This Week's 5 Dumbest Stock Moves
Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.
1. Discounting Groupon
Shares of Groupon (NAS: GRPN) tumbled 17% on Monday after the daily deals leader revealed that a "material weakness" in its internal systems is forcing a revision to its fourth-quarter results.
Its revenue is overstated by $14.3 million and its operating profit will need to release $30 million worth of air.
There aren't too many people feeling sorry for Groupon. This was the same company that had to delay its IPO last year after regulators scoffed at its creative accounting.
Bargain seekers may be tempted to hit up this opportunity in the same way that a deal hunter snaps up Groupon deals. Groupon, after all, is now trading at a discount to its $20 IPO price. Until Groupon gets its bean counters in line, be careful.
2. Memory storage that you would rather forget
SanDisk (NAS: SNDK) didn't have the kind of quarter that it thought it was going to have.
The flash memory giant hosed down its original guidance on Tuesday.
SanDisk now sees revenue of $1.2 billion for its fiscal first quarter that ended this past weekend. The earlier projection called for $1.3 billion to $1.35 billion on the top line. Gross margins will also come in below its original forecast of 39% to 42%.
If revenue is weak and the gross margins on those sales are weak, investors can only imagine the colossal disappointment that will be waiting for them on the bottom line.
3. Special orders don't upset us
Retail investors should be grateful that Brazilian private-equity firm 3G Partners took Burger King private in late 2010. The Home of the Whopper slipped to third in this country on sales volume among burger chains after being glued to second place since 1972.
Well, 3G Partners is teaming up with London-listed investment vehicle Justice Holdings to get shares of the fallen burger monarch back on the New York Stock Exchange.
All of this comes during a week that finds BK getting blasted for essentially ripping off some items of the McDonald's (NYS: MCD) menu for new food ideas. From the strawberry-banana and mango smoothies to the Snack Wrap knockoffs, where chicken and lettuce are served in flour tortillas with honey mustard or ranch dressing, Burger King may as well paint golden arches over its logo.
The market may like that Yahoo! expects the move to eventually save $375 million a year, but why is the market applauding what will create more morale issues? Yahoo! has had several layoffs already in recent years. Where has that taken the company?
Yes, Yahoo! is in a bit of a funk. Revenue growth has stalled. It's lacking the growth properties that will return it to dot-com darling status. However, Mr. Market needs to understand that there's a difference between making money and merely saving money.
Applauding shareholders better hope that the key to returning Yahoo! to greatness wasn't one of the 2,000 people about to walk out the door.
5. Playing Twister with Comcast
Last month's tornado touchdowns in Michigan are blowing up into another black eye for Comcast (NAS: CMCSA) .
What began as a story late last week in the Dexter Leader -- detailing how many displaced tornado victims are being forced to pay either stiff cancellation fees or $15 to $20 a month in "on vacation" fees for a cable service that they cannot use in their tattered homes -- is gaining momentum this week.
As the country's largest cable service provider, Comcast is going to be a natural target given its percolating rates that outpace inflation year after year. However, when it comes off as insensitive -- even when it may seem justified given the destroyed cable boxes and modems -- Comcast needs to learn that sometimes you have to take a financial hit over a reputational pounding.
At the time this article was published The Motley Fool owns shares of Yahoo!.Motley Fool newsletter serviceshave recommended buying shares of Yahoo! and McDonald's. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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