5. Blyth's Catch-22
could somehow combine its candle-making and weight-loss businesses then maybe its shareholders will stop getting burned at both ends.
Blyth stockholders were less than blithe (the happy kind of blithe) this past week after seeing their shares plunge more than 40% to $25 as a result of a Moody's downgrade and the company's subsequent decision to abandon the IPO of its rapidly growing nutritional products division ViSalus. The ratings agency chopped its view of Blyth to "negative" from "stable" late last Thursday, citing concerns about the company's financial wherewithal once it completed its plan to spin off ViSalus. Moody's decision put so much selling pressure on the stock that Blyth ultimately announced on Wednesday it would cancel the offering and keep the division in house.
In case you forgot, news of the ViSalus IPO caused the stock to pop to a 52-week high of $46 in mid-August, a feat certainly enhanced by a vicious short squeeze. Since then, however, the company's stock has gently flitted lower until Moody's downgrade and its ensuing obliteration.
Hmm. Not to sound blithe (the callous kind this time), but this is one heckuva Catch-22.
The stock goes up on the original IPO announcement because the market knows that sales at ViSalus are on fire - and they want in. Revenue for its energy drinks and food supplements totaled more than $190 million in the second quarter versus $41 million last year. Furthermore, ViSalus claimed over 114,000 independent "Promoters" at the end of the second quarter versus 28,000 a year earlier.
Meanwhile, the company's PartyLite candle sales for the second quarter sank 13% to $86.8 million from $100.1 million last year. And, as one might expect, PartyLite's European sales came in even worse, dropping 16% compared to the prior period, in part because of currency translation woes.
In other words, Blyth's fragrance business stinks so bad right now that investors holding onto shares for the sake of gaining exposure to ViSalus -- hey, they could give the IPO another shot! -- have no idea whether to keep hanging on.
Oh man. Even we can't be blithe about a double-edged decision like that.
Or perhaps we just were.
4. Questcor Crumbles
Here's one for your 'Never catch a falling knife' or 'Trust a stupid analyst' files.
On Sept. 19, shares of
lost nearly half their value, falling to $26 from $50 after insurer
said it would limit coverage of the company's top-selling multiple sclerosis and infant seizure drug Acthar. The selloff was the stock's biggest one-day drop since November 1992.
For its part, the drug maker said it didn't expect a "material impact" from the change, notwithstanding the stock's shellacking. And for their part, the analysts covering Questcor took the company at its word and told their followers to scoop up the beaten-down stock with both fists.
Did they counsel 'safety first' in the wake of such a massive selloff? Were they worried at all that other insurers would follow suit, or fear that something deeper may be afoot? Did they extract any measure of restraint from the short sellers that comprise roughly 35% of the company's outstanding shares?
No, no, no and no. The ensuing research notes last Thursday from Oppenheimer, Piper Jaffray, ThinkEquity and Leerink Swann all screamed buy, buy, buy and buy. The selloff had created a once in a lifetime bargain they opined. The coast, in their learned view, was clear, and the worst, in their experience, was over.
Alas, that was not the case at all. And investors who threw caution to the wind and rushed into the stock based on these analysts supposedly sage advice quickly discovered that the coast was in fact craggy and the worst was indeed yet to come.
On Sept. 24, Questcor announced it was under investigation by regulators over its promotional practices, sending its shares down another 37% to $19. On the heels of that news, Questcor refused to name the agency undertaking the inquiry and said it would not be available for further comment.
Guess who subsequently downgraded Questcor due to this "uncertainty"? Guess who said the "investigation overhang" wasn't going away anytime soon? Guess who told investors to "move to the sidelines"? Guess who sliced his rating as a result of "reimbursement risk"?
Yes, yes, yes and yes indeed. Our friends, the analysts, had all abandoned Questcor's quest, a mere two trading days after pounding the table with bullish calls.
To which we say: Oh no, no, no and not again!
3. Musk's Macho Mess
Hey David Brooks, maybe next time Elon Musk should try keeping some of his "grand verbiage" to himself. Don't you think?
CEO, who was glowingly profiled by Brooks in an op-ed for
The New York Times
last week disappointed Wall Street Tuesday by slashing 2012 sales guidance for the electric car company because of lower-than-expected deliveries of its new Model S sedan. Tesla said it now expects its 2012 revenue to total between $400 million and $440 million, down from its previous forecast of $560 million to $600 million.
Shares of the company sank over 8% to $28 on Tuesday's news. The stock had run up beyond $30 in the prior weeks as a result of all the fawning media coverage about Musk and his "grandiose" (Thanks again Brooksy) space exploration plans.
A sales misfire wasn't the only thing slamming the stock though. Tesla also announced a secondary offering of 4.3 million shares of its common stock on Tuesday. And just in case the company hadn't flooded the market with enough stock, Tesla granted the offering's underwriter,
a 30-day option to buy an additional 651,740 shares.
That's okay though. If there is one thing the market is clamoring for, it's more shares of Tesla to sell short.
You thought we were going to say profits right? Wrong! Nobody expects those to hit until next year, if then.
No, it's the shares themselves that traders want. More than half of Tesla's shares are currently held in short accounts, so borrowing the stock to bet against Musk has become not only one of the most popular, but one of the most expensive wagers on Wall Street.
Not to forget one of the most personal, especially after Musk challenged his doubters in an
interview earlier this month.
"I think it is very unwise to be shorting Tesla, it's very unwise," Musk told Fox. "There is a tsunami of hurt coming for the shorts."
Sorry Elon, but judging from this week's action, it was less a tsunami for the shorts then a lot of babbling by Brooks.
2. RIM's Terrible Timing
Failure, like success, is all relative. Just ask the folks at
Research In Motion
The beleaguered BlackBerry maker apologized last Friday for a three-hour outage in Europe that echoed a similar widespread service disruption last October. RIM CEO Thorsten Heins said around 6% of the company's customers - or nearly 5 million users - may have experienced email delays.
"We are conducting a full technical analysis of this quality of service issue and will report as soon as it concludes," Heins said in a statement.
Cheer up old buddy. Look on the bright side, last year's four-day service disruption was far larger by comparison, idling the thumbs of tens of millions of frustrated BlackBerry users. So, relatively speaking, one might say that RIM is headed in the right direction considering the size and scope of its screw-ups are getting smaller!
(Along with the company's stock price, which has fallen more than 50% in the past year even after Thursday's
Chin up Thorsten. Things could be worse. You could be
CEO Tim Cook during last weekend's positively disastrous roll-out of its newest iPhone. Not only did Apple not have enough supply on hand to meet the massive demand, but it failed to meet Wall Street's exorbitant forecasts as well.
Apple announced Monday that it sold more than five million units of its new iPhone 5, just three days after its launch on Sept. 21. While that may seem like an impressive number, it was far below the targets of Wall Street analysts like influential Piper Jaffray analyst Gene Munster, who predicted sales of 6 to 10 million.
"While we have sold out of our initial supply, stores continue to receive iPhone 5 shipments regularly and customers can continue to order online and receive an estimated delivery date," said Cook. "We appreciate everyone's patience and are working hard to build enough iPhone 5s for everyone."
You see Thorsten! It's all relative. You wouldn't want to be that guy right now. Would you?
1. Intel Bugs Buddy
With best bugs like
, who needs enemies! Right Paul Otellini?
Wait! Did we say
? We meant buds, as in best buggies. Sorry, as in best buddies. That's what we wanted to say...You know what? Why don't we act like
and pretend we didn't say anything at all!
Addressing his troops in Taiwan, Intel's CEO said that Microsoft's Windows 8 operating system is being released before it's fully problem-free, according to a
report which cited an employee who asked to remain anonymous. Microsoft intends to release the newest version of its Windows software on Oct. 26.
Oh man. And Mitt Romney thought he had a problem with people leaking highly sensitive, yet viciously insensitive comments spoken at private gatherings. This slip of Otellini's lips is devastating because this is Mr. Softee's first version of Windows designed for touch tablets and it could sink Microsoft's plan to compete with
iPad this Christmas season.
Analysts were already wary of Microsoft introducing another Vista onto the market, so Otellini's comments certainly did not help reassure the Wall Street crowd that Microsoft had eliminated the kinks from its upcoming offering. Furthermore, since Intel is one of Microsoft's closest partners, Otellini's loose talk surely hurt his own cause especially since both companies are suffering from a truly horrific PC market.
That's why -- despite our friends at
saying so -- the whole thing never happened. Yep, according to an Intel press release on Wednesday, Windows 8 is critter-free and the two tech giants are as tight as ever.
"Intel has a long and successful heritage working with Microsoft on the release of Windows platforms, delivering devices that provide exciting experiences, stunning performance, and superior compatibility. Intel fully expects this to continue with Windows 8... Intel CEO Paul Otellini is on record as saying 'Windows 8 is one of the best things that ever happened to Intel,'" said the semiconductor giant in a truly strange statement.
You see. The whole thing never happened. Microsoft and Intel are still best bugs.
Damn. We meant buds. Sorry, we misspoke again.
Wait! No we didn't. The whole thing never happened. Right Paul Otellini?
Written by Gregg Greenberg in New York
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.