1. Dancing FoolCiti ( C) showed off some fancy footwork this week. The New York banking giant
2. The Skype Is FallingeBay ( EBAY) finally dropped the Skype hype. The San Jose, Calif., online auction company admitted Monday that its high-priced Internet phone acquisition hasn't worked out as planned. eBay
3. Bear MarketBear Stearns ( BSC) is firing away. The New York-based brokerage firm eliminated 310 jobs Wednesday in its mortgage origination business. The firm said it would combine two units into Bear Stearns Residential Mortgage, or Bear Res. "We have a powerful mortgage franchise, and this combination will allow our account executives better access to the full suite of products Bear Res can now offer," said Bear mortgage chief Tom Marano. "A hallmark of our franchise has been our ability to adapt to changes in the market environment and product demand." One change in the market environment is that demand has dried up for the subprime mortgages that Bear and rivals such as Lehman Brothers ( LEH) once issued in great volume. Investors fled after defaults spiked this past spring. Since then, mortgage issuers everywhere have been mostly limited to issuing mortgages that pass muster with government-sponsored investors such as Fannie Mae ( FNM). Those loans are much less profitable for issuers than subprime mortgages were. Leave it to Bear to paint the market's sharply diminished appetite for mortgage paper as a positive development, though. "Looking ahead, we will soon be expanding our product menu to include Fannie Mae, Freddie Mac and FHA loans," Marano said. "These additions will increase our capabilities and further allow our brokers to select the products that best meet their customers' needs." If only Bear had thought of that earlier. Dumb-o-Meter score: 88. "The combination will allow the firm to right-size the business to current market conditions and increase efficiency," Bear says.
4. Starved for AttentionNutriSystem ( NTRI) is on a crash diet. The Horsham, Pa., nutrition company saw its shares lose a third of their value Thursday after a round of disappointing profit guidance. Late Wednesday, NutriSystem projected third-quarter earnings of 62 cents to 66 cents a share -- down from its July forecast of 77 cents to 82 cents a share. NutriSystem appears to be losing customers to Alli, a diet drug launched in June by pharmaceuticals giant GlaxoSmithKline ( GSK). New customers in NutriSystem's direct sales business fell 7% from a year ago in the third quarter to 218,000 -- a decline that set off alarm bells with investors who have been buying NutriSystem for its fast growth. "We continue to be satisfied with our success in reactivating former customers," CEO Michael Hagan said, "but our performance with new customers, we believe, was affected by shorter-term competitive pressures which caused our marketing dollars to become less efficient." The company predicts Alli's gains won't stand, given the poor record of weight-loss programs that depend on drugs alone. Nevertheless, Thursday's selling left the stock at levels last seen at the end of 2005. The sharp drop suggests investors don't share NutriSystem's confidence in a rebound. "Though mindful of the heightened competitive factors surrounding our business," Hagan said in rolling out a $100 million stock buyback, "the combination of a solid financial platform and upcoming catalysts for growth in fiscal 2008 gives us confidence that the company's future remains strong." Too bad no one else seems to share that view. Dumb-o-Meter score: 78. An analyst at Canaccord Adams says Alli's gains suggest NutriSystem's business model is "broken."