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The Five Dumbest Things on Wall Street This Week

Chemical maker Bayer may be more of a bear than you think. Also, one CEO really speaks his mind.

1. Bayer Fighting the Bears?

One beneficiary of the anthrax scare has been

Bayer AG


, the German chemical maker, which has seen its share price gain 10.4% since the terrorist attacks. But investors bidding up the stock might be getting ahead of themselves.

Bayer makes Cipro, a leading treatment for anthrax. But while the demand for Cipro is high, sales from the drug are only a small portion of the company's overall revenue, which totaled 30.9 billion euros last year (and, according to analysts, will increase even more this year, due to its acquisition of Aventis CropScience, a crop protection and production company). To put the demand for Cipro in context, J.P. Morgan expects U.S. sales of the drug to be approximately 1.2 billion euros for 2001.

Even emergency purchases of Cipro probably won't add that much to Bayer's overall revenues. The president has asked for $643 million for antibiotics to combat bioterrorist attacks. While it's possible that sum will be increased, not all the money would be spent on Cipro.

Besides, it's not even clear that Bayer will remain the only producer of Cipro. Though the company holds the patent for the drug, there's some pressure in Congress for the government to purchase a generic version from other manufacturers.

On another front, Bayer is currently battling a class-action lawsuit related to an anti-cholesterol drug implicated in a number of deaths. It was forced to withdraw the drug from the market.

Bayer may offer protection against anthrax, but that doesn't mean it's a refuge for investors.

2. Losses at Twice the Price

You know things are bad for a company when its losses per share are double the price of the shares themselves. That's the case for

i2 Technologies


, the supply-chain software maker. After market close on Tuesday, the company

posted losses under generally accepted accounting principles that amounted to $5.5 billion, or $13.25 per share, for the latest quarter, including all charges.

In other words, i2's losses were more than twice the value of its share price, which closed at $5.69 before the announcement.

Much of the huge writedown reflects amortized goodwill from the purchase of Aspect Development in March 2000.

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To be fair, investors in companies that have made big acquisitions like i2 typically focus on pro forma earnings, which exclude charges and extraordinary items. By that measure, i2's losses didn't look quite so bad: The company met analysts' consensus expectations with a loss of $55.3 million, or 13 cents per share.

Still, investors met i2's earnings with disapproval, knocking the stock down 25% the day after they were reported.

3. Microsoft's Bag of Tricks

In times like these, there's comfort in knowing business goes on as usual at many U.S. companies. Just like the old days,


(MSFT) - Get Microsoft Corporation (MSFT) Report

is in the hot seat for its sharklike behavior toward a competitor.

It stands accused of sending 3,000 fake cereal boxes emblazoned with the words "Microsoft Server Crunch" to customers of rival server software maker Novell. The boxes, according to Novell, contained "a number of false and misleading statements" intended as putdowns of Novell products.

Among the attempted insults were some not-so-clever plays on packaged food. For example, in a reference to Novell's flagship software product, a line on the Microsoft boxes read: "What's the expiration date on that NetWare platform?" (A round of applause, please, for those gut-splittingly funny engineers.)

The boxes also said Novell is shifting its focus from software to consulting services, which Novell says isn't true.

Microsoft spokesman Jim Desler said the cereal boxes were primarily intended to advertise Microsoft services, not to slight Novell. "It was all in the theme of a mock cereal box," he said. "It was a modest campaign."

In response to Novell's complaints, he says Microsoft sent out a letter in September to recipients of the boxes to clarify some of its statements, and it's just agreed to send another letter to appease the company. For the record, Novell said it's not calling off its lawsuit for unspecified money damages.

4. AMD's Feisty Pledge

CEOs don't get their jobs by being eloquent, and it probably would be too much to expect them to sound statesmanlike. But sometimes their oratorical rough edges cross the line into embarrassing.

Case in point: Comments from Jerry Sanders, the CEO of

Advanced Micro Devices

(AMD) - Get Advanced Micro Devices, Inc. Report

, which earlier this week reported a loss for the first time in almost three years. The company, facing harsh pricing competition from


(INTC) - Get Intel Corporation (INTC) Report

, said its revenue was down 22% from a year ago and it expects a likely operating loss for the fourth quarter.

Given recent declines in consumer confidence, the downturn is likely to be extended by several quarters, Sanders admitted. But in a conference call, he indulged in some spirited fist-shaking. Citing the company's so-called "Hammer" architecture for processors, Sanders declared, "We feel that when the upturn comes, we're going to kick ---."

Does this guy carry around a surfboard in his car or what? Mr. Sanders, meet

Mr. Reeves.

OK, so we actually kind of admire Sanders' never-capitulate spirit. But his comment seems a little redundant, because just about everybody will look better when the economy turns around. Because that may not be anytime soon, what matters is how companies weather the interim -- feisty pledges notwithstanding.

5. Enron's Rabbit-From-a-Hat Style

Analysts have complained for some time about



rabbit-from-a-hat style accounting, with which the company produced results that wowed investors without making it quite clear where they came from. Now that its business has taken a sour turn, that tendency has gotten even more unsettling.

To cap off its disappointing earnings results this week -- Enron posted a steep loss after taking a $1.01 billion charge -- the company let drop that its shareholder equity had decreased by $1.2 billion.

In a conference call, CEO Kenneth Lay attributed the reduction in equity to the "removal of an obligation to issue a number of shares." According to a report in

The Wall Street Journal

, Enron repurchased 55 million shares issued through a series of transactions involving LJM Capital, a partnership that until recently was headed up by Enron's CFO.


Peter Eavis has

written that it appears Enron lent LJM money to buy Enron stock.

Ironically, the company boasted in its earnings release this week that it had expanded reporting of its financial results, presumably to quiet its accounting critics.

Enron's transactions have been so labyrinthine that it's hard to identify exactly if or how they were inappropriate. But the latest revelation, to say the least, does nothing to bolster the company's credibility. Enron, whose CEO resigned unexpectedly in August, had seen its stock fall 59% for the year leading up to its latest earnings release. Since then, it's dropped another 12.6%