This Week's 5 Best Moves and Blunders in Business

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Starbucks 7 dollar geisha coffee blunderCompanies can do brilliant things, but there are also times where they fall flat on their faces. Sometimes CEOs can save the day, but at other times, they say and do the darndest things.

There were plenty of winners and blunders this week. Let's check out some of them.

Starbucks (SBUX) -- Blunder

We still live in economically sensitive times, but that won't stop the country's largest premium coffee chain from pouring you a $7 cup of Joe.

A small number of Starbucks stores are now serving Costa Rica Finca Palmilera -- brewed from a rare coffee bean of the Geisha variety -- at a whopping $7 for a 16-ounce serving. Even if these pricey brews are only being served at 46 specially equipped stores in the Northwest, putting them on the menu still sends the wrong message of pricing insensitivity.

Green Mountain Coffee Roasters (GMCR) -- Winner

Shares of the company behind the Keurig single-cup brewer soared 27 percent on Wednesday after posting blowout quarterly results.

Investors might want to slightly rein in their excitement over the 33 percent revenue jump and the 36 percent growth in adjusted earnings: An extra week in the reporting period padded results. However, analysts did account for the extra week in their forecasts -- and they were woefully conservative.

Despite the recent expiration of patents related to its once lucrative K-Cup portion packs, Green Mountain still predicts 15 percent to 20 percent revenue growth in the year ahead.

Costco (COST) -- Blunder

A lot of companies have been stepping up with special one-time dividends, and rightfully so. Tax rates on qualified distributions that currently max out at 15 percent are about to get sharply higher come January.

But how far should a company go to make such a payout possible?

Costco announced a $7 a share dividend, but it will cover the $3 billion tab by raising $3.5 billion in debt.

Why, Costco? The warehouse club is usually far more on-the-ball than this. Sure, it's getting the funding at some crazy low rates given its proven pedigree. It's just odd to see a company that already has ample cash on its balance sheet declare a dividend that it will be paying off over the next few years.

SodaStream (SODA) -- Winner

Controversy sells. SodaStream's first global television commercial ran into a roadblock in the U.K. with regulators blocking the ad. The soda maker's banned TV spot -- already airing in the U.S., Australia, and Sweden – shows hundreds of two-liter bottles exploding whenever someone activates the carbonation process on a SodaStream machine.

British advertising authorities felt the spot was too disparaging to soda bottlers, even though none of the exploding bottles are branded.

SodaStream was able to milk the free publicity behind the ban, and this week rolled out an ad where the original audio track plays but the visuals consist solely of white text on a black screen. The ad closes with the suggestion that the actual ad can be found on YouTube.

Microsoft (MSFT) – Blunder

What attack ads lack in class, they often make up in effectiveness. Microsoft knows all about this with the "I'm a Mac/I'm a PC" ads from a few years ago. Now, it's Microsoft's turn to take a potshot ... at Google (GOOG).

Microsoft rolled out the website Scroogled.com, which takes Google to task for its tweaked Google Shopping website. The comparison shopping website now consists solely of paid advertisements, and Microsoft launched Scroogled.com to point out how Bing is the place for "honest" search.

There's a problem, though.

As Search Engine Land's Danny Sullivan rightfully points out, Microsoft is now requiring merchants to go through Shopping.com to get listed on its shopping portal. That's a site that requires payment to join, and even Microsoft's own page points out that paying merchants gain "higher visibility" on Bing Shopping.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for SodaStream and Green Mountain. The Motley Fool owns shares of Costco Wholesale, Microsoft, SodaStream International, and Google. The Motley Fool owns shares of and has written puts on Starbucks and has created a synthetic short position on Green Mountain Coffee Roasters. Motley Fool newsletter services have recommended buying shares of Starbucks, Google, Green Mountain Coffee Roasters, Costco Wholesale, and SodaStream International. Motley Fool newsletter services have recommended writing covered calls on Starbucks, creating a synthetic covered call position in Microsoft and creating a bear put spread position in Green Mountain Coffee Roasters.




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pasturemuffins

Starbucks..."putting them on the menu still sends the wrong message of pricing insensitivity." I have the same problem with the Audi I am in love with, those insensitive louts at Audi want over $80,000 for this car. I think that sends the wrong message to the public. Since when did sensitivity become pivotal in selling a cup of coffee to someone who would gladly spend that much for it anyway? Now excuse me, I have to go brew a pot of Starbuck's Sumatra at only $14.00 a pound...that's more pleasing to my fragile and tender sensitivities...

December 01 2012 at 6:01 PM Report abuse rate up rate down Reply