The Five Dumbest Things on Wall Street This Week

1. How Do You Spell 'Stupid?' V-O-N-A-G-E

Vonage ( VG) is getting one ringing endorsement after another.

Shares in the Internet-phone-service provider have dropped 42% since their May 24 initial public offering amid customer complaints and investor apathy. In response, the Holmdel, N.J., company is turning on the public relations charm.

"Vonage Named Best VoIP Service of 2006 by PC World," reads the headline on one recent press statement. "Vonage Receives Effie for Advertising Effectiveness," says another.

Vonage certainly isn't taking home any trophies for communicating with Wall Street. Late last Thursday, the company said the Federal Trade Commission (FTC) had closed its investigation of Vonage's 911 disclosures and compliance.

That might have qualified as good news -- except that it wasn't true. "Vonage has not ... received a closure letter from the FTC," Vonage explained in a correction notice after the market closed Friday. "Until the Company receives such letter, the FTC's inquiry into this matter remains open."

It's hard to know what Vonage was thinking by jumping the gun on the FTC. Luckily, the company explains its strategy in the Effie award release.

"Vonage's 'People Do Stupid Things' marketing campaign, which highlights some dumb things that people do, turned out to be a very intelligent brand direction for us," CEO Mike Snyder says. "It educated consumers on the new VoIP category, while urging consumers not to be stupid when selecting their phone service."

Don't worry, consumers. Vonage has the "being stupid" part covered.

Dumb-o-Meter score: 93. Great brand direction, guys.

To view Colin Barr's video take on Vonage's entry in Five Dumbest this week, click here .

2. Airbus: Just Plane Slow

The troubles at Airbus are giving Boeing ( BA) a nice lift.

Airbus, the European aerospace consortium, this week detailed a seven-month production delay for its huge A380 double-decker airliner. Airbus says "industrial issues" will cut scheduled 2007 deliveries of the new plane by more than half, to nine. The news sent shares of Airbus' publicly traded parent, European Aeronautic Defense & Space (EADS), down 26% Wednesday in Paris.

Airbus had already pushed production of the A380 back by six months. But the A380 isn't the only problem in Toulouse, where Airbus is based. The CEO of Singapore Airlines recently criticized the A350, saying Airbus' redesign wasn't sweeping enough to keep up with the competition.

Boeing has pushed ahead, ringing up orders for its fuel-efficient 787. Singapore Airlines on Wednesday ordered 20 new 787s, saying the airplane would "further its commitment to innovation and improvement in providing service, comfort and entertainment to customers."

Meanwhile, Boeing shareholders must be finding plenty of comfort, not to mention entertainment, in the ranting of Airbus' top management.

"We have a serious issue with the industrial ramp-up of the A380," said the co-CEOs of EADS, Tom Enders and Noel Forgeard, in an understatement Wednesday. "We expect Airbus management to fully deliver according to the revised schedule and, if possible, even to improve."

That shouldn't be hard.

Dumb-o-Meter score: 90. "This announcement came as a big blow," Forgeard said on a conference call, MarketWatch reports. "But we will create recovery."

3. Self-Tender Is the Night

The tenderhearted folks at Tribune ( TRB) are under attack.

Two weeks ago, the Chicago-based publisher rolled out a plan to take on a huge chunk of debt and buy back a quarter of its stock. Tribune says the $2 billion program will help it reinvigorate its languishing TV-and-newspaper portfolio. Critics say an underperforming, unimaginative management is simply entrenching itself at holders' expense.

Now the Chandler family, which through two trusts owns 12% of Tribune, is agitating for change at the top. The family signaled last week that it didn't agree with CEO Dennis FitzSimons' vision, and this week it called on the board to take charge.

The Chandlers want to put Tribune on the block if the company won't quickly split its publishing operations from its broadcast assets. They say FitzSimons' big buyback isn't the answer to the many questions looming over Tribune.

"Tribune's strategic missteps are now reflected in a market-valuation multiple that is well below its peers," a Chandler filing says, noting the stock's 47% decline over two years leading up to the self-tender announcement. "Management's self-tender is simply a financial device that increases the company's risk profile and undercuts the financial flexibility for necessary fundamental challenges. We believe that this sequencing -- financial structure in advance of strategy -- is backwards."

The Chandlers aren't alone in that view. Moody's became the latest agency to downgrade Tribune debt to junk Thursday, citing the buyback's balance sheet impact.

Tribune continues to stand by its plan, but some of its remarks smack of typical boardroom buck-passing.

"After receiving recommendations from management and the board's outside financial and legal advisors," lead independent director William Osborn said in a statement late Wednesday, "all the directors except those representing the Chandler Trusts approved the tender offer as being in the best interest of all shareholders."

Yes, only sound advice could have led to such a fine decision.

Dumb-o-Meter score: 85. "In a changing media environment, our commitment to quality journalism and service to our communities will continue to be a top priority," FitzSimons adds, deftly changing the subject.

4. Artful Dodgers

Don't be surprised if Michaels Stores ( MIK) leaves this week's clippings out of its official scrapbook.

The arts-and-crafts retailer conceded in a regulatory filing Tuesday that it may have understated compensation expense by $60 million between 1990 and 2001. In making the announcement, Michaels joins a string of companies trying to pin down stock-option accounting problems.

Michaels cited apparent backdating of options in certain "nonroutine" option grants. Backdating allows companies to increase option holders' gains by putting an artificially low exercise price on their shares.

The company, which is trying to sell itself, said it doesn't expect a restatement. But regulators are looking into the stock-option issue all across the market. Michaels says two shareholders have sued, alleging breach of fiduciary duty. The Irving, Texas, company already faces a host of other legal challenges, including a probe of trusts tied to the family of Chairman Charles Wyly.

And that's not all.

"As the Audit Committee's review is not complete and is ongoing as of the date of this filing," Michaels explains, "additional information may become available which could cause the current estimate of potential unrecorded compensation to change materially."

Sounds like some financial embroidery may have taken place at Michaels.

Dumb-o-Meter score: 78. The findings came just days after Michaels trumpeted that its audit committee had "initiated an internal review on a proactive basis into the Company's historical stock-option grant practices." Way to be proactive five years later, guys.

5. A Cold Day in Dell

Platitudes are plentiful lately at Dell ( DELL).

The Round Rock, Texas, computer giant is slumping after a decade of sparkling performance. Shares have fallen almost 40% over a year as earnings and sales growth have topped off.

A piece in Thursday's editions of The New York Times offers some insight into the company's troubles. The piece focuses on CEO Kevin Rollins' push to restart growth and boost profitability. But reader Frank Kilpatrick says the reason for Dell's decline is evident in comments by a lower-level exec, senior vice president for the Americas Joseph A. Marengi.

"There is a feeling of 'let's get this back to where it should be,' " Marengi confides to the Times. "It's basic business, but at the end of the day, there is a sense of urgency."

Yes, it's basic English, but that may be the most cliche-ridden comment ever.

Dumb-o-Meter score: 73. "Our goal is to provide the best quality and value to global customers like Unilever," the ever-insightful Marengi said in a press release last month.

In our award-winning effort to enrich the reader experience, the Five Dumbest Things Lab now scores each item using our proprietary Dumb-o-Meter. This cutting-edge technology employs a finely calibrated, 100-point scale measuring sheer Dumbness, as calculated via a closely guarded secret formula.

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