The Five Dumbest Things on Wall Street This Week

The Check's in the Mail The really big check, that is

1. 'Weill, Weil, Gotshal & Manges' Has a Nice Ring to It

On Thursday, Citigroup (C) recorded a staggering $4.95 billion charge to help extricate itself from bubble-era legal problems related to Enron and WorldCom.

Wow. Some companies aspire to $4.95 billion in income. Others aim for $4.95 billion in revenue. But for Citigroup, it's just a legal expense. A footnote. Unbelievable.

So here's our unsolicited advice for acquisition-crazed Chairman Sandy Weill: Forget about buying up all those banks you covet. The next time the company's money is burning a hole in your pocket, do yourself a favor and buy a law firm.

2. A Tip of the Red Hat

At Red Hat (RHAT), the hits just keep on coming.

Or, more accurately, the body blows.

It started a month ago, when the market reacted nervously to the totally innocuous news that CFO Kevin Thompson was resigning. The company said Thompson was merely pursuing "other interests," but the market was suspicious: Given the rough patch the software business is in, investors like to see sudden movements in the executive suite as much as highway patrolmen like to see them at traffic stops.

Things got worse a few days later when Red Hat missed first-quarter revenue estimates.

Fast forward to this Tuesday, when Red Hat said its auditors, PricewaterhouseCoopers, had objected to a revenue recognition policy Red Hat has employed for the past five years.

More alarming than the revelation of the now-discredited policy -- after all, who among us hasn't slid revenue forward 20 days every now and then? -- are some other disclosures the company made in the course of explaining the revenue problem to analysts.

First, though the company started out saying that PwC had brought the revenue problem to its attention on June 16, Red Hat said on the call that in fact, the problem had previously surfaced at some time in the distant past. "While prior discussions about the method had occured early on," said one executive, "it has only been since the discussions that commenced on the 16th that we understood the need to make this correction." For some reason, we don't find that comment reassuring.