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 from this week that may make your head spin.
1. Geek Squad is no chic squad
Best Buy (NYS: BBY) is hoping that a test store will provide the concept that it needs to turn the electronics retailer's sagging fortunes around.
The Wall Street Journal describes the new format as an Apple Store knockoff, complete with the Geek Squad-staffed Solution Central help desk that seems a lot like the tech giant's Genius Bar. The ability to check out throughout the store and streamlining the number of products on display are other features being liberally borrowed from the Apple Store platform.
It's easy to figure out why this will never work. Best Buy hasn't spent decades cultivating a premium brand and putting out differentiated products that raise the bar for everybody else.
Best Buy needs a test store that will allow it to combat the showrooming trend with lower prices instead of upgrades that will force it charge even more for merchandise or scare shoppers away with high-margin services and protection plans that they don't want.
Barclays Capital's Mark May slashed his rating on the Web-based dining reservations leader from "overweight" to "equal weight," taking down both his profit and stock price targets along the way.
May's channel checks show that the industry is slowing. Pair that up with increasing competition and May warns that the second quarter that just concluded won't be pretty. He fears that this may be the first time in OpenTable's history that it posts a sequential dip in revenue.
Upgrades tend to be good news -- and I generally agree with Kessler's bullish opinion here at current prices -- but I'm not sold on the merit of analyst surveys in general.
Kessler's survey of 422 music buffs discovered that 64% were active Pandora users, and more importantly that just 4% of them were expecting to stream less of the service in the coming year.
Is this really reliable? The streaming industry is changing pretty quickly these days. Spotify just announced a free music discovery offering for mobile users. Songza came out of nowhere to become the App Store's hottest music download last month, and as of yesterday it had already dropped out of the top 10 slots.
Regardless of what Pandora users in particular or music fans in general may say, they have no idea what the future has in store for their eardrums.
4. Mr. Softy takes a hard foul
Did Microsoft (NAS: MSFT) overpay when it shelled out $6.3 billion for aQuantive five years ago?
The matter was always open for debate, but now there isn't much of a doubt. The world's largest software company did overpay, and this week it revealed a $6.2 billion hit in its online business unit to write down its goodwill.
Microsoft did use the online marketer's technology to improve its own marketing tools, but you never want to see charges in the billions. One can only imagine that hit that we'll be seeing out of Microsoft in a couple of years for its even more expensive Skype purchase.
5. Nokia is a Nok-Nok joke
Nokia (NYS: NOK) hit its lowest stock price in 18 years yesterday.
CEO Stephen Elop is clearly on the hot seat, and a Computing interview with Silicon Valley veteran Jean-Louis Gassee argues that Elop and the entire board should be replaced with more effective leaders with a better grip of the mobile market.
Elop was hailed as a savior when he arrived at Nokia 21 months ago, but the stock has gone on to shed more than three-quarters of its value.
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At the time this article was published The Motley Fool owns shares of OpenTable, Microsoft, Best Buy, and Apple. Motley Fool newsletter services have recommended buying shares of OpenTable, Apple, and Microsoft. Motley Fool newsletter services have also recommended creating bull call spread positions in Apple and Microsoft. 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.
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