4 Big Firms, 4 Big Surprises: Liberty Tax, HP, Starz and ATT
It's hard enough for a company to go public, even when its timing is decent. JTH Holdings couldn't have picked a worse day to announce an IPO.
JTH, the company behind Liberty Tax, filed to go public on Friday. Unfortunately, shares of larger rival H&R Block (HRB) fell 12% that same day, after posting disappointing quarterly results the night before.
The market loves its sympathy plays, so why didn't JTH's underwriters wait a weekend? The moment that H&R Block posted a larger-than-expected quarterly deficit on softer revenue than the pros were targeting, everyone knew that its stock would get crushed on Friday.
Liberty's taxing dilemma wasn't the only head-scratching news last week. Here are some of last week's other biggest surprises, blunders, and just flat out boneheaded maneuvers.
Shooting Starz: Netflix (NFLX) streaming subscribers may be seeing stars, but they won't be seeing Starz (LSTZA) come February. The premium cable channel with juicy film distribution rights announced that it wouldn't be renewing its multiyear deal with Netflix, which expires in a few months.
Netflix reportedly offered to pay more than $300 million for those rights. Starz balked, even though no other premium streaming service can pay anything close to what Netflix was offering.
The Los Angeles Times claims that Starz wasn't necessarily holding out for more money. It was concerned with the value proposition of more than 20 million people paying $8 a month to stream unlimited video. It wanted Netflix to move to a tiered pricing plan, where couch potatoes would pay extra to access Starz' library.
Really? A meandering cable channel is going to tell Netflix how to run its business and command a king's ransom for a product that would only reach some of Netflix's subscribers? I guess that company had its head in the clouds.
Out of Touchpad: Outside of the iPad, you have to go all the way back to Moses to find the last time that someone has succeeded in disseminating tablets. Hewlett-Packard (HPQ) didn't fare any better this summer with the TouchPad, until it marked down the $499 gizmos to $99 in a fire sale.
What if the TouchPad isn't dead yet? HP -- after reportedly failing to dump its webOS business on a hardware partner -- may be readying another run. The struggling tech giant advised customers last week that it would be making a limited second production run of the tablets.
HP has its reasons. Its suppliers supposedly had stocked component parts for another run, because who kills a tablet after a single soft month on the market? If HP is simply doing its manufacturing partners a solid by bailing them out of this stock, that's an honorable thing to do. However, HP better not start thinking that folks actually want webOS tablets at any price point that would turn a profit for HP. The novelty of the $99 tablets rests largely on the fascination of opportunistic deal seekers. HP is likely losing more than $200 on every TouchPad it sells at that rock-bottom price. If Android tablets have proven to be a hard sell at reasonable price points, a more obscure platform with waning developer support will only have an even harder time succeeding.
Reach Out and Stall Someone: It isn't easy being AT&T (T) these days. The Department of Justice is filing suit to block its planned acquisition of T-Mobile from Deutsche Telekom (DTEGY).
We knew that this wouldn't be a speedy approval. There are competitive concerns, even if the deal would still leave at least two strong options besides AT&T/T-Mobile for wireless service.
The real head-scratcher here comes from AT&T's bizarre promise to bring back 5,000 call center jobs it's off-shoring if regulators approve the deal. Does AT&T really want to remind everyone that it has shipped out thousands of jobs in these times that are rife with high unemployment? Does it want the gesture to be seen as a threat? There's no way AT&T looks good here. Moving the jobs back and then letting everyone know would make the public more sympathetic to AT&T. Anything else comes off as a hostage situation.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article, except for Netflix and HP. Motley Fool newsletter services have recommended buying shares of AT&T and Netflix.