The Five Dumbest Things on Wall Street This Week

2004: An Odyssey Health Odyssey DOJ on the way

1. I'm Just Thinking of an Unrelated Thing

Employees sometimes find it hard to drag themselves into the office Monday morning. This week, though, it was a little harder than usual for one executive at Odyssey HealthCare (ODSY Quote).

On Monday, the hospice operator issued a classic bad-news press release. It said third-quarter results would come below analysts' expectations. It lowered guidance for the year. And it announced that David Gasmire -- president since 2001 and CEO since January -- had decided to leave the company.

Odyssey's shares dropped 47% in a single day.

Oh, yeah -- there was another piece of bad news. "In an unrelated announcement," as the company put it deep down in its Monday morning press release, Odyssey disclosed that the Justice Department had begun an investigation under the False Claims Act. The probe covers payment claims submitted to the government since 2000 as well as patient admissions, patient retention and billing practices.

That's an "unrelated announcement"? You know, from the outside looking in, you don't have to be a conspiracy theorist to wonder whether Gasmire's departure had just a little something to do with the DOJ warning. But Odyssey says no. The DOJ's move "is totally unrelated to any management change here," Chairman Dick Burnham told analysts Monday.

Maybe he's right. Maybe the DOJ thing played no role in Gasmire's wanting to leave. On the other hand, we can't imagine it was something he wanted to stick around for, either.

2. Not Bad for a Day's Work

The big news at Kmart (KMRT Quote) this week was that President and CEO Julian Day resigned Monday.

Actually, the really big news was the going-away package that Day received after his two and a half years as president of the discount retailer chain: options worth as much as $120 million, The Wall Street Journal estimates.

Hey, mom! Can I resign from Kmart, too?

Pay Day No cut-rate deal for ex-CEO

Whether Day deserves all this money is up for debate, of course. He may be making a lot of dough, his supporters might say, but he made dough for shareholders too, leading the company out of bankruptcy and quadrupling its stock price over the past year.

What we remember is three years ago, when Kmart lent $30 million to executives as part of a pre-bankruptcy "executive retention program" -- a program that ended up in a mess of unretained executives and unpaid loans.

Yep, at Kmart they sure know how to get everything cut-rate. Except for an executive.

3. Some People Call Me Milhous

Last week, AIG (AIG Quote) was caught up in Eliot Spitzer's probe of insurance industry sales practices. This week, it disclosed that a grand jury was investigating a previously SEC-investigated deal with telecom firm Brightpoint (CELL Quote).

You would sort of think that AIG CEO Maurice Greenberg has enough bad news to keep him busy.

But no, there's more: On Thursday, Greenberg had to endure the honor of a well-meaning analyst's indirect comparison of him to Richard Nixon.

Yep. That's exactly the kind of positive-spinning public relations this company needs.

"Back, I guess it was in 1974, you had Richard Nixon do something that was flawed, and it led to a change in U.S. government," Credit Suisse First Boston's Charles Gates analyst said during the question-and-answer portion of AIG's earnings call. "And that thing, the Watergate, amounted to nothing in total. ... Do you believe that there is any parallel there vs. basically what's occurring now with regard to either one, Spitzer, or two, whatever is Brightpoint?"

After Gates, plagued by a poor phone connection, repeated his question, Greenberg responded, "I do not believe that any of the current issues that have been raised will have a dramatic effect long-term on AIG."

Nixon's press secretary, let's recall, once dismissed the Watergate break-in as a "third-rate burglary." We'll have to wait and see to discover whether Greenberg is similarly accurate.