What Was Wall Street Thinking? Zombies Scores, iPhone iFallout, $60 Video Rentals, and Napster Sleeps
There's never a shortage of silliness when it comes to Wall Street. Let's go over some of last week's biggest surprises and head-shaking blunders.
The living dead are invading the malls again: Financial reporters are human. We make mistakes all of the time. I know it. However, sometimes the automated spellchecker fumbles the ball.
The Associated Press ran a rundown of same-store sales at publicly traded retailers for the month of September on Thursday. An out-of-the-ordinary entry on retailer list -- Zombies -- reportedly came through with a healthy 10.1% spike in comps last month.
Is there really a retail concept devoted to the living dead? Is this a seasonal player setting up shop ahead of the Halloween costume-shopping season? No. It was actually edgy apparel retailer Zumiez (ZUMZ) that managed to score an impressive double-digit pop in comps in September.
Autocorrect, what a prankster you've become.
The iPhone 5 that wasn't: The market was generally disappointed with Apple's (AAPL) iPhone event Tuesday.
Some analysts were hoping for dual announcements of an evolutionary iPhone 4S and a revolutionary iPhone 5, but the country's most valuable tech company only introduced the 4S model.
The new iPhone is going to be great – you will want to buy it, FYI. It's a more powerful smartphone with a dramatically improved camera. The Siri speech-recognition feature is another bar-raising moment for Apple. However, expectations ran high after the Wall Street darling delayed this release for several months.
Walking away empty-handed were the Apple watchers who figured that moving away from its historical early summer iPhone updates meant that the company was giving itself to time to incorporate 4G LTE connectivity or NFC mobile transaction chips.
There was never going to be an opportune moment for Steve Jobs to pass away, but he leaves us at a time when Apple needs him the most.
I guess that's why they call it Tower Heist: Cable giant Comcast (CMCSA) feels that you're willing to pay $60 to watch a three-week-old movie from the comfort of your own living room.
In a test that should ultimately twist couch potatoes the wrong way, Comcast is going to offer Tower Heist -- a comedy action flick starring Eddie Murphy and Ben Stiller -- to its video-on-demand customers in Atlanta and Portland, Ore., next month. The $59.99 price is going to seem outrageous to customers used to paying roughly a tenth of that for fresh celluloid, but the hook here is that the movie is likely to still be playing at your local multiplex.
Comcast will be offering the costly rental three weeks into the flick's theatrical run. How is this possible? Well, Comcast is also the company behind NBC Universal, after its contested acquisition, so it's the movie studio behind Tower Heist.
Exhibitors are upset. They feel that Comcast is squeezing the gap between cinematic and retail video releases. It's not going to be a big deal. How many people do you know who will be willing to pay more -- a lot more -- for a movie that has likely already faded in popularity three weekends into its mainstream screenings?
Obviously there's something to be said about the creature comforts of home theater setups, especially in homes that can afford $60 for two hours of celluloid. No one likes to sit in noisy theaters with soda-sticky floors and take out a loan to bankroll a tub of popcorn. However, who will pay $60 for something they can rent for a buck through a Redbox kiosk just a few months later?
There is a market for this offering, but certainly not at that price point.
Naptime for Napster: Best Buy (BBY) is finally punting on Napster.
The consumer electronics giant will be handing over its music service subscribers to rival Rhapsody in exchange for a minority stake in the combined company.
Z"Best Buy is living in denial when it comes to cyberspace," I warned last month, arguing that Best Buy will never be great again. "Keep in mind that this is the same Best Buy that bought Napster and hasn't been able to grow the music subscription service."
It's a typical blunder. Best Buy positions itself to matter in digital music but then drops the ball in promoting Napster. It also failed to let Napster evolve to the point where it can take on the faster growing Pandora (P) and Spotify services.
Instead of throwing more money to fortify its digital future, Best Buy is back to relying on its bricks-and-mortar past. CD sales peaked a dozen years ago. That's not coming back, and Best Buy appears to be the last one not to know.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Best Buy and Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.