The Five Dumbest Things on Wall Street This Week

4. Wendy's Frosty Reception

Wendy's (WEN Quote) looks fried.

The Dublin, Ohio, fast food chain cut its full-year earnings target Monday. Wendy's said sales in stores open at least a year rose just 0.7% in the second quarter. The company blamed a new pricing strategy for the shortfall.

"We believe our new market-based pricing approach is the right long-term strategy to generate more positive store operating margins," CEO Kerri Anderson said in a press release Monday, "but it has pressured transactions in the short-term."

Wendy's is feeling pressure from all sides lately. Activist shareholders have been demanding changes in the name of boosting the stock. Wendy's has duly shuffled management, spun off Canadian doughnut chain Tim Hortons (TMI Quote), sold Mexican chain Baja Fresh and bought back lots of stock. But the stock has failed to take off.

Wendy's isn't giving up, though. Under its latest effort to win over Wall Street, the company has taken to announcing once a month that it's up for sale.

The new plan seemed to work wonders back in April. Shares soared 16% in a day after Wendy's board formed a special committee to consider its options.

"The board's formation of the special committee," Chairman James Pickett said then, "is a positive step in Wendy's continuing efforts to further enhance value for its shareholders, franchisees and other stakeholders."

But the charm started wearing off in May, when the board said it hired J.P. Morgan and Lehman Brothers to oversee the sale process. That day, shares dropped about 0.5%.

So it was no surprise when Monday's press release, headlined "Wendy's to Explore Possible Sale of the Company," was poorly received. Shares sank 4% Monday and dropped again Tuesday as Moody's mulled a downgrade of Wendy's bonds.

Pickett isn't discouraged, though.

"While a sale remains only one of the alternatives under consideration," he said in a press release Monday, "we believe it merits more thorough examination."

If you ask us, Pickett's head is what merits a thorough examination.

Dumb-o-Meter score: 85. "Our employees and operators are producing improved results," Anderson said Monday, "but certain external factors have changed and are impacting results."

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