This Week's 5 Dumbest Stock Moves
Jul 20th 2012 10:04AM
Updated Jul 20th 2012 4:10PM
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. Learning the hard way in China
New Oriental Education (NYS: EDU) flunked out on Tuesday after revealing the SEC was investigating its financial statements. Things got even uglier the next day when noted worrywart Muddy Waters posted a scathing critique of the company.
The leading provider of private education in China believes that the investigation concerns the company's accounting of Beijing New Oriental Education & Technology -- a variable interest entity -- in its earlier financial statements.
SEC inquiries are never a good sign, but there are always two sides to every stock story. There have been too many Chinese stocks lately that have come under attack for fraudulent financials, and investors tend to run at the first whiff of improprieties rather than wait for the company's defense. It's a shame here because New Oriental Education has been trading stateside since the summer of 2006. One would think that a proven leader would be given the benefit of the doubt, or at the very least not surrender more than half of its value until the facts are presented.
2. Architects, engineers, and teens seeking saucy video clips
Earlier this year there was buzz building for Socialcam. The free app that allows users to upload, edit, and share videos was being called the Instagram of video.
Autodesk may be getting a seemingly good price, but what is it doing buying Socialcam? Autodesk makes drafting and designing software used by architects and engineers. Does it really want to dabble in the finicky consumer market in an unrelated area?
Socialcam comes with plenty of baggage. It's been accused of ripping off trending YouTube videos. It's an annoyance on social networking websites, since checking out a clip often means revealing to everyone in your news feed what you watched.
Buying Socialcam may make sense for some companies, but Autodesk is biting off more than it can chew here.
3. Maybe everybody doesn't want an iPhone
Analysts rely on channel checks, supply chain inquiries, and surveys to stay ahead of the market in modeling corporate projections, but it's important not to read too much into the findings.
Piper Jaffray analyst Gene Munster issued a bullish note earlier this week, pointing out that a survey reveals that 65% of the participants plan to make Apple's (NAS: AAPL) iPhone their next purchase.
Munster's one of the sharper analysts when it comes to calling the world's most valuable tech company, but this survey seems suspect. For starters, it's comprised of just 400 participants, and 52% of them currently own an iPhone.
Trust me, half of the country does not own an iPhone. Android devices far outsell the iconic iPhone, primarily because they are cheaper and have several manufacturers and all wireless carriers selling them. It's still impressive that so many iPhone and non-iPhone owners want to make an Apple smartphone their next handset, but the survey's statistical relevance just doesn't seem to hold up this time.
4. TV party tonight
Viacom (NYS: VIA) and DIRECTV (NYS: DTV) have finally stopped squabbling, reaching an agreement that will finally return Viacom's 26 channels that went dark on DIRECTV over a carriage fee dispute for more than a week.
The two companies seemed to be closing in on a resolution on Tuesday, but then things got testy.
Viacom took the first public jab.
"DIRECTV has moved backwards significantly and created more obstacles to reaching an agreement," Viacom claims in a statement.
The country's largest satellite television provider countered with accusations that Viacom was demanding that DIRECTV pay an additional $500 million to carry the Epix premium movie channel.
Viacom disputed the claim, calling the $500 million demand a "complete work of fiction" on DIRECTV's behalf.
Meanwhile, DIRECTV's nearly 19 million customers had to do without Comedy Central, Nickelodeon, and MTV.
There was a time when the industry was so scared of cord cutters that these disputes were quickly resolved before the viewers were inconvenienced. They're getting cocky again. It's time to cut the cord again, or at the very least demand piecemeal pricing for the channels that folks are actually watching.
5. Siri needs a genius bar
The New York Times' Nick Bilton took some shots at Apple's voice-activated digital assistant in a recent Bits column.
Shots at the reliability -- and viability -- of Siri have been creeping up lately, and anyone who has tried to use Siri for anything other than a cocktail novelty would probably agree. Misunderstandings and a lack of actionable responses have hurt the platform's credibility.
Why is Apple spending so much money on Siri ads -- and now celebrity-studded Siri ads -- for a product that may not be casting the company in an ideal light in terms of quality?
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The article This Week's 5 Dumbest Stock Moves originally appeared on Fool.com.The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and New Oriental Education. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. 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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