The Five Dumbest Things on Wall Street This Week

A holding company's fantasy and a chump-change Net scam are some of this week's beauts.
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1. Now Hold On, Holding Company

Former

GE

chief Jack Welch couldn't pull off the acquisition of

Honeywell

(HON) - Get Report

. But could a midget-sized holding company succeed in a bid to buy GE?

Not likely. Yet Ade Ogunjobi, the self-described CEO of the Los Angeles-based company Toks, filed a statement with the

Securities and Exchange Commission

Monday describing his grandiose plans to buy not only the venerable General Electric

(GE) - Get Report

, but also

General Motors

(GM) - Get Report

, Hughes Electronics,

AT&T

(T) - Get Report

,

AT&T Wireless

(AWE)

,

AOL Time Warner

(AOL)

, and

Marriott International

(MAR) - Get Report

in exchange for $2 trillion in stock and the assumption of all outstanding debt.

The SEC filing, which was rife with misspellings, said synergies between the seven massive U.S. companies could increase total revenues by $300 billion annually. Following its purchases, the report added, Toks might become "the largest U.S. public entity. Or the largest public entity in the world."

Ogunjobi's company, Toks, is not publicly traded, which would render any stock offers suspect. But the company says it is planning an offering of 20 shares at $5,000 per to be issued within the next month.

SEC spokesman John Heine said he couldn't comment on whether there would be an investigation in response to the filing. But under the Securities Exchange Act of 1934, it's considered fraudulent to announce plans to make a tender offer if the bidder can't afford it.

And we can assume Toks' financial resources are limited given that the filing, which included a corporate phone number, also explained that the CEO was the only person around to answer phone calls. Callers would have to be patient until he gets a chance to hire a receptionist, the filing explained.

2. What Passes for a 'Net' Gain These Days

You almost have to admire the twisted optimism of Internet scam artists, who persist in their vocation though many stocks in the sector are all but worthless. Yet, following the example of market analysts and economists, it seems even the fraudsters have had to lower their expectations.

Take, for example, a bogus press statement on

Yahoo!

Finance's Web page. The statement, which was intended to resemble a press release, said

Extreme Networks

(EXTR) - Get Report

planned to buy the outstanding shares of

Viasource Communications

(VVVV)

. Extreme Networks quickly denied the report.

Granted, the unknown source of the fake news managed to move the stocks -- but when nearly worthless stocks surge in value, they're still nearly worthless. In response to the news, shares of Viasource rose 44% on Monday, jumping from 9 cents to 13 cents.

Extreme Networks rose a meager 4.3%, closing at $9.23.

For the record, we don't miss the malevolent opportunism that characterized Net scams in their heyday. But we can't help but be struck by how pathetic a showing this is -- a little like bank robbers robbing an empty bank.

3. Another Xerox Blunder

It's no secret

Xerox

(XRX) - Get Report

has a reputation for sloppy accounting. Last spring, the company had to restate

earnings for the past three years, after it was revealed that it used a $100 million reserve inappropriately.

One might expect Xerox to do everything in its power now to tighten its accounting standards.

To the contrary, Xerox announced this week it had fired its auditor, KPMG, which had recently voiced concerns about the company's accounting practices.

In a statement, Xerox Chairman Paul Allaire said simply that the company had decided "it is appropriate at this time to bring in new accountants" -- in this case, PricewaterhouseCoopers.

By the way, the timing of the replacement wasn't great, either. Last month, Xerox announced it had created a new position of ethics chief who would clean up the company's image. Looks like that job just got a little more complicated.

4. Russia, an Investment Haven?

Call it the principle of unbounded financial gloom: When markets in one corner of the world crater, there's nothing to stop others from tanking, too. Global capital markets aren't a zero-sum game.

Yet the portfolio manager of one international fund recently suggested that now may be the time for investors to put money into the Russian market. "In an increasingly uncertain investment climate around the world, Russia stands out as a relative safe haven for investors," said a statement from John Connor, manager for the $3 million

(TMRFX)

Third Millennium Russia fund.

Connor explains that Russia has boosted its currency reserves and the economy is expected to grow more than 5% this year, a rare feat in the current global economy. And to be fair, Connor's fund has turned a nice profit in the Russian market: In its three years of existence, the fund racked up annualized returns of 22.1%. That ranks it in the top 4% of Europe funds, according to Morningstar.

But no matter how bad things have gotten in the U.S. and abroad, it's tough to buy the "safe haven" idea only three years after Russia defaulted amid the emerging markets crisis.

Or put another way: An investment in one consistently unstable, corrupt part of the world doesn't become any more inviting just because everything else starts to look wobbly.

5. Another 'Nonrecurring' Charge From Motorola

Another quarter, another nonrecurring charge from

Motorola

(MOT)

.

Investors have perennially groused that Motorola is too quick to use charges, making it difficult to compare its true performance from year-to-year and quarter-to-quarter. But this time the writedown was massive. For the third quarter, Motorola took a net charge of $2 billion.

The latest charge covers items that would seem to be a routine part of doing business, like impaired investments and "cost-reduction activities." In the past, the company also has taken charges to cover the cost of discontinuing products and downsizing manufacturing plants -- other activities that would seem to be standard business procedures.

Motorola has been nothing if not consistent: It's taken a charge for every quarter going back at least two years, including $496 million for the second quarter of 2001; $279 million for the first quarter of 2001; $68 million for the fourth quarter of 2000; $144 million for the third quarter of 2000; $355 million for the second quarter or 2000; $39 million for the first quarter of 2000; and $351 million for the fourth quarter of 1999. Combined with the latest writedown, that amounts to $3.732 billion, or 9.9% of Motorola's annual revenues for 2000.

Nonrecurring charges?

Riiiiight

.