5 Big Winners and Losers of the Week in Business
It's been a week of interesting tidbits in the business world, like a plucky upstart cashing in on a banned Super Bowl ad, and a misguided analyst's too-clever case for upgrading a faltering retailer. Here's a rundown of this week's smartest moves and biggest blunders in the business world.
Nintendo (NTDOY) -- Loser
The Japanese gaming giant seemed so sure about its Wii U when the new console hit the market in November.
It didn't seem to matter that there weren't enough Wii U blockbuster titles available at the time of the system's release. Or that the $300 price tag made it far more expensive than the current Xbox and PlayStation, unlike the original Wii, which was the cheapest console when it debuted.
Well, reality has crashed the party for Nintedo, and its possible that not even Mario would be get the company out of this mess.
Nintendo has warned that it will likely reach just 4 million Wii U systems sold for the fiscal year ending in March, a number that disappointed investors. Its earlier sales target was 5.5 million. Nintendo is also scaling back its 3DS and overall revenue targets.
SodaStream (SODA) -- Winner
Once again, SodaStream is getting a lot of juice out of a banned commercial.
CBS (CBS) rejected SodaStream's planned Super Bowl spot, apparently because it was viewed as too much of a slam on two of the game's biggest advertisers. The commercial uses the tried-and-true soda ad theme of the rivalry between Coke and Pepsi truck drivers, but with a twist: It ends with both brands bottles exploding after someone uses a SodaStream system.
SodaStream is replacing the ad with a slightly tweaked version of its existing commercial, but there's nothing like a little notoriety to draw attention. SodaStream uploaded the banned commercial to YouTube on Wednesday, and it already has more than 2.2 million views.
Best Buy (BBY) -- Loser
It's not often that you see Apple's (AAPL) stock slide cited as a bullish argument for a consumer electronics retailer.
BB&T Capital Markets analyst Anthony Chukumba upgraded shares of Best Buy on the grounds that Apple's gradual falling out of favor will benefit Best Buy.
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The thesis may make sense on paper. Retailers earn thinner margins selling Apple products than they do rival for devices. Apple also attracts prospective buyers to its namesake stores, and you know Apple Store locations will always get the best allocations of new merchandise.
However, Chukumba may be missing the point. Best Buy has been struggling because it's too expensive. The chain has been falling out of favor because shoppers don't like to be badgered with pitches for extended warranties or service plans they don't want.
More importantly, Best Buy is suffering because all of the physical media it sells -- DVDs, CDs, books, and video games -- are growing obsolete. These are the items that Best Buy used to woo shoppers into their stores, but as far as those products are concerned, digital distribution is zapping the retail middleman. So it doesn't matter nearly as much if it's an iPhone or an Android device -- whenever Best Buy sells a phone or a tablet, it's arming the customer with the means to avoid visiting the chain in the future.
Homebuilders -- Winner
It was a good week for real estate developers and Tri Point Homes (TPH) chose the perfect week to go public.
The homebuilder went public on Thursday, and it was a hot IPO. Tri Point was planning to price its offering between $14 and $16 a share. It was able to issue more shares than it was originally looking to sell at $17, and that still wasn't enough. The stock opened at $19.56.
It was great timing on Tri Point's part. Residential real estate is hot again, and mortgage rates are still low. Larger homebuilder D.R. Horton (DHI) soared on Tuesday after posting better than expected results.
Housing is a pretty inviting neighborhood for investors these days, but keep an eye on those interest rates.
VMware (VMW) -- Loser
Virtualization software is supposed to increase efficiency by allowing a host computer to run several virtual environments.
Well, maybe VMware can create a virtual environment in which we forget this week's disappointing quarterly report.
VMware hit fresh 52-week lows after offering weak guidance. The $5.23 billion to $5.35 billion that VMware now sees in 2013 revenue is short of where the pros were parked. The company also plans to slash about 900 jobs -- or 7 percent of its workforce -- a telling sign of what VMware thinks lies in its future.
Motley Fool contributor Rick Aristotle Munarriz owns shares of SodaStream. The Motley Fool recommends Apple, Nintendo, SodaStream, and VMware. The Motley Fool owns shares of Apple, SodaStream, and VMware.
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