This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Five Dumbest Things on Wall Street: July 31

Bartz's Boatloads

Yahoo! (YHOO - Get Report) CEO Carol Bartz guaranteed "boatloads of value" from its brand-new search deal with Microsoft (MSFT). Disappointed Yahoo! shareholders, however, want the "boatloads of money" she promised in May.

In a desperate measure to stem the growing power of Google (GOOG), Microsoft and Yahoo! finally agreed to combine forces Wednesday. The two have been dancing around the subject since 2005, yet it took Bartz just six months to ink an agreement that both her predecessors, Terry Semel and Yahoo co-founder Jerry Yang, spent years avoiding.

Unfortunately for Yahoo! shareholders, this great conciliation between the Internet powers -- following years of frustration and aggravation -- has not removed the one constant from this drawn out affair: deprivation. Yahoo! stock dropped 12% to around $15 on news of the accord as shareholders grew dismayed over the lack of an upfront payment.

Wait. Let us clarify that. We should say those remaining shareholders that did not already throw in the towel last year when Yahoo! rejected Microsoft's $47.5 billion buyout offer. Yahoo's market value currently stands at about $22 billion.

Bartz, nevertheless, says now is absolutely the wrong time to give up on Yahoo! and accuses the naysayers of being too ticked off to read the fine print. In return for giving its search engine over to Microsoft's Bing, Yahoo! will pocket 88% of the revenue from all ads that run alongside search requests on its site for the first five years of the deal. Yahoo! estimates the deal will boost its annual operating profit by $500 million, while saving it nearly $200 million on annual capital expenditures.

"I think the market hasn't figured out that there's not much I can do with an upfront payment," said Bartz in a Wednesday interview. "What am I going to do with it? Collect interest on it every year? That doesn't help me."

That's an eye-opener even for us. We've been at this for a long time and we've never heard a CEO speak so disdainfully about the market's collective wisdom, or being on the receiving end of a lump of cash. And we've certainly never encountered a CEO who couldn't figure out to do with a bundle of money suddenly thrown at her feet.

Bartz's bet may end up paying off in the long run. But right now her investors are clearly saying that a boatload of cash in hand is worth two in the bush.

Dumb-o-meter score: 85 -- Bartz's ship better come in. Or else she'll be walking the plank.

3 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ATVI $22.93 0.00%
BBY $39.79 0.00%
TTWO $25.05 0.00%
YHOO $43.99 0.00%
AAPL $128.54 0.00%

Markets

DOW 18,096.90 -106.47 -0.58%
S&P 500 2,098.53 -9.25 -0.44%
NASDAQ 4,967.1410 -12.76 -0.26%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs