Week's Winners and Losers: EBay, HP Mishandle Bad News

www.ebay.com There were plenty of winners and losers in the business world this week, with the leading online auction site suffering a massive data breach and a streaming video service expanding overseas. Here's a rundown of the smartest moves and biggest blunders. eBay (EBAY) -- Loser A massive data breach at eBay was reported this week. Hackers cracked into eBay's database, gaining access to the names, email addresses, phone numbers, addresses and birthdays of its 233 million registered users. Passwords and payment information were encrypted, and are in all likelihood safe, but eBay is telling folks as they log into the site to change their passwords as a precautionary measure. Identity theft at websites and retailers is a major problem, but why are companies so slow to get the news out? The hack at eBay took place nearly three months ago, and eBay found out about it two weeks ago. Why did it wait until Wednesday to announce the breach? It also didn't mail its users, choosing instead to let them know about it when they logged into the site. Such situations are unfortunate, and unfortunately becoming more common, but companies need to own up to the breaches sooner and communicate with their customers more effectively when they happen. Netflix (NFLX) -- Winner The leading premium video streaming service is about to collect some more passport stamps. Netflix announced on Wednesday that it will be expanding into Germany, Austria, Switzerland, France, Belgium and Luxembourg later this year. The moves were widely expected. Variety spilled the beans on Netflix being in talks to enter France and Germany several weeks ago. After offering its digital platform in the United Kingdom and Scandinavia, the central Europe is a logical next step. Sears Holdings (SHLD) -- Loser Several out-of-favor retailers bounced back a bit this earnings season, but Sears wasn't one of them. The parent company of Kmart and its namesake department store saw sales fall 7 percent in its latest quarter. It generated a massive loss of $402 million, or $3.79 per share. Sales have been sliding and losses have been mounting for years. The company blamed weak consumer electronics demand for part of this quarter's soft numbers -- but who buys consumer electronics at Kmart or Sears? Management continues to naively cut costs and spin off assets instead of investing in the makeovers that are long overdue to rescue its tired store. It now concedes that it may have to close more than the 80 stores that it's in the process of winding down. GameStop (GME) -- Winner One of the out-of-favor retailers that bounced back this week was GameStop. The leading video game retailer posted better than expected earnings despite a sharp drop in sales of new software. Sales grew 7 percent to $2 billion as an 81 percent surge in hardware sales (mostly Xbox One and PlayStation 4 systems) offset a 20 percent plunge in new games. However, earnings per share still soared a better than expected 28 percent as the sale of pre-owned games improved during the period. GameStop has a sweet business in accepting trade-ins that it then refurbishes and resells at tidy markups. This is 30 percent of GameStop's business, but nearly half of its gross profit. It bucked the trend of slipping new software sales, and the end result is a welcome beat on the bottom line for the small box retailer. Hewlett-Packard (HPQ) -- Loser There are many ways to mess up a quarterly report, and the world's largest PC maker managed to check off on a lot of them. A page leaked onto its website, prompting HP to issue the entire press release with six minutes to go in Thursday's trading day. Companies historically wait until the market close so investors don't have to rush to hasty decisions on the numbers. HP also fell short of Wall Street's revenue growth expectations. The tech bellwether's revenue declined by 1 percent during the quarter. Finally, HP is going to be handing out more pink slips. It plans to eliminate between 11,000 to 16,000 jobs as it aims to shave costs. In short, it was bad news for investors and employees, and the news itself was divulged prematurely. That's a terrible trifecta right there. More from Rick Aristotle Munarriz
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