The Five Dumbest Things on Wall Street This Week

1. For Fans of Clarity, a Red-Letter Dave

We've got a big shout-out for Dave Pottruck, who stepped down Tuesday from his post as CEO of ailing broker Charles Schwab ( SCH).

See, we've spent weeks complaining about how companies regularly dispense euphemistic, truth-evading non-explanations of why top executives are unexpectedly exiting their well-paying, highly responsible jobs. Judging from the usual press releases, it's as if there's an epidemic of execs who suddenly realize it's time to spend more time with their families or pursue other interests.

But when it's Pottruck's turn to hit the road, does he mince words? No. "The last few years have been difficult in the securities markets," he says to the world, "and I accept the Board's decision that it's time for me to step aside."

In other words, Pottruck is leaving because the board told him to get the hell out. You can't ask for greater honesty than that.

2. Weigh in on Microsoft's Giveaway

Attention all you Microsoft ( MSFT) watchers out there: It's time for a reader contest. Yes, it's time to put your mouth where Mister Softee's money is.

For lo these many years, you see, the colossus of Redmond has has insisted it couldn't possibly hand out its cache of cash to shareholders. No, it had big plans for that money, big plans. Maybe it would all fly away in lawsuits. Or maybe the company would use it to buy something really special with it.

"The long-term goal of our cash is to utilize it for our business," Microsoft treasurer Greg Maffei told The Wall Street Journal seven years ago. "We look to make investments where we think it's a good strategic value as well as a good equity investment."

So this week, what grand idea does Microsoft come up with for what to do with the $56 billion it has on hand? Why, exactly the same thing people have been telling it to do with that money for years: Give it to shareholders. Microsoft said Tuesday it plans to pay out $75 billion to shareholders over the next four years, via a $32 billion special dividend, a $30 billion buyback and a pumped-up regular dividend.

Lab Clearinghouse Sweepstakes
No, you don't get cash

A good idea. But as far as the Five Dumbest Things Research Lab is concerned, it's not good enough. After all these years, we think Microsoft could have come up with something more original on the subject. We know you can.

Which brings us to the latest on our sporadic series of reader contests. We call it "Where Should Microsoft Have Stuck its Money?"

To enter, all you've got to do is tell us what Microsoft should have done with its money to get a better return for shareholders. Send your idea, plus a brief explanation, to the research lab, in care of Entries will be judged on the basis of originality and creativity, but not practicality. Brevity is appreciated. Keep it clean.

The winning entry will win a lovely baseball cap signed by James J. Cramer himself. Decisions of the judges are both capricious and final.

3. Finds a Floor

And this week's "The Guy Can't Help It" award goes to ( CRM), the customer relations management service firm headed by extraordinarily efficient Dumb-Thing-generator Marc Benioff.

Benioff, you'll recall, was the guy who had to apologize for printing up a poster implying that the Dalai Lama was a satisfied customer of salesforce. com. He was also the guy who forced a postponement of his company's IPO by chatting up's rosy future. (It ended up debuting June 23 at $11 a share.)

So what does Benioff do this Wednesday? Why, he comes to New York to conduct an analyst day, and to hold a cocktail party. And where does he do it? Why, at the New York Stock Exchange?

And how does the company's stock trade on the NYSE that very day? Why, after jittery investors hear of's guidance below the three-analyst First Call consensus, the company's shares tank like the rest of the tech market, dropping $4.36, or 27%, to close at $11.70.

Drink up, folks! Time to party like it's 1999.

4. Waking Up From a Bad DreamWorks

Just this past weekend, we at the research lab went out to see Shrek 2. It was great. Undeniably high-quality stuff.

But then Wednesday rolls around, and Shrek 2 producer DreamWorks Animation goes out and files for an initial public offering.

Talk about an unhappy ending.

You see, we had always thought that Atlantic City and Las Vegas were the national capitals of separating suckers from their money.

Now that we've looked at the DreamWorks Animation IPO filing, however, we have to remember to include Hollywood in that list of dollar-draining cities.

It's not that Shreks 1 and 2 aren't great. They are. And they made a decent amount of money, too.

The problem is everything else. Shrek 2 has done $425 million in domestic box office receipts, yes. But the other seven movies DWA has released theatrically -- ranging from the hit original Shrek to the turkey known as Sinbad: Legend of the Seven Seas -- garnered an average of $102 million. (We assume the eighth prior title, the straight-to-video Joseph: King of Dreams, would have brought the average down from there.)

IPO Pipe Dream
Does Shrek get options?

Not bad. But what's clear to us is that DWA is timing the IPO to ride the wave of extraordinarily good results, not average ones.

And that average performance is something to be worried about. Over the past three years and a quarter (which excludes the boom times of Shrek 2), the company has shown an operating loss of $75 million and a net loss of $242 million -- a $157 million loss even if you charitably net out cumulative effects of accounting charges.

And, as DWA notes in the "Risks" section of its offering, the company's nine-title library is "insubstantial" compared with major movie studios' film libraries, which typically contain hundreds, if not thousands, of old titles. Those older flicks -- the studios' equivalent of a trust fund -- "can provide a stable source of earnings and cash flows that offset fluctuations in the financial performance of newly released films."

In other words, DreamWorks Animation is poised to have a much more erratic financial performance than its rivals -- quite an achievement in an industry known for its erratic financial performance. And like a lot of other folks who seek to raise money from the general public, the company has a keen sense of smelling the top of the market.

5. Grasso and Spitzer Go Head to Head

What with New York Attorney General Eliot Spitzer having sued former New York Stock Exchange Chairman Dick Grasso back in May, and what with Grasso filing a counterclaim Tuesday against the NYSE -- well, you'd almost get the feeling that Spitzer and Grasso are growing apart.

A Little Off the Top
Hair you go again
Source: The Wall Street Journal

Not true. Like a bickering couple in their fourth decade of marriage, Spitzer and Grasso actually share more with one another than they'd admit.

It's the baldness, of course. Grasso -- he of the famously wedge-shaped, trapezoidal skull -- is completely shiny on top. And Spitzer? Well, we couldn't help noticing this week that The Wall Street Journal replaced its year-old pointillist portrait of the AG with something that's, um, a little wispier on top.

The AG's office didn't respond to a request for comment on the changing face -- forehead, specifically -- of Eliot Spitzer. But a Journal spokesman says the new Spitzer portrait was drawn in April "to mix it up."

Hah! We assume that the revision was prompted by our observation in March that the Journal's dotted drawing of Spitzer wasn't quite up to its usual standards, hairline-accuracywise.

So who says crusading reporters can't reveal a true picture of Wall Street? Not us.

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