This Week's 5 Dumbest Stock Moves

These five companies got it wrong this week.

Rick Munarriz
Rick Munarriz
Jul 18, 2014 at 5:15PM
Investment Planning

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. It's raining pink slips
It isn't a surprise to see Microsoft (NASDAQ:MSFT) resorting to layoffs. With a new CEO and a major recent acquisition, it was really just a matter of time before the world's largest software company began to prune its payroll.

However, Microsoft makes the cut this week because it plans to eliminate 18,000 positions over the next year. A little more than two-thirds of the cuts will come from its recent mobile handset acquisition. That was expected, but 18,000 jobs -- and the pre-tax charge of as much as $1.6 billion associated with the move -- is a bit extreme. At the very least, morale will be a problem as Microsoft shrinks in scope.

2. Krash Kors
It was a rough week for Michael Kors (NYSE:CPRI), with several analysts downgrading the stock or lowering their price targets. The fear here is the deep summertime discounting that they're seeing on the company's designer handbags and accessories. Kors typically has markdowns to make room for incoming fall fashions -- and one analyst bucked the negativity by arguing that the seasonal discounts are in line with Kors' action a year earlier -- but the pros are still worried.

Kors is reporting in less than three weeks, so the push by so many analysts to temper enthusiasm is troublesome. Then again, Wall Street has never done a good job of assessing how Kors is doing. Over the past four quarters we've seen Kors top analyst bottom-line expectations by 25%, 4%, 29%, and 15%, respectively. Something's got to give come Aug. 5, when Kors will report fresh financials.

3. Gone in a flash
SanDisk (UNKNOWN:SNDK.DL) shares took a hit on Thursday after the company gave a weak outlook for the current quarter. The rearview mirror looks great: The flash memory giant came through with an 11% pop in revenue as a 51% spike in volume was more than enough to offset a 26% plunge in pricing. The lower prices didn't squeeze margins too badly, with SanDisk's adjusted profit of $1.41 per share besting the $1.39 per share that analysts had laid out. 

However, SanDisk's top-line outlook for the third quarter is lower than what Wall Street had forecast. SanDisk's guidance on gross margins and forewarning that the second half of the year will be supply constrained didn't win over too many investors. The stock slumped 14% on Thursday as a result of the troublesome outlook.

4. Mattel hell
There's no time to toy around at Mattel (NASDAQ:MAT). The leading toymaker posted disappointing quarterly results on Thursday morning, weighed down by a 9% decline in worldwide sales.

There was a 15% drop in Barbie sales, but that wasn't even as bad as the 17% plunge at Fisher-Price. Yes, even the seemingly timeless Fisher-Price kids toys have fallen out of favor with today's jaded toddlers and their parents. This is now the third quarter in a row where Mattel has fallen short of Wall Street's profit expectations. Mattel needs to stop playing games -- and the country needs to start.

5. It doesn't check out if folks don't check in
RealPage (NASDAQ:RP) is one of Friday's biggest losers after offering up preliminary financial results that fell woefully short of market expectations. The provider of property management software solutions now sees revenue for the recently concluded second quarter clocking in between $93.8 million and $94.8 million, essentially flat with the prior year's results but well short of the $107.2 million that analysts were forecasting. 

RealPage blames the health of the leasing market for the shortfall as low vacancy and resident turnover rates find property owners relying less on RealPage's marketing solutions. It had to discount aggressively to gain market share at the expense of margins, and that naturally isn't going to fly with investors banking on bottom-line improvement.