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. The store marquee lies
Best Buy (NYS: BBY) hit a new nine-year low earlier this week but bounced back with the general market.
The market didn't flinch at the company's quarterly report, but don't read too much into the struggling consumer electronics retailer's slight gains in net sales and adjusted earnings per share.
Earnings from continuing operations actually dipped during the period. The only reason there was growth on a per-share basis is that Best Buy has been aggressively buying back shares over the past year.
Revenue inched 2% higher as Best Buy continues to open smaller Best Buy Mobile stores, but store-level comps fell a cruel 5.3% -- and that's stacked on top of a 3% slide a year earlier. Remember when Best Buy was eyeing overseas markets for growth? Well, international comps fell an even headier 10.5%.
Don't buy into the optimists arguing that Best Buy is on the cusp of a turnaround. You can't turn around until you actually hit bottom.
2. If you dish it out, you have to take it
Well, that didn't last long.
When DISH Network (NAS: DISH) rolled out a premium-priced DVR that eliminates TV ads earlier this month, I knew it would be trouble. The crowd-pleasing box that zaps commercials -- not visually fast-forwarding them as other DVRs do -- was going to upset the content creators that the country's second-largest satellite television provider can't afford to make angry.
"As a company that tries to set itself apart from its larger rival on the basis of price, DISH will find it hard to be a low-price leader when content providers will want more after destroying an important part of their business," I wrote in tapping DISH in last week's "dumb" list.
Well, Fox, NBC, and CBS are all suing DISH now, according to Hollywood Reporter.
No, DISH. There isn't some magical button that you can hit that will make all of the legal fisticuffs go away.
3. Dell's bells
It's bad enough that Dell (NAS: DELL) isn't selling as many PCs as it used to. Now it's just making less money on the stuff it is able to sell.
The former market darling that wowed the market with its direct-selling model through the 1990s and a good chunk of the 2000s has a problem. Revenue slipped 4% in its latest quarter, but earnings tumbled a whopping 33%.
The stock tumbled on the news, as Dell doesn't seem to have an answer for the trend that's diving traffic to "good enough" computing devices -- including smartphones and tablets, where Dell is merely a bit player.
4. Facebook off
Sneaky little Facebook (NAS: FB) . The social networking giant's stock has rattled off back-to-back positive trading days, but the aftermath of last Friday's poorly received IPO goes far beyond the dot-com bellwether's valuation concerns.
Between the market makers that took a hit on trading snafus and the rival exchange trying to sweep Facebook off its feet, there are plenty of rough spots in the postmortem of last week's debut. However, nothing is uglier than the reports that a few major investment bankers quietly lowered their estimates on the company after being privy to what appears to be cautious comments delivered during privileged discussions during the company's pre-IPO road show.
This may just be the tip of the selective dissemination iceberg.
5. Cree shoots
Cree (NAS: CREE) took a hit earlier this week after the LED specialist revealed that its CFO was leaving to "pursue other opportunities."
It's understandable for investors to get a little jittery when a bean counter walks, but CFOs leave all the time. It doesn't mean that the company is faltering financially or has something to hide. CEO Chuck Swoboda even reaffirmed the company's June quarter guidance, and Cree's controller is stepping in as interim CFO.
It's no big deal. The stock tumbling by more than 6% on its heaviest day of trading volume since January was just another case of the market overreacting.
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At the time this article was published The Motley Fool owns shares of Best Buy. Motley Fool newsletter services have recommended buying shares of Dell. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free 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.