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.
Shares of Ebix Inc (NASDAQ:EBIX) tumbled nearly 27% yesterday after the worrywarts at Gotham City Research accused the insurance software provider of funky accounting.
The research firm admits that it stands to profit if the stock declines, but that doesn’t necessarily invalidate the accusations.
Would you discredit a bull’s opinions if they were backed by an ownership stake? Of course not.
Ebix has been here before. Copperfield Research accused the software company of cooking its books two years ago. Ebix must not have done a convincing enough job of defending itself if someone else is back to taking its accounting practices to task.
2. Playing both sides of the Research In Motion Ltd (NASDAQ:BBRY)’s BlackBerry
There doesn’t seem to be much of a consensus on the early success that Research In Motion Ltd (NASDAQ:BBRY) BlackBerry is having with the overseas launch of its new smartphone running on Research In Motion Ltd (NASDAQ:BBRY) BlackBerry 10.
Pacific Crest analyst James Faucette finds his channel checks indicating that Z10 shipments will come in between 275,000 to 325,000 phones during the current quarter. He’s reiterating his underperform rating, fearing that Z10 sales will come at the expense of cannibalizing the company’s older phones.
Canaccord Genuity analyst Mike Walkley, who was initially expecting Research In Motion Ltd (NASDAQ:BBRY) BlackBerry to clear 1.4 million Z10 units this quarter, also whittled down his target to just 300,000.
On the other end of the spectrum, Jefferies & Co. analyst Peter Misek feels that sales have been holding up well. His estimate stands at 500,000 Z10 phones during the quarter.
Analysts often have diverging opinions, but one camp is going to look awfully silly when Research In Motion Ltd (NASDAQ:BBRY) BlackBerry does report its quarterly results in a few weeks.
3. Office space
The combination of OfficeMax Inc (NYSE:OMX) and Office Depot Inc (NYSE:ODP) is brilliant. It helps two struggling companies team up, shave overhead, and last a little longer than either office supply superstore chain would on its own.
However, it’s impossible to ignore the boneheaded way that the news was inadvertently leaked.
News of the long-rumored combination was buried in Office Depot’s earnings release that went out on Wednesday morning. Office Depot had to embarrassingly retract the press release and the two companies issued an official merger announcement more than two hours later.
Thomson Reuters accepts responsibility for sending out the release prematurely. Unfortunately, there’s no vat of Liquid Paper big enough to erase the memory of this blunder.
4. The wrong way to roll out video ads
Facebook Inc (NASDAQ:FB) is working on a video advertising product, but it better not be too intrusive.
David Fischer — Facebook’s VP of marketing — gave a recent presentation in which he didn’t exactly shoot down the possibility of auto-play ads. These are the video spots that start playing the moment that someone loads up a website.
“Could Facebook run auto-play video ads without overly distracting users from their friends’ content?” he was asked.
