The five dumbest things on Wall Street this week

By Colin Barr

"TheStreet.com" examines the dumb things on Wall Street and in corporate America. Using its 100-point-scale Dumb-o-Meter, "TheStreet.com" scores corporate foibles.

Vonage passes the hat

Vonage shares are down 24% since last week's $531 million initial public offering. Hefty competition from the likes of eBay's Skype has sent investors fleeing. Even Vonage's effort to turn users into owners has boomeranged.

Explaining that "much of our success is attributable to our customers," Vonage said it would cut the customers in on the IPO. But after users complained about the Customer Directed Share Program and the stock tanked, a Vonage spokesman told CNBC Tuesday the company would make customers whole on the IPO.

But just a day later, after legal experts scoffed at the plan, Vonage decided to stick customers with the bill instead.

"To be clear," Vonage said Wednesday night, "we have not offered and are not offering to repurchase any of the shares of common stock from our customers."

Dumb-o-Meter score: 93. When it comes to looking out for its customers, Vonage is all talk.

For more on Vonage’s dumbness, click here.

Sun isn't rising

Sun Microsystems’ new chief Jonathan Schwartz made his first big move Wednesday, unveiling as many as 5,000 job cuts.

Sun also dropped its poison pill. The company -- whose stock market value exceeds $15 billion despite a 90%-plus drop in its share price since 2000 -- had adopted the shareholder rights plan back when Scott McNealy was CEO.

Schwartz says dropping the poison pill is "indicative of Sun's reinvigorated commitment to maximizing shareholder value and enhancing the company's already stellar reputation for tight corporate governance protocols."

Dumb-o-Meter score: 90. Stellar reputation? Way to reach for the stars, Jonathan.

For more on Sun’s dumbness, click here.

Subtracting value

ADC Telecom said Wednesday it would buy wireless rival Andrew in a stock swap initially valued at $2.04 billion.

"The strategic, operational and financial synergies of our two strong companies create a significant opportunity to grow value for our customers, shareholders and employees," said ADC chief Robert E. Switz.

Unfortunately, the deal has done anything but grow value for shareholders so far. The merger terms gave Andrew investors a 30% premium, based on Tuesday's closing stock price. But ADC shares promptly plunged 20% Wednesday and an added 3% Thursday, wiping out the upside and knocking the deal's value down to $1.58 billion. Andrew shares sagged back to Tuesday's levels.

Dumb-o-Meter score: 88. This is no way to grow value.

For more on ADC’s dumbness, click here.

Revolving door

The business software company CA, formerly known as Computer Associates, rolled out its latest accounting mishap this week, saying it would miss fiscal fourth-quarter targets and restate third-quarter earnings.

The news comes as top execs continue to flee the company's home base of Islandia, N.Y., in droves. Just two weeks ago, CA said CFO Robert Davis would leave "under mutual agreement."

Davis' departure came a week after chief technology officer Mark Barrenechea departed for a venture-capital company, and a month after operating chief Jeff Clarke took off for Cendant.

"When we began the task of transforming CA," CEO John Swainson said May 15 in announcing the Davis move, "we knew that we would encounter many challenges and understood that in an undertaking of this scale and scope, changes were to be expected."

The management shuffle is in stark opposition to a February 2005 press release CA put out when CEO John Swainson joined the company. "CA Names Swainson Chief Executive Officer," reads the headline. "Management Transition Completed."

Dumb-o-Meter score: 85. Not by a long shot.

For more on CA’s dumbness, click here.

Very Sirius settlement

Chief Les Moonves drives a hard bargain. CBS made a big splash this past winter by suing shock jock Howard Stern and his current employer, Sirius Satellite Radio.

The suit accused Stern of "pocketing over $200 million for his personal benefit" by illicitly promoting Sirius while he was still at CBS. Stern agreed in October 2004 to join Sirius for $500 million.

"To this day," CBS added in a Feb. 28 press release outlining its claims, "Stern continues to breach his contract by refusing to return property that belongs to CBS Radio -- the recordings of his CBS radio program that, under his Agreement with CBS Radio, belong to the company."

Stern promptly raised the stakes by appearing in March on CBS' Late Night With David Letterman clad in an "I Hate Les Moonves" T-shirt.

But this clash of legal titans never got to court. Last Friday the sides issued a joint statement saying they had come to terms.

“As part of the settlement, CBS Radio will receive payments relating to the conveyance of its rights in the recordings of 'The Howard Stern Show,'" the statement read, according to media reports. "Sirius, for its part, will make a total payment of $2 million related to this conveyance."

Dumb-o-Meter score: 79. So CBS gets a little money and Stern keeps the recordings. No word on who ends up with the T-shirt.

For more on the CBS-Sirius-Stern dumbness, click here.

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