The five dumbest things on Wall Street this week

By TheStreet.com

1. H-P's spy game

Hewlett-Packard (HPQ, news, msgs) admitted this week that it hired investigators last year to ferret out news leaks as directors debated former CEO Carly Fiorina's firing.

H-P's bloodhounds fingered director George Keyworth as the culprit. The board asked him to quit.

But H-P got more than it bargained for when Keyworth stuck around and his ally, venture capitalist Tom Perkins, quit instead. Perkins believed that he and non-executive chairman Patricia C. Dunn had agreed to handle the Keyworth flap privately. H-P didn't disclose the disagreement, claiming Perkins' beef was with Dunn, not the company.

Then things really got messy. H-P started hearing from regulators about the nondisclosure decision and about its investigative methods. At that point, the company conceded that its hired guns had assumed false identities to check directors' phone records without consent -- a technique known as "pretexting."

"The situation is regrettable," Dunn told The Wall Street Journal. "But the bottom line is that the board has asserted its commitment to upholding the standards of confidentiality that are critical to its functioning. A board can't serve effectively if there isn't complete trust that what gets discussed stays in the room."

Of course. Spying on people is always the best way to gain their trust.

Dumb-o-Meter score: 95. For more on H-P's dumbness, click here.

2. Feet of clay

Ford (F, news, msgs) tapped Boeing (BA, news, msgs) exec Alan Mulally as its new chief executive this week. Longtime CEO William Clay Ford was quick to praise Mulally for reviving Boeing's commercial airline business after the Sept. 11, 2001, terror attacks.

"Clearly, the challenges Boeing faced in recent years have many parallels to our own," said Bill Ford, who has been struggling with tough foreign competition, rising gas prices and Ford's high costs since he toppled his predecessor, Jacques Nasser, back in October 2001.

Bill Ford's tenure was marked by aggressive action: He shook up management countless times and pledged to slash thousands of jobs. He insisted he would make Ford a greener company and improve quality. He even went so far as to give this year's restructuring plan a catchy name -- the Way Forward.

Yet Ford shares fell 36% over his term as rivals like Toyota Motor (TM, news, msgs) gained sales momentum. With that performance in mind, investors may have found themselves slightly unsettled by Ford's parting shot.

"Let me assure you," Bill Ford wrote, "I'm not going anywhere."

Sounds like Ford may not be ready for takeoff just yet.

Dumb-o-Meter score: 91. For more on Ford's dumbness, click here.

3. The Sumner wind

A mere two weeks after he parted ways with movie star Tom Cruise, Viacom (VIA, news, msgs) Chairman Sumner Redstone shook up the New York media company again. He canned Viacom CEO Tom Freston and rehired two former vice chairmen, Philippe Dauman and Tom Dooley.

Redstone promised that investors would see Viacom "moving ahead as entrepreneurially and as aggressively" as possible, particularly in digital media. New leadership will pave the way, he said.

"I could not be more pleased to be teaming up again with Philippe and Tom."

Wall Street was less pleased, sending Viacom shares down 8% over two days. The sell-off seemed to undermine Redstone's claim that it was Freston who had lost credibility.

After all, Freston isn't the first Viacom hard-charger to have overstayed his welcome with Redstone. Before Freston there was Mel Karmazin, who left two years ago muttering that Redstone would never retire. Before Karmazin, there was Frank Biondi.

Dumb-o-Meter score: 88. It seems some people are tired of endless Sumner.

For more on Viacom's dumbness, click here.

4. Wall Street takes offense

Lucent Technologies (LU, news, msgs) and Alcatel (ALA, news, msgs) said Thursday their shareholders "overwhelmingly" approved their $10.8 billion stock swap merger. Lucent and Alcatel have portrayed the agreement as creating a more competitive company, through expanded product offerings and thousands of firings.

"We are another step closer to creating the first truly global communications solutions provider with the broadest wireless, wireline and services portfolio in the industry," said Lucent CEO Patricia Russo, who will head the combined Alcatel Lucent.

"This significant transaction is about creating the world leader in our industry," said Alcatel chief Serge Tchuruk. "This offensive strategy ... aims to increase Alcatel's value for its shareholders, and to provide its customers with the broadest portfolio and to give its employees great opportunities."

Still, Lucent shares are down 26% and Alcatel down 22% since the deal was hatched. Clearly, the strategy has been offensive to shareholders so far.

Dumb-o-Meter score: 85. For more on the Alcatel Lucent dumbness, click here.

5. Advo cat fight

Valassis Communications (VCI, news, msgs) and Advo (AD, news, msgs) agreed in July to a $1.3 billion merger creating the nation's biggest direct advertising company.

"This is an exciting opportunity for employees, clients and shareholders," Valassis chief Alan Schultz said July 6.

The combo has indeed become exciting, though probably not in the way the companies intended. Valassis last week sued Advo to break up the deal, claiming Advo misrepresented its financial health. Advo shares plunged.

Advo quickly issued a statement announcing that Valassis' claims "are nothing more than a case of 'buyer's remorse…perhaps exacerbated by Valassis' own continuing financial weakness."

The companies have had little of substance to add since then, but they haven't let that stop them. On Wednesday, a Valassis press release mused, "What is Advo hiding?" Advo replied, "Advo rejects Valassis' invitation to litigate this case by press release."

Valassis, of course, didn't take the hint. Its press release Thursday screams, "Advo once again hides behind legalities." Heightening the suspense, Valassis then wonders, "When will we learn the truth?"

Not before about a hundred more posturing press releases, at this rate.

Dumb-o-Meter score: 82. For more on Valassis and Advo's dumbness, click here.

© 2006 TheStreet.com, All Rights Reserved.

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