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. Better pastures than Best Buy
Best Buy caught some heat earlier this year on reports that it was shelling out retention bonuses to managers that weren't tied to performance incentives. The move also generated some Wall Street ire because it came at a time when the consumer electronics retailer was closing down stores and laying off lower-level employees.
Well, one Best Buy executive is moving on.
Stephen Gillett -- the head of Best Buy's digital division -- is leaving. He will be COO at security software specialist Symantec . Was he one of the managers awarded a retention bonus to stick around this summer? Does it matter? It still brings up a bad memory in what has been a very bad year for Best Buy.
When a stock tanks, qualified execs move on.
2. Facebook thinks tollbooths will lick spam
Facebook has been dishing out some new ways to monetize its popular social networking site, but it may be going too far this time.
Facebook is testing a plan whereby it charges some users to send messages to a person's inbox, instead of the "other" folder that is largely ignored by Facebook users as a spam magnet reserved for non-friends.
Facebook offers up some interesting examples. Maybe someone hears a person speak at an event, and wants to follow up on that. Maybe someone wants to reach out to a particular stranger with a job opportunity. Would paying $1 for these kind of messages be fair?
It might work, but you know that the public is going to blow it out of proportion. They will wonder why the recipients aren't getting paid. The rumor of Facebook charging users will make the rounds again.
It also doesn't help that Facebook is framing this obvious way to carve out a new revenue stream as a way to dissuade spammers. Really? Can't they keep sending stuff to the "other" folder?
3. Taxpayers unfortunately can't get a recall
General Motors can't catch a break.
The automaker is recalling 118,800 Chevy Colorado and GMC Canyon pickup trucks in this country -- and reportedly more than 145,000 internationally -- because they lack a required secondary hood latch. The latch exists in case the primary one is not engaged, and without it the hood could swing open while the truck is in operation.
The chances of that happening are rare, naturally, but every recall is an embarrassing one.
It also doesn't help that this news comes just as the Treasury Department is announcing that it will sell some of its bailout-related stake in GM at a loss. It's important for the country to divest itself from GM, but the whole Government Motors tag isn't going to go away if the country has to take a loss once all of the sales have been tallied.
4.Beneath the Surface
Microsoft is having a hard time getting consumers and analysts to warm up to its Surface tablet.
Last week it was Barclays Capital analyst Raimo Lenschow slashing his holiday quarter target from 2 million tablets sold to a mere 700,000 units. This came just as the software giant was broadening the retail distribution of the Windows RT tablet.
Has a week dulled the concerns? Nope.
This week it was Pacific Crest's Brendan Barnicle taking down his forecast for the current quarter from 1.5 million Surface units to just 1.2 million. Making matters worse, his target for fiscal 2013 -- ending in June -- has gone from 5 million to 3.2 million. So if coming up short by 300,000 this quarter is bad, selling 1.5 million fewer the next two quarters is terrible.
Surface needs a price cut on the Surface -- and next month's pricier Surface Pro -- before the more laptop-esque Pro units hit the market. Unfortunately, Microsoft may not be able to do that without infuriating its tablet hardware partners.
5. Bad to the Baidu
Analysts can be such killjoys.
Maxim Group initiated coverage of Baidu with a sell rating, slapping an $80 price target on China's leading search engine.
More than a few Wall Street firms have been beating down on Baidu while it was down, but the stock was actually rebounding when Maxim stepped up the pessimism. The stock closed above $100 for the first time in three months the day the coverage came out.
Maxim Group argues that margins will contract as Baidu reaches out to smaller advertisers and competition intensifies. Monetizing mobile usage -- and making sure that it's as strong in mobile as it is in traditional desktop search -- won't be easy.
There's merit to the concerns, but even if it means that Baidu's growth is decelerating, it's still trading at an earnings multiple that's a discount to its growth rate.
Baidu is bouncing back because it was too cheap. History hasn't worked out too well for analysts who decided it would be a nifty contrarian move to turn bearish on the former dot-com darling while it's ascending.
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The article This Week's 5 Dumbest Stock Moves originally appeared on Fool.com.Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Baidu, Facebook, and Microsoft and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Baidu, Facebook, General Motors Company, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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