This Week's 5 Dumbest Stock Moves
Jan 25th 2013 11:19AM
Updated Jan 25th 2013 12:10PM
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. Apple jacked
Apple has a problem.
The stock tumbled on Thursday after posting disappointing quarterly results. Revenue clocked in lighter than expected. Net income was essentially flat. Gross margins were creamed.
Investors were braced for a sluggish holiday quarter, but what they got was even worse. Yes, Apple sold a ton of iPhones and iPads, but the marketplace no longer supports its once-juicy markups. Consumers are flocking to cheaper iPad Mini tablets and iPhone 4 smartphones.
Apple's guidance isn't comforting.
Yes, Apple's stock is historically -- if not hysterically -- cheap. There's apparently a reason for that.
2. Dividends as a burning platform
One of the best reasons to own Nokia -- it's chunky 5.5% yield -- is no more.
The Finnish handset maker is, ahem, finished with shelling out quarterly distributions, at least for now.
The move doesn't make a lot of sense. Nokia has billions in the bank, and it also stands to collect billions more in the coming years by supporting Windows Phone on its Lumia smartphones. Yes, Nokia has a challenging future ahead, especially as it tries to make up ground as global consumers move from Nokia feature phones to rival smartphones.
Does it really need to go into capital preservation mode now? Will investors buy Nokia on fundamentals alone? The wireless pioneer is coming off three straight quarterly deficits and analysts see another year of declining revenue in 2013.
The dividend was an important treat for patient investors -- and now it's gone.
3. Six Flags stuffs your face
Six Flags is introducing annual passes -- for your gut.
The regional amusement park operator is offering a Season Dining Pass at some of its parks this year, offering guests free select in-park meals for a single up-front price.
Since Six Flags Magic Mountain is one of the few parks already open in 2013, let's take a closer look.
For a hefty price of $99.99, a guest can enjoy one lunch and one dinner every time they visit the coaster-rich park through 2013. Six Flags is offering a wide range of eligible entrees across the park's many eateries.
Do you see the problem? It's not about the math. It's not about someone going every single operating day this year, grabbing roughly 500 meals for just $0.20 each. That's just not going to happen. However, Six Flags already has a reputation for selling cheap season passes to teens and young adults that just spend time at the park without really spending any kind of money. This isn't going to change that. If anything, it'll make lines longer for folks who are paying for concessions.
Sirius XM Radio will get a little more expensive for subscribers next month.
The satellite radio provider is telling its 23.9 million subscribers that its music royalty fee will be going up on Feb. 1. This isn't the published $14.49 a month that subscribers currently pay, which itself rose from $12.95 last January.
Sirius XM has been tacking on the music royalty fee on top of its monthly plans since 2009, and as its own obligations go up, the media giant is passing them on to subscribers.
The old rate of $1.42 a month will climb to $1.81 for the most popular Select and Premier pricing plans starting with next month's billing cycle.
It's true that Sirius XM had no problem passing through last year's basic rate increase. It closed 2012 with 2 million more subscribers. However, this comes at a time when paychecks are getting smaller given the payroll tax stimulus that expired last month. If consumers are on the fence, this may be what pushes them over -- especially for those that thought that the $14.49 a month they were paying was the all-inclusive price for the commercial-free music that they are enjoying.
5. RIM shot
Shares of Research In Motion hit new 52-week highs this week after its CEO told a European interviewer that the company is open to considering either licensing its mobile operating system or selling its hardware operation.
Cashing in by selling secondary businesses is smart, but why is licensing such a big deal? Android is free for handset makers, and cheap for consumers. Android's closing in on a billion apps.
If Android is giving Apple fits and leading Nokia to suspend its dividend, what kind of shot does RIM have? There's plenty obviously riding on next week's BlackBerry 10 media event, but "sell on the news" is starting to sound like the smarter trading strategy.
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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 position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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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