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. Penney arcane
In a move that was long overdue, J.C. Penney Company, Inc. (NYSE:JCP) finally dismissed Ron Johnson as its CEO. The stock tanked on the news because the reeling department store chain merely fished out former CEO Mike Ullman to serve as its interim helmsman.
A dynamic CEO may come, but after the flashy Johnson fizzled, it remains to be seen if J.C. Penney Company, Inc. (NYSE:JCP) can be saved at all.
Johnson’s plan to do away with sales and couponing while remaking the stores by introducing “store within a store” brands hasn’t panned out. J.C. Penney Company, Inc. (NYSE:JCP)’s sales plunged 25% last year. We’re talking about $4.3 billion in net sales, and things weren’t going so well before that. Obviously. It’s why the company turned to Johnson in late 2011.
However, the red flags were there from the beginning. His refusal to move to Texas — and hiring many key executives who also raced back to their home states before the workweek was even over at a time when it should’ve been “all hands on deck” — was telling. Pushing out policies before testing them was arrogant.
Letting Johnson go may be the right thing to do, but let’s kick off the list this week with this item, because J.C. Penney Company, Inc. (NYSE:JCP) waited too long to act in the first place.
2. The fall and fall of Microsoft Corporation (NASDAQ:MSFT)
Consumers are becoming finicky maids. They don’t do Windows.
Trend-tracker IDC is reporting that PC shipments plunged 13.9% worldwide during the first quarter. This is the sharpest year-over-year drop since IDC began tracking quarterly PC shipments 19 years ago.
Microsoft Corporation (NASDAQ:MSFT) took a pounding because it’s clear that consumers no longer care about Windows as an operating system. Casual users are perfectly fine with the smartphone and tablet approach to computing, and it’s Android and iOS that are the mobile platforms of choice.
We live in operating-system-agnostic times, outside of those who still need PCs for work or play. It’s no wonder that Goldman Sachs downgraded Microsoft Corporation (NASDAQ:MSFT) after the IDC report was published.
1). MKM Partners analyst Michael Genovese argues that Research In Motion Ltd (NASDAQ:BBRY) is losing relevance after commissioning a survey that found few people were excited about Research In Motion Ltd (NASDAQ:BBRY)’s new BlackBerry 10 mobile operating system. He has a sell rating on the shares and a $10 price target.
2). Detwiler Fenton’s channel checks show that some retailers are taking in more returns of Z10s than they are selling now that the initial push is over. Research In Motion Ltd (NASDAQ:BBRY) went on to refute those claims in a statement.
3). ITG Research is arguing that the sales trend is quite weak for the Z10.
4). Pacific Crest analyst James Faucette may be slightly more upbeat, as his channel checks show modest sales of the new phone, but he’s not budging from his underperform rating.
Bulls will argue that the bearish analysts will only see what they want to see, but when so many start to chime in with unflattering perspectives, there’s often some kernel of truth in there.
4. Dry milk
Pandora Media Inc (NYSE:P) may have hit a meaty milestone this week, but it only illustrates how poorly it’s been doing in milking revenue out of its audience.
The leading streaming service announced that it has now surpassed 200 million registrations since the site was launched eight years ago. Half of those registrations have taken place during the past two years alone.