The Five Dumbest Things on Wall Street This Week

3. Subtracting Value

ADC Telecom (ADCT) investors are already feeling buyer's remorse.

The Minneapolis-based networking company said Wednesday it would buy wireless rival Andrew (ANDW) in a stock swap initially valued at $2.04 billion.

Some observers questioned the logic of the deal, noting intense competition in the telecom-equipment business and the expanding might of customers like AT&T (T) and Verizon (VZ). But ADC and Westchester, Ill.-based Andrew see big opportunity.

"The strategic, operational and financial synergies of our two strong companies create a significant opportunity to grow value for our customers, shareholders and employees," said ADC chief Robert E. Switz.

Unfortunately, the deal has done anything but grow value for shareholders so far. The merger terms gave Andrew investors a 30% premium based on Tuesday's closing stock price. But ADC shares promptly plunged 20% Wednesday and 3% Thursday, wiping out the upside and knocking the deal's value down to $1.58 billion. Andrew shares sagged back to Tuesday's levels.

"With accelerating globalization and consolidation among telecommunications-service providers and communications-equipment suppliers," Andrew chief Ralph Faison said in Wednesday's press release, "now is the right time for ADC and Andrew to join forces and grow value as a world leader in network-infrastructure solutions."

We shudder to think how the market might have reacted at the wrong time.

Dumb-o-Meter score: 88. This is no way to grow value.