A Fool Looks Back

Rick Aristotle Munarriz, The Motley Fool
Updated

When did it become profitable to fail?

Sears Holdings (NAS: SHLD) announced on Thursday that it will sell 11 stores and unload some of its smaller concepts. The stock rallied.

Around the same time, DISH Network (NAS: DISH) revealed that it will close down a third of its 1,500 Blockbuster stores. The stock rallied.

Sure, that wasn't the whole story in either case. Sears' strategic divestitures will help raise some money, and DISH posted a surprising uptick in subscribers to its namesake satellite-television service. However, the market seems to forgive companies when they fail.

Think about the last time a company announced layoffs or dumped an unprofitable line. The stock rose on the news, didn't it?

There are temporary rallies, of course. Sooner or later, the fundamentals have to be there for stocks to sustain their gains. Even though Sears and DISH rallied, there's little reason to believe that those gains will stick.

Briefly in the news
And now let's take a quick look at some of the other stories that shaped our week.

  • OmniVision (NAS: OVTI) posted better-than-expected results on Thursday night and delighted investors with a surprisingly upbeat near-term outlook. The company makes image sensors, so it shouldn't be a problem to take a snapshot of the rare exuberance.

  • Edgy headphone and earbud maker Skullcandy (NAS: SKUL) has now posted better-than-expected profitability in each of its first three quarters as a public company, but the stock continues to trade below last year's $20 IPO price.

  • Yandex (NAS: YNDX) delivered revenue and earnings growth of better than 50% in its latest quarter. Yandex operates the leading search engine in Russia.

Moving on
Now that you've had a glimpse of the past, let's delve into the future. A new report details the latest Rule-Breaking multibagger that has earned Fool co-founder David Gardner's attention. The report is free, and you're closer to it than you think. Check it out now.

At the time thisarticle was published Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors.Longtime Fool contributorRick Munarrizcalls them as he sees them. He owns no shares in any of the stocks in this story and is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Advertisement