Stupidity is contagious -- even respectable companies can catch it. As we do every week, let's look at five dumb financial events from this past week that may make your head spin.
1. Open and shut Steelcase
Just when you start thinking that Corporate America is humming along, you get a bad piece of news. I'm not talking about the downward revision of the first quarter's GDP metric. We all knew that it was a bad quarter for the economy. The bad news I'm referring to was what sent shares of Steelcase (SCS -2.25%) 11% lower on Thursday.
The office furniture distributor slumped after falling woefully short of expectations this quarter. Revenue rose by a weaker-than-expected 8%, and margins collapsed, with Steelcase's adjusted profit of $0.08 per share coming up far shy of Wall Street's forecast of $0.12 a share. One of the reasons given for the bottom-line shortfall was an increase in warranty claims. That's as problematic as you may think, since it means that there may be some product quality concerns to address here. Steelcase also didn't help its cause by putting out uninspiring guidance that calls for profits to fall short of analyst targets for the current quarter as well.
2. It's a small world after all, Wal-Mart
Wal-Mart (WMT 0.23%) won a legal battle in China this week, but all that that's doing is illustrating the world's largest retailer's struggles to gain traction overseas in the face of fading stateside popularity.
An arbitration ruling in the world's most populous nation came in China's favor, throwing out a trade union lawsuit that was fighting for more compensation at a recently closed store in China that displaced 130 workers. A little more than half of them had rejected Wal-Mart's settlement of one month's pay to offset the store closing. The case has now been dismissed, but don't write off the likelihood of further appeals.
On paper, Wal-Mart won. However, in the eyes of the world and the chain's investors, it's struggling overseas -- to the point where this is one of 20 stores that it's shuttered in China. Labor disputes aren't limited to its home turf, and this comes at a time when Wal-Mart needs the growth. Stateside comps have fallen for five straight quarters.
3. Double-stuffed Aereo
In a legal decision that's bound to keep your cable or satellite television bill rising, the U.S. Supreme Court ruled that Aereo's streaming service of over-the-air broadcast television violates copyright laws. Networks are naturally rejoicing over the decision, which will keep juicy transmission fees coming -- otherwise Aereo may have had a great shot at disrupting the market with its cheap platform that uses tiny remote antennas to give subscribers access to a dozens of channels on the cheap.
This isn't the end of Aereo, but given the ridiculous situation with traditional pay TV providers, where consumers can't just pay for the channels that they actually watch without having them bundled with stuff they don't, it's going to set the inevitable revolution back.
4. This is what concealer is for, my dear
It was a case of adding insult to injury for Elizabeth Arden (NASDAQ: RDEN) shareholders this week. South Korea's LG Household announced that it was no longer interested in pursuing a deal to acquire the stateside cosmetics company after it announced a restructuring.
Elizabeth Arden plans to unload some poorly performing brands and businesses, likely slashing a ton of jobs along the way. Fiscal 2014 has proven to be a stinker for Elizabeth Arden, but this week's double dose of bad news -- the restructuring followed by LG Household's exit -- sent the stock to a three-year low.
5. Chrome wasn't built in a day
It's not often that Google (GOOG 0.03%) gets called out in this weekly column, but it may have earned it this week after Computerworld called it out for reneging on a LTE Chromebook Pixel deal. Initial buyers of the high-end laptop were supposed to receive two years of free data from Verizon (VZ -1.79%). Yes, it was sorely restrictive, capped at a mere 100 megabytes per month. However, for folks who have their own connectivity most of the time, it was a pretty neat perk to have to help offset the high price of the Pixel.
Halfway through the term, either Google or Verizon balked on the complimentary data. Computerworld exposed the bait and switch. Google's doing the right thing here by giving buyers $150 in credit for those who bought the LTE Chromebook Pixel while the two free years of limited data was offered, but it's bad form to give up the partial refund only after you get called out by a major computing publication. The mantra is "do no evil" -- not "do no evil if we'll be caught."
