Task Serves Up This Year's Biggest Turkeys

Gobble, Gobble

SAN FRANCISCO -- In preparation for that great American tradition of eating, football and more eating, we present the "Turkey Awards" -- the annual rundown of Wall Street's biggest flops and foibles. As we poke a finger into the giblets of some of the financial world's biggest birds, please remember: The idea is to be thankful for what we've got or -- in some cases -- what we didn't have.

The U.S. Department of Justice is this year's biggest turkey. In what is purportedly a capitalistic society, the government went after Microsoft (MSFT), the greatest wealth-creating entity in history. Why? Maybe it was all the whining (and lobbying) by executives such as Scott McNealy of Sun Microsytems (SUNW), Steve Case of America Online (AOL), Larry Ellison of Oracle (ORCL) and Jim Barksdale of the firm formerly known as Netscape. Along with the oh-so-proud-of-themselves DOJ officials -- namely Assistant Attorney General Joel Klein and bosswoman Janet Reno -- those execs certainly deserve a few "gobbles" for not having enough faith in their firms and the market to sort out the winners and losers.

A big hunk of white meat also goes to Microsoft for not having enough faith in the open market to sort out the winners and losers, and for failing to understand that you can't operate in the same manner you did as an upstart when you've become the dominant player in a maturing industry.

Maybe that sounds like I'm trying to have both drumsticks (and eat 'em, too), but I believe the forces of the free market -- a.k.a. the Internet, open-source coding, PC makers' need to cut costs, wireless technologies or a combination thereof -- would have ultimately shifted the balance of power away from Redmond, Wash. If they haven't already.

Tyco International (TYC). The company denied any wrongdoing, but its stock is still down 20.8% since a noted short-seller published a report critical of Tyco's accounting.

Speaking of the dreaded accounting "irregularities," McKesson HBOC (MCK) revealed its share this year. No surprise, then, that the stock is down 71.7% year to date. Fellow pharmaceutical distribution firm Bergen Brunswig (BBC) also makes the list of year's biggest percentage losers (among stocks with market caps of at least $500 million), down 77.4%. Earlier this month, Bergen Brunswick fired its CEO after its earnings disappointed because of problems at two recently acquired subsidiaries.

But maybe there's something else infecting health care and related companies. Be it acquisitions gone wrong (a common theme), concerns about Medicare reform, misguided business strategies or (imagine?) competition from Internet upstarts, the list of this year's biggest losers is littered with companies involved in various segments of the health-care industry. See the table for some of the more sickly.

Bad Medicine
Company	Prime business	Percent decline, year-to-date*
Rite Aid (RAD)	Retail drug-store chain.	-82.7%
Total Renal Care Holdings (TRL)	Dialysis centers.	-76.3
Henry Schein (HSIC)	Dental equipment supplier.	-70.4
HealthSouth (HRC)	Rehabilitative health- care/outpatient surgery.	-64.8
Covance (CVD)	Commercial drug testing and trials.	-63.3
Omnicare (OCR)	Pharmacy services for nursing homes.	-61
AmeriSource Health (AAS)	Wholesale drug distribution.	-62.1
Quintilies Transnational (QTRN)	Testing and marketing services for drugmakers.	-56.8
Humana (HUM)	Health maintenance organization.	-58.2
*Through close of trading Nov. 24. Source: ILX.

Ouch. That's almost as unpalatable as dry bird with no gravy.

The 30-year Treasury bond, as of Monday's close, was just 1 basis point off its 1994 pace, according to Jim Bianco, president of Bianco Research. Thus, "with five weeks left, we're still in the hunt for this to be one of the worst years ever," he said.

The losses this year are "concentrated" in the 30-year bond, vs. 1994 when all fixed-income classes plummeted, Bianco noted. But that doesn't excuse bond bulls (and "New Era" proponents) such as Brian Wesbury of Griffin Kubik Stephens & Thompson and John Ryding of Bear Stearns from having to do the funky turkey.

Many financial stocks have been hampered by the bond market's struggles, including Bank One (ONE), which also had a pesky problem in its credit-card division. The firm's shares are down over 30% year to date.

Y2K has also laid a big (turkey) egg this year, going from Apocalypse Now-type peril to a bad made-for-TV movie that almost nobody watched. Bianco noted there were reports Federal Reserve officials made it clear that banks would have ample liquidity if the NBC "extravaganza" last weekend prompted a run on ATMs. So if the Fed is using the TV listings as part of its policymaking decisions, I wonder how it feels about the runaway success of "Who Wants to Be a Millionaire?" Also, is "Y2K=disaster" proponent Ed Yardeni of Deutsche Bank Securities going to feel like a cannibal at Thanksgiving?

Speaking of averting disaster, a big turkey to all those stock-market prognosticators who've been forecasting doom for much (if not all) of this year, including Barton Biggs of Morgan Stanley Dean Witter, Gail Dudack of Warburg Dillon Read, Bill Meehan at Cantor Fitzgerald and Don Hays, formerly of Wheat First Butcher Singer. Perhaps time might prove their "the sky is falling" warnings prescient. But for now, they are the "Turkey Littles" of the investment world. An honorable gobble goes to Ronny Kraft of Gotham Capital Management for his bold but boneheaded "crash" call on Sept. 8.

Which brings us to the final category. TheStreet.com Internet Sector index is up 138% year to date, and Red Hot JDS Uniphase (JDSU) is up over 580%. But online plays such as TheGlobe.com (TGLO), uBid (UBID), Cyberian Outpost (COOL), Beyond.com (BYND) and TicketMaster Online-CitySearch (TMCS) have not only failed to keep pace, they're each down more than 40%. Meanwhile, shares of 1-800-Flowers.com (FLWS) and FTD.com (EFTD) have stunk up the joint like your Aunt Frieda's cauliflower and tuna casserole (for those who don't like turkey).

And before you send that snide email, please note I'm forbidden to write about a certain online financial news provider in which I'm an investor.

Happy holidays.

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