The Five Dumbest Things on Wall Street This Week

3. Reverse Lickety Split

Nortel (NT Quote) is reversing course.

The Toronto-based telecom gearmaker rolled out its latest quarterly loss this week. Shares tumbled 11% Tuesday after the company said it missed even Wall Street's piddling penny-a-share profit estimate.

"We should and will be moving faster," CEO Mike Zafirovski explained. "Pricing pressures and the speed at which our revenues are shifting to next-generation early-cycle products is increasing our challenge to drive profitability improvements."

Nortel is moving right along with other improvements, though. The company said Tuesday it will become the latest struggling telecom-equipment maker to resort to a gimmick to make its flagging shares look healthier.

Like JDSU (JDSUD Quote) and Ciena (CIEN Quote) before it, Nortel will do a reverse stock split. That move, also called a share consolidation, will leave a holder of 10 Nortel shares with just one.

But oh, what a share it will be. Long-suffering Nortel investors haven't seen $20 since February 2001. But, starting Dec. 1, their stock will trade in those rarefied heights, up from a recent $2.13. The higher stock price, Nortel says, will "broaden interest to institutional investors and investment funds," as some funds can't buy shares below $5.

There may be other reasons funds aren't buying Nortel stock. The company said it lost $99 million, or 2 cents a share, for the latest quarter. But it stresses that the reverse split "is expected to increase investors' visibility into the company's profitability on a per-share basis."

Nothing to see here, folks.

Dumb-o-Meter score: 85. "True shareholder value will be driven by ongoing progress and company performance," said finance chief Peter Currie, "but this step helps create a better foundation on which to build."