This Week's 5 Dumbest Stock Moves
byNov 4th 2011 9:50AM
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. It's not the cord that's being cut, it's the provider
Comcast (NAS: CMCSK) (NAS: CMCSA) can't shake the cord cutters. The cable television giant lost another 165,000 net video customers during the third quarter, having now shed 443,000 homes through the first nine months of the year.
This isn't a new problem for Comcast, having suffered net defections of 623,000 video accounts in 2009 and 757,000 in 2010.
Comcast can't point to streaming as the cause anymore. After all, Netflix (NAS: NFLX) shed a whopping 800,000 net domestic subscribers during the same three months. Cheaper rivals, including U-verse, actually gained new couch potatoes during the period.
Comcast can take heart in video revenue growing despite the diminishing customer base, but that's also the problem. Comcast doesn't realize that it's pricing itself out of the market.
2. A banker's retreat
Bank of America (NYS: BAC) finally did the right thing, bowing to more than a month of negative publicity and reversing its decision to begin charging customers that use its debit cards a fee of $5 a month.
I was going to tag this one of this week's smartest stock moves, but then I got to Tuesday's press release announcing the move.
"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," co-chief operating officer David Darnell notes in this week's announcement. "Our customers' voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."
Really? Did it take Bank of America this long to realize that its accountholders weren't happy or did it simply take this long to realize that "customers' voices" are important?
Bank of America is never going to catch a break. It was singled out by consumers in this year's MSN Money/Zogby customer service poll as the company that treats its customers the worst! Folks will always feel entitled as they view TARP's poster child, and that may not be fair to Bank of America, but it's no excuse for this laughable explanation.
Oh, and why does Bank of America need more than one COO?
3. BlackBerry sings the blues
Research In Motion (NAS: RIMM) launched its BBM Music app Wednesday, giving the beleaguered BlackBerry maker another reason to scratch its head in a few weeks when it realizes that folks aren't interested in paying $5 a month for streaming access to 50 songs.
BBM Music is RIM's half-baked attempt at mattering in social music, a niche that even smart companies haven't been able to master. Paying $5 a month is a lousy value proposition for 50 tracks out of a catalog of countless tunes, but the key is to get more friends to share the service, since you can also share their 50 songs.
Well, that's a problem waiting to happen.
"Folks can get pretty self-conscious when it comes to sharing playlists," I wrote earlier this week. "It's no longer about the 50 songs you want to hear. It's about the 50 songs that you want your friends to think you want to hear."
And, really, how often do you see someone with a BlackBerry jamming to music on their earbuds? It's the wrong product for the wrong audience.
4. Check please
OpenTable (NAS: OPEN) found a fly in its soup after posting disappointing quarterly results. It was the first time since the online dining reservations leader went public two years ago that it merely met Wall Street's bottom-line expectations. OpenTable's 40% top-line spurt may seem respectable, but not to the pros targeting a 46% gain.
This was also the first time in three years that the number of patrons seated through OpenTable dipped sequentially. Yes, that's a seasonal thing. Summer is a slow time for fine dining. Reservations dipped in the third quarter of 2008, were flat in the same quarter in 2009, and grew only slightly in 2010. However, when skeptics are taking shots at your model and your moat, why give them more ammo?
5. Sony and chair
Sony (NYS: SNE) is still a sinkhole. The consumer electronics company conceded that it will post its fourth consecutive annual loss this year. And it's going to be a $1.2 billion doozy.
Some will argue that we should give the Japanese giant a break. It just happens to be stuck in bad-luck businesses including record labels, TV manufacturing, and other ho-hum endeavors. However, it also made its own luck. PS3 hackings, exploding laptop batteries, and delaying an overpriced handheld gaming system will ding you every time.
If you want to track these companies to make sure that they don't make another dumb mistake soon, consider adding them to My Watchlist.
- Add Sony to My Watchlist.
- Add Research In Motion to My Watchlist.
- Add OpenTable to My Watchlist.
- Add Comcast to My Watchlist.
- Add Bank of America to My Watchlist.
At the time this article was published The Motley Fool owns shares of Bank of America and OpenTable. Motley Fool newsletter services have recommended buying shares of Netflix and OpenTable. 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.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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