Wall Street Wackiness: Pointless Celebrations, Layaway Revivals, and Too Many TiVo Tuners

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TIVOCompanies do the darndest things, and last week was no exception. Consider these recent surprises, blunders, and flat-out boneheaded moves.

CEO Target Practice

Investors have a puzzling way of applauding change, as long as it's not happening to a market darling.

Yahoo! (YHOO) shares have climbed 12% in the three days since Carol Bartz was booted out. The stock's return during her 32-month tenure? A mere 7% gain.

However, last week's craziest round of applause came when Talbots (TLB) announced that it would be replacing its chief creative officer.

You know Talbots. It's the retailer where your mother -- or perhaps even your grandmother -- used to shop a couple of years ago. Well, times have changed, and things haven't been going so well for the clothing chain lately. Its latest quarter was a disaster: Talbots posted a wider-than-expected loss, and consolidated comparable sales plunged 10.4%.

This is the kind of report that would send the already-battered stock even lower, yet the market responded by making Talbots one of last week's biggest winners -- up 18% -- after the announcement of a shift at the creative helm.

But let's be frank: Talbots is not just one design or marketing breakthrough away from winning back its erstwhile shoppers.

Conn's Job

The market's hottest performer last week also rose despite dubious news.

Shares of Conn's (CONN) soared 53% higher last week, and it didn't even have to hire a new chief creative officer to get there. The retailer simply posted a better-than-expected profit before one-time charges, even if some of those charges came as the result of Conn's closing down three of its stores.

Yes, selling appliances, consumer electronics, and furniture isn't a gold mine these days. Consumers aren't outfitting their underwater homes with costly appliances and plush mattresses, and Conn's sales reflect that with a 13% decline over the past year.

Conn's targets low-income shoppers with its in-store financing and rent-to-own programs, so it's also taking on a fair amount of default risk from deadbeat dryer buyers.

I get the applause for stronger than projected net margins here, but is anyone else concerned that Conn's sales are going the wrong way?

Ho, Ho, Owe

For the first time since 2006, Wal-Mart (WMT) is offering cash-strapped shoppers a layaway option for the holidays.

From Oct. 17 through Dec. 16, shoppers can make installment payments for items they want to buy. Wal-Mart hands over the goods only after they have been paid for in full. It's easy to see why retailers have been kissing layaway goodbye in this era of swiped plastic. Someone who doesn't qualify for credit or debit cards can also simply stash the required money until they have enough.

To be fair, Wal-Mart isn't charging interest on layaway plans. It would have made a disastrous blunder if it did, since the interest should actually be flowing the other way (because it would be the company holding onto layaway funds before having to hand over the merchandise).

However, Wal-Mart gets bad marks on this move because it is instituting some peculiar fees on a throwback program that doesn't accomplish as much as it used to. The department store chain is adding a $5 non-refundable service fee and $10 cancellation charge for orders that either aren't picked up by Dec. 16 or cancelled by the buyer.

That mattress -- the lumpy one, not the new one at Conn's -- is starting to look better and better as a place to store holiday shopping money.

Tuners for Tubers

Contrary to popular lore, couch potatoes aren't born with eight eyes.

Along comes TiVo (TIVO) with an easy fix. It is introducing the TiVo Premiere Elite, a DVR with four tuners, so a television buff can record four different shows while watching a fifth channel at the same time.

This seems like a solution to a problem that doesn't exist. With so many streaming options these days -- and so few quality broadcast alternatives -- we might ask if there will ever be a time when someone has five shows that they just have to watch? And if someone is that glued to their TV, what are the chances that they can afford the $500 box and the monthly TiVo subscription?

I realize that this is a niche product for high-end boob tube fans, but it's a needless luxury in this era of on demand programming.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Yahoo! and Wal-Mart. Motley Fool newsletter services have recommended buying shares of Wal-Mart and Yahoo!.


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mikegaynes

Rick, you missed the point on that five-channel TiVo box. It's not for people who watch on-demand programming. It's for sports degenerates. Fantasy football is a national mania and gambling on games is bigger than ever, so tracking five pro or college games at the same time would be a dream come true for some of these crazies. Personally, I'm an addict of the "other" football, and by sheer coincidence I was reading your article while trying to program two TiVo DVRs on two different TVs to record simultaneous European Champions League games that start in about 45 minutes. I'm embarrassed to admit that if I could record four and watch a fifth, I would.

Sorry to cut this short, but I have to call TiVo.

September 13 2011 at 1:48 PM Report abuse rate up rate down Reply