What Was Wall Street Thinking? $5 Debit Card Sting, Berkshire's Buyout, Oracle's HP Shot, and More
There's never a shortage of silliness when it comes to Wall Street. In case you were offline last week, here are some of the week's biggest surprises and head-shaking blunders.
Debit discredited: Last week's move by Bank of America (BAC) to begin charging its customers $5 a month if they use their debit cards for purchases is going to sting.
Folks still see Bank of America as the poster child of the "too big to fail" banks bailout. This move is going to reopen old wounds. Taxpayers had to bail out Bank of America, and now it's going to bilk the same taxpayers that also happen to be accountholders?
With the kind of consumer resentment that's going to bubble up in the coming days and weeks, I wouldn't be surprised if Bank of America doesn't start sending out bank statements in red rectangular mailers.
When executives attack: It's not a surprise to see Oracle (ORCL) CEO Larry Ellison needling Hewlett-Packard (HPQ), but things have gotten uglier than usual.
Ellison kicked things off by claiming that Autonomy -- which HP recently bought for $10.3 billion -- was originally shopped to HP for $6 billion earlier this year. Ellison said he balked, arguing that Autonomy was overpriced at the time. In other words, he was taking another shot at HP, this time implying that it's grossly overpaying for its acquisitions.
Autonomy chief Mike Lynch fired back, claiming that his data management company was never directly shopped to HP. Ellison has never been a shrinking violet, so he went ahead and posted the presentation's slides on Oracle's website -- at oracle.com/pleasebuyautonomy. Yes, Ellison even packs a punch when his company is naming Web pages.
Autonomy's response -- through Frank Quattrone, who helped shop the deal -- was that those slides were sent to Oracle exec and former HP CEO Mark Hurd three months before the alleged shopping visit in April.
Who's right? Did Ellison go too far by publishing the PowerPoint slides? Either way, HP is once again learning that you don't mess with Ellison unless you want to be embarrassed.
Buffett's surprising buffet: Has Berkshire Hathaway (BRK-B)(BRK-A) run out of investment ideas?
Warren Buffett's legendary holding company is doing something that it's never done before: Berkshire Hathaway is ready to buy back some of its own shares.
Stock repurchases are generally viewed as a good thing by the market. Done right, buybacks can improve earnings on a per share basis by reducing the number of shares outstanding. However, investors buy into Berkshire Hathaway to profit from the timely trades and acquisitions of Buffett and Charlie Munger. Is Berkshire Hathaway sending the wrong signal when it decides to buy into itself instead of using its tens of billions in the bank to buy more of the investments that have fallen even harder than the holding company?
I realize that I'm in the minority here. The stock popped higher on the news, possibly to the point where Buffett won't be buying at all (since he limited the timing of the purchases to when Berkshire Hathaway is trading for less than 110% of book value). Bulls will argue that Berkshire Hathaway's intrinsic value makes it a great buy at this point. I'm just not overly impressed to see Buffett do what any lay investor can easily do.
A fee for those glasses: Sony (SNE) has had it with footing the bill for 3-D specs. According to The Hollywood Reporter, the movie studio is telling theater owners that it will stop paying for the glasses handed out at its 3-D screenings come May of next year.
Studios want to move to the ownership model, where moviegoers bring in their own 3-D specs. Exhibitors can sell them to patrons who don't own a pair -- or left their glasses at home -- as an additional profit center. This is the model used in many countries, but stateside celluloid buffs are already paying at least $3 more for a 3-D screening over the more conventional 2-D flick. Isn't this the kind of move that will ultimately kill 3-D?
This has already been a challenging year at the local multiplex. Box office receipts are down year to date. Going out to the movies shouldn't become even more inconvenient or expensive, especially at a time when the release window between theatrical and DVD releases is narrowing and streaming technology at home is improving.
"Fade to black" means a profitable Wall Street, but it has an entirely different meaning on the silver screen.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article, except for HP. The Motley Fool owns shares of Berkshire Hathaway, Bank of America, and Oracle. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway.
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