The Five Dumbest Things on Wall Street This Week

Merck, Heal Thyself

1. Leaving Your Merck

As pharmaceutical giant Merck (MRK Quote) learned this week, sometimes defensive medicine is just a waste of time.

On Sept. 30, to refresh your memory, Merck pulled its blockbuster drug Vioxx from the market on the basis of evidence that the painkiller increased the risk of cardiac illness.

In the years leading up to the recall, Merck had publicly insisted that no link existed between Vioxx usage and increased risk of heart attacks. The about-face precipitated a 27% free-fall in the stock.

Sensing that more bad news was in the air, Merck issued a press release last Friday alerting investors that certain Merck documents related to pending Vioxx litigation -- including documents under court orders prohibiting disclosure -- had been made public.

"Past experience of other companies," said Merck, "suggests that documents will be presented out of context. ... As such, the documents, the surrounding events and the business practices of Merck may well be misinterpreted in any reporting."

Merck's shares fell slightly on the company's brief announcement, ending the day down 1%, and perhaps the company thought it had inoculated itself against the shock of additional bad news.

It didn't. On Monday, The Wall Street Journal wrote a 3,500-word story based on the documents -- a detailed article that, rather than simply presenting documents out of context -- used additional reporting to persuasively portray a Merck that fought vigorously to stamp out any suggestion that Vioxx could be linked to heart problems.

Shares fell $4.51, or 14%, over the next two days.

The problem for Merck wasn't that the documents were presented out of context. It was that they were presented in context all too well.

2. Oops, They Did It Again

Remember that Julia Roberts movie called Runaway Bride? The one where she kept getting engaged, only to ditch each groom at the altar?

Well, we've just found Julia's Wall Street counterpart: computer services company EDS (EDS Quote).

See, on Oct. 18, EDS announced it would hold an earnings call at 5 p.m. Eastern time Oct. 25.

Never a Bride

But at 4:42 pm Oct. 25 -- that would be about 18 minutes before the ceremony was to begin -- EDS got cold feet. Something to do with a possible impairment of assets.

No, it wouldn't be releasing earnings that day. Instead, it would postpone the conference call to this Wednesday, Nov. 3, at 5 p.m. No big deal, right?

Wrong. Once Wednesday evening rolled around -- this time, 54 minutes before the conference call was slated to begin -- the company backed out again. That asset impairment charge still hadn't been finished. And something else had come up, too -- something about "certain issues related to quarterly bonus plan accruals."

Perhaps having learned a lesson here, EDS declined to set a date for its next earnings release, other than to say it likely won't deliver it by the usual deadline.

Yes, EDS has always struck us as a promising company. Let's just hope they can stop promising and start delivering.

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