1. Last Stop on the Bus

Stan O'Neal finally got the hook at Merrill Lynch ( MER).

The brokerage firm's CEO stepped down Tuesday. Merrill directors had started pushing for O'Neal's ouster after the firm was forced last week into an $8 billion writedown of subprime mortgage loans and collateralized debt obligations. O'Neal didn't help matters by (not so) secretly pursuing a merger with Wachovia ( WB) that would have lined his pocket with millions of dollars in change-of-control payments.

News leaks over the weekend made it clear that O'Neal was finished, but his departure was delayed while lawyers hammered out the terms of his departure. And for O'Neal, the wait was well worth it.

Despite the huge writedown, Wall Street's expectation that Merrill still faces billions of dollars of future CDO-related losses, and the fact Merrill shares have lost nearly a third of their value this year -- the exec will walk away with a $160 million slug of stock, pension money and deferred compensation. This on top of the $48 million he pulled down last year and his $37 million payday in 2005. Plus, he gets an office and an assistant for three years.

O'Neal gets his sweet going-away package even though he steered Merrill into the teeth of the worst credit crunch in a generation. On his watch, the firm became the biggest underwriter of CDOs -- the esoteric debt whose collapse has left Wall Street firms with billions of dollars in losses this fall.

Adding to the absurdity, the deal allows O'Neal to say he "retired" from Merrill. The wording allows O'Neal to collect all his winnings while making his departure sound orderly -- a quaint notion belied by the fact that Merrill hasn't yet lined up a new CEO to take his place.

Indeed, former Merrill chief Dan Tully complained to Bloomberg this week that O'Neal's ruthless elimination of potential rivals left the firm shorthanded. He said that during his reign Merrill's board spent countless hours anticipating unforeseen executive changes -- an exercise he referred to as the "hit-by-the-bus scenario."

O'Neal had his own plan, though, and it didn't require any long meetings or elaborate flow charts.

He just pushed Merrill shareholders under the bus.

Dumb-o-Meter score: 95. Tully previously called O'Neal's $8 billion writedown mess "sickening."

2. Citizen Cayne

Jimmy Cayne, Bear Stearns' ( BSC) cigar-chomping CEO, may have bitten off more than he can chew.

Bear shares tanked Thursday on a report in The Wall Street Journal that Cayne was busy playing golf and bridge this summer while the firm's hedge funds collapsed. The article, citing people who were there, also said Cayne smoked pot in a hotel men's room in Nashville back in 2004.

Cayne denied that the marijuana incident happened, telling the Journal there's "zero chance" of such a thing. Bear Stearns also emphasized that Cayne isn't inaccessible to the firm when he's out on the golf course, even though he goes without a cell phone or email device.

Still, the exec felt compelled to issue a staffwide memo Thursday urging Bear's workers to ignore the media hubbub. In the memo, Cayne denied doing anything "inappropriate," without being more specific.

Cayne made his comments to staffers on a day in which the stock tumbled as low as $108.15 a share -- putting it within $10 of a low reached in early August. This past summer's selloff came as investors wondered if the firm had enough money to see its way through a mortgage-related credit crunch.

This time around, the threat is less to Bear's solvency than to its reputation. An out-of-touch CEO isn't exactly what investors are looking for in the midst of the biggest credit-market storm in a decade. But Cayne's comments in the memo may not dispel worries about what's going on in Bear's smoke-filled boardroom.

"Don't be distracted by the noise," he wrote in the memo, TheStreet.com's Mark DeCambre reports. "I am certainly not."

It's not the noise we're worried about, Jimmy.

Dumb-o-Meter score: 91. "I stand by the record of success the firm has had over the 14 years that I have had the privilege of leading this great organization," Cayne said.

3. Sprint to the Bottom

Sprint ( S) can't stop sliding.

The Reston, Va., telco continues to amaze onlookers by losing subscribers even as wireless industry growth accelerates. On Thursday, Sprint said it lost 60,000 cell-phone customers in the third quarter -- marking its third quarterly subscriber loss in four quarters.

That's a remarkable record, given that wireless handset maker Nokia ( NOK) last month raised its 2007 industrywide wireless-device sales forecast. Closer to home, Sprint rivals Verizon ( VZ) and AT&T ( T) together posted a third-quarter net gain of nearly 3 million wireless customers.

But steady attrition was one of the hallmarks of former CEO Gary Forsee, who was forced out of Sprint last month after four ineffectual years atop the company. Like the deposed Merrill Lynch chief Stan O'Neal, Forsee seems to have succeeded in just one area: Clearing the deck of possible successors.

So like Merrill, Sprint has been left to stumble through a bruising stretch without a full-time CEO. In Sprint's case, finance chief Paul Saleh is serving as interim chief executive while the board searches for someone better.

That shouldn't be hard. So far, Saleh hasn't shown he has a clue of how to turn things around at Sprint, though he does seem to have a hammerlock on the obvious.

"Going forward, our clear mandate is to improve the customer experience at every touchpoint and simplify our business," Saleh said Thursday. "We also plan to focus more resources on customer retention."

Better step to it or all the customers will be gone.

Dumb-o-Meter score: 90. The company also cut its full-year guidance.

4. French Toast

Alcatel-Lucent ( ALU) continues to fire at will.

The Paris-based telecom equipment maker posted its third straight quarterly loss Wednesday. Alcatel Lucent said revenue dropped 8% from a year ago as its telco customers trimmed their spending.

In response, Alcatel Lucent chief Pat Russo mailed out more pink slips. The company now plans to eliminate some 16,000 jobs -- almost 20% of the workforce that was on hand last April when France's Alcatel announced a plan to merge with New Jersey's Lucent.

Alcatel Lucent wasn't supposed to be such a chop shop. Back in the spring of 2006, the company said it expected to cut around 10% of its 88,000-strong staff in a bid to exploit so-called synergies. After that, Alcatel Lucent expected to cash in on "extraordinary opportunities for our combined company to accelerate its growth," Russo said back on April 2, 2006.

But the company has been shrinking instead, as customers pulled back on their upgrade plans and rivals like Ericsson ( ERIC) took market share. In response, Russo has repeatedly expanded the number of workers to be fired -- first to 9,500 last fall and then to 12,000 this past spring.

The repeated pratfalls have raised calls on Wall Street for Russo to join the ranks of the unemployed. In September, directors ordered Russo to put together a report showing how Alcatel Lucent would rise above the turmoil roiling the telecom gear business.

In response, Russo came up with a seven-member management committee and a revamped operating structure that cuts regions to two from four.

"This streamlined management structure," Russo said, "enables a more efficient, more focused company with clear lines of accountability."

We'll believe that one when we see it.

Dumb-o-Meter score: 88. "While they were at it," one Wall Street analyst told TheStreet.com's Scott Moritz, "they probably should have gone all the way to just one region and called it Earth."

5. Working Overtime

A little routine paperwork is turning into a big mess at Office Depot ( ODP).

The Delray Beach, Fla., office supplies company saw its shares plunge 14% Monday after Office Depot delayed its third-quarter earnings release. The company, whose slogan is "taking care of business," hinted at possible accounting problems -- prompting a wave of downgrades by analysts concerned that an earnings restatement could be on the way.

"The delay is due to an independent review by the Audit Committee of the company's vendor program funds," Office Depot said Monday morning. "The review relates principally to the timing of the recognition of certain vendor program funds."

Sounds like Office Depot may have been taking care of business a little too well.

Dumb-o-Meter score: 80. "Perhaps the most favorable outcome for the stock would be a transformational event," one analyst decisively concluded.

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