The 5 Dumbest Things on Wall Street This Week: March 9

5. Overstock Gets Ugly

Remember the Clint Eastwood western The Good, the Bad and the Ugly? Well, we here at the Dumbest Lab have a great idea for a sequel entitled: The Dumb, the Ugly and the Overstock.

Shares of ( OSTK) were overwhelmed by sellers last Friday, sinking over 10% after the online retailer reported an "ugly" $3.4 million fourth-quarter loss and a 10% drop in revenue as a result of confusion over its new Web site.

And when we say it was an "ugly" quarter, we aren't the only ones. In fact, that's not even our adjective. We borrowed it from Overstock CEO Patrick Byrne, who started the post-earnings conference call by admitting "it was an ugly end to an ugly year."

Hey that's pretty good, Patrick, we couldn't have said it better ourselves, and that's what we do for a living.

Moreover, Byrne was even nice enough to blame himself for the company's rotten results, thereby saving us the trouble. Byrne owned up to the decision to rebrand his Web site "" last year, a maneuver which caused all kinds of consternation among its customers who mistakenly kept clicking "".

" was my bad call," said Byrne, about his miserable marketing campaign, who then spoke incoherently about another major marketing mistake he made last year.

This time, however, Byrne refused to divulge his "bad decision," saying: "We tried killing it and it turns out that it was better not to have killed it and just have let it keep going and not have an ROI, a good ROI than to kill it all together."

Huh? We understand the ugly earnings apology, but what on earth are you rambling about, Patrick?

Clearly, that's the "Dumb" part of the movie.

4. Dick's Departure

So long Dick Parsons. Now that you are stepping down as chairman of Citigroup ( C), you will be missed.

Of course, Parsons won't be missed by Citigroup in the least after he helped reduce that once proud bank to rubble. No, his departure will be most mourned right here at the Dumbest Lab, because while he may have destroyed a ton of wealth for Citi shareholders, he's provided a treasure trove of material for us.

"Given the strong position that Citi is in today, I have concluded that the time has come for me to take my leave," said Parsons, who will be succeeded by Bank of Hawaii ( BOH) CEO Michael O'Neill, in a statement last Friday. Vikram Pandit, who became CEO when toe-tapping Chuck Prince was forced out in 2007, will remain in that job.

Strong position, huh? Really, Dick? Relative to what? Citigroup stock has lost approximately 75% of its value since you joined the board 16 years ago. Albeit that's better than the 84% decline that Time Warner has seen in its stock price since you helped preside over that company's disastrous merger with AOL back in January 2000, but still.

Granted, Citigroup is much stronger now than it was in October 2008 when it was forced to take $25 billion in federal bailout money because of gross mismanagement by the likes of Parsons and fellow negligent board member Bob Rubin. We'll give him that. Same goes for the additional $20 billion in taxpayer money the bank needed in January 2009, not to mention the $306 billion in assets that the government guaranteed for the so-called sake of the entire financial system. We'll give him that, too.

But seriously, how can he honestly suggest that the bank is better off for having him been at the helm? Well, supposedly at the helm. We still don't know exactly what Parsons and his buddies did at those Citi board meetings, anyway. Other than get paid, that is.

Here's the real kicker when it comes to Parsons. At least Rubin had the good sense to leave in early January 2009 once he realized that his utter neglect for his duties did indeed have disastrous consequences. Parsons, on the other hand, stepped up and took the chairman's title when Win Bischoff slumped off in disgrace later that month.

Think about it. Citigroup gets saved by Uncle Sam, lays off tens of thousands of employees, and this guy pushes for a promotion!

Talk about chutzpah. That's like killing your parents and then begging the judge for mercy because you are an orphan.

Sure the government made $12 billion when it ultimately sold out of its Citi stake, but once again, relatively speaking, that's a minuscule return for the nightmare the bank put the nation through. Just because all's well now does not mean Dick's tenure ends well.

But we will miss him. That we will.

Even if nobody else does.

3. Goldman Gets Sacked

And now for this week's episode of As the Goldman Pillages.

On Monday, El Paso ( EP) pushed back a shareholder meeting to vote on the pipeline company's proposed $21 billion acquisition by Kinder Morgan ( KMI) in order to give investors more time to chew on a judge's critical ruling of the deal's dirty details.

El Paso said the meeting would be held Friday, instead of Tuesday, and added that shareholders can still change their votes before the gathering. As of Monday, 70% of the outstanding shares have been voted with almost 99% of those shares favoring of the deal.

So what did Delaware Chancery Court Judge Leo Strine say that was distressing enough to delay what most people thought was already a done deal?

Well, he said a heck of a lot about our good buddies at Goldman Sachs ( GS), and not much of it nice.

You see, Goldie was on every conceivable side of this deal, sucking every available cent out of it, from a $20 million fee for advising on the transaction to the pop it's getting from its own $4 billion stake in Kinder Morgan and everything in between.

And all that money-sucking would be fine -- egregious, but still fine -- if investors had only known about it. Unfortunately, as Strine points out, Goldman and El Paso CEO Douglas Foshee were far less than forthcoming about what was going on behind the scenes.

As a result, Strine did not block the transaction, but still slammed both the investment bank and Foshee for "incomplete and inadequate" handling of the deal's many conflicts of interest.

One particularly cringe-worthy example of Goldman's conniving cited by Strine was the investment bank's push to have Morgan Stanley ( MS) act as a second adviser to the deal in order to prove Goldman's impartiality.

The rub was that Morgan would only get paid if El Paso followed Goldman's bidding and sold out to Kinder Morgan. As a result, the so-called "conflict-cleansing bank" willfully followed Goldman's commands and pushed for the sale.

Oh man, that's a clever maneuver. It's also brazen to the point of stupidity considering Goldman just ponied up $550 million for its conflict-of-interest sins just last year.

Then again, you know the old adage: A vampire squid can't change its stripes.

2. Pandora's Morrison Moment

Remember when Jim Morrison crooned "When the music's over, turn out the lights" back in 1967? Well, based on Pandora's ( P) performance this week, maybe The Doors singer was offering stock advice from beyond the grave.

Hey! He was the Lizard King you know.

Shares of the Internet radio station were snakebitten Wednesday, falling 25%, after the company reported a wider-than-expected loss for its fiscal fourth quarter and offered even uglier guidance for the full year. Pandora reported a loss of 3 cents a share, on revenue of $81.3 million. Wall Street analysts, however, were anticipating a loss of 2 cents a share on revenue of $83.1 million.

And while that's bad, especially compared with the two surprise profits the company posted since going public last June at $16, it was really the company's full-year guidance that failed to light Wall Street's fire.

For the full fiscal year ending in January 2013, the company expects a non-GAAP loss of 11 to 16 cents a share on revenue of $410 million to $420 million. The current average estimate of analysts polled by Thomson Reuters is for a profit of a penny per share on revenue of $418.3 million.

And aside from the shellacking in the stock, it appears that "this is the end" -- to quote Jim again -- for the company's free pass from some of its friends on Wall Street. And by friends, we mean underwriters.

Citigroup's Mark Mahaney, for example, downgraded the shares to neutral from buy and cut his price target to $17 from $25, writing: "We initiated on Pandora with a Buy/High Risk last July with the stock at $18. That call clearly hasn't worked." Mahaney added that "with no profitability track record and no near-term profitable outlook -- Pandora always carried very little margin for error. And now there's error."

Other investment bankers, sorry, research analysts, like the ones from JP Morgan and Morgan Stanley slashed their price targets, but reiterated their overweight ratings on the stock based on the jump in the company's listener hours. In their views, monetization and profitability will eventually follow the music, but it's just going to take a little longer than they originally anticipated.

Sure guys. If that ridiculous reasoning gets you a spot in the secondary offering, then go for it. But as for us, you can just "cancel our subscription to the resurrection" of this stock because it's clearly not coming back.

As for Mr. Mojo Risin' ... well, he's another story.

1. Adios, Allen Stanford

Allen Stanford is finally going to jail for good. That's great news and we couldn't be more thrilled about it. Still, the fact that he eluded authorities for so long will forever taint our view of the Securities and Exchange Commission as being dumb beyond belief.

Stanford was convicted on Tuesday of running a $7 billion Ponzi scheme, the biggest since Bernard Madoff's $17 billion investment swindle. Stanford could best Madoff when it comes to his prison sentence, however, as he faces 230 years in the slammer while Madoff serves out his 150-year prison sentence. (And we don't doubt that the megalomaniacal Madoff does indeed believe he will live out his term and one day leave a free man.)

A Houston jury found the fraudulent financier guilty on 13 counts of a 14-count criminal indictment, including fraud, conspiracy and obstructing an investigation by the SEC. The only rap Stanford beat was that of wire fraud.

To be perfectly honest, we were a little bit nervous about this trial's outcome considering Stanford's winning record against the government. The SEC examined his operations in 1997, 1998, 2002 and 2004, and in each case the regulators concluded that he was most likely running a Ponzi racket. Yet they still did absolutely nothing about it, thereby enabling Stanford the freedom to fleece even more investors.

Robert Khuzami, the SEC's enforcement director, said in a statement, "Today's guilty verdicts send a resounding message that those who violate the law and obstruct SEC investigations will be held accountable. We applaud the skill and tenacity of the prosecutors handling the case."

No questions there, Bob. The prosecutors handling the case certainly did a bang-up job.

But it will be a long time before we get over the fact that the SEC's complete and utter ineptitude forced them to do a job at all.

Maybe not 230 years, but still a long, long time.

-- Written by Gregg Greenberg in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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