Five Dumbest Things on Wall Street: July 31
Palm Loses Grip
Palm (PALM) successfully scaled the wall of worry. Now it needs to get a grip on reality.
The newly resuscitated smartphone maker, whose shares are up nearly 400% this year, was shocked to learn that Best Buy (BBY), the last real electronics retailer standing, spent last weekend practically giving away the Palm Pre, the company's last hope for survival. The Palm Pre generally retails for $199, but more than a few customers were treated to new ones for $99 after a slip-up in Best Buy's computer system.
The confusion started when a picture of an in-store banner promoting a week-long special of a $99 Pre with a two-year contract was mistakenly posted online. A Best Buy marketing manager tried to fix the problem by announcing the error on his Twitter page, but by then it was too late. Somehow the half-price deal was programmed into vendor systems and -- faster than you can say "blown profit margin" -- stores nationwide began selling the phone at the lower price.And that wasn't the only bizarre behavior affecting Palm last week. It also had to deal with Bono gone bonkers. As reported in the New York Post a week ago, U2 front man Bono has been out pitching for Palm's archrival Research In Motion (RIMM) in commercials for its BlackBerry smartphones. The TV spots for BlackBerry are linked to the release of U2's latest album, No Line on the Horizon. Bono could sing the praises of BlackBerry all he wants if not for one major problem: He's a major investor in Palm through the private-equity firm Elevation Partners. And as the Post points out, Bono's conflicted role could create a wave of lawsuits by other Palm investors who have bet big on the Pre. Not to mention its one-product parent. Dumb-o-meter score: 90 -- You too can get a half-priced Pre at Best Buy! And so can U2.
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