What Was Wall Street Thinking? Tablets Tumble, Beazer Bumbles, Wal-Mart Humbled, Quepasa Stumbles
If you watch Wall Street close enough, you'll never be at a loss for cocktail party fodder. Last week alone, tablet prices tumbled, homebuilder Beazer bumbled, Wal-Mart was humbled, and Latino social networking site Quepasa stumbled.
Take Two Tablets and Call Me in the Mourning
It's getting brutal for any tablets that aren't made by that fruit company in Cupertino.
Sprint Nextel (S) revealed Friday that it will not be putting out a 4G version of Research In Motion's (RIMM) PlayBook. It had announced plans to sell a 4G model of the BlackBerry tablet earlier this year but will now stick to simply offering the Wi-Fi version.
The announcement came during the same week that found Hewlett-Packard (HPQ) permanently slashing the price of its TouchPad down to $399 apiece. TouchPad -- the first tablet to use Palm's webOS platform -- hit the market at $499 just last month.
Really? How is the market supposed to react to a 20% price cut after just five weeks? The move will upset the early adopters who bought in last month, but it has to make potential buyers apprehensive about making the leap now.
Desperate moves like this will make it harder to smoke out early buyers for its next webOS tablet -- if we get that far.
Gadgetry prices continue to fall at a ridiculous pace. Nintendo (NTDOY) began selling the 3DS in March at $250, and on Friday the handheld gaming system was marked down to $180. However, things are just insane when it comes to tablets, where everyone outside of Apple (AAPL) is realizing that you can't make a dent in this market on spec sheets alone.
Beazer Buzzer Beaters
Teetering homebuilder Beazer Homes (BZH) was one of last week's biggest losers, shedding 27% of its value to hit a two-year low after posting a disappointing quarterly report. However, one of the more head-scratching gems during its conference call was that Beazer plans to expand its rental program.
This isn't Beazer simply renting out some of its unsold homes until the market comes around. Beazer is literally buying dozens of foreclosed homes in the hard-hit Phoenix and Las Vegas markets, then turning around and renting them out.
In other words, Beazer is now no different than your wide-eyed Uncle Roy who shows up at the family reunion every year with cockamamie schemes to strike it rich.
Beazer points out that it will be keeping these transactions off of its balance sheets, but what's the point? It can't buy up enough foreclosed homes to drive up prices -- and interest -- in newly built homes out in the suburbs.
Don't you miss the days when residential developers used to focus on building homes?
Running a social networking website for the growing Latino community isn't the slam dunk you'd think it would be. Quepasa (QPSA) released an uninspiring quarterly report last week.
Unfortunately, Quepasa didn't spell out how many overall pages it served up during the period. It's easy to see why the dot-com left out this meaty morsel. It posted a 17% sequential decline in revenue. Quepasa bragged about its users spending more time on the site, but that means that either it's drawing fewer unique repeat visitors or that its ability to monetize its pages is diminishing.
The silver lining here is that Quepasa still expects to close on its acquisition of the much larger myYearbook parent by year's end. It will be a transformative deal, if it can be pulled off. If Quepasa can't complete the transaction, investors better start practicing their "no mas" chants.
If Sam Walton Could See This Now
Things aren't going to plan in cyberspace at Wal-Mart (WMT). The leading discounter completed a major restructuring of its online executives, several news agencies reported over the weekend.
It's easy to see why things are in disarray at Walmart.com. Earlier in the week, Wal-Mart was advising record labels and music distributions that it would shut down its MP3 download store this month.
Why would Wal-Mart close down the digital music store that it's been running since 2003? Even if it's no match for Apple's iconic iTunes, the last thing that Wal-Mart should be doing is yielding digital distribution of any media. CD sales have fallen nearly every year over the past decade. Digital tracks and albums are the future. Even if it's an unpopular offering, keeping the company's foot in the door is better than letting the door slam shut.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Research In Motion, Apple, and Wal-Mart. Motley Fool newsletter services have recommended buying shares of Nintendo, Wal-Mart, and Apple, as well as creating a bull call spread on Apple.