The Week’s Corporate Gaffes On Wall Street (CEPH, MER, AGE, AMTD, BRLC)

This week’s "Corporate Gaffe of the Week" should actually be shared by several companies.

What may be the blue ribbon winner is Cephalon (NASDAQ:CEPH).  Reports noted that the company sent out a "Dear Doctor Letter" warning that its pain management drug FENTORA for cancer patients has a pretty severe side effect: Death!  How ironic is it that a pain drug causes death, or that a cancer patient would die from a pain aid rather than cancer?  The real problem is if you look at the company website, Cephalon was just touting the positive study results on FENTORA not even a month ago. 

When an analyst at a bulge bracket brokerage firm downgrades a key financial stock, it can actually pull down that same brokerage firm’s stock.  This happened when Merrill Lynch downgraded shares of DJIA component American Express (NYSE:AXP).  Merrill Lynch (NYSE:MER) shares fell over 2% at one point Friday morning in sympathy with American Express, so that took away about $1.7 Billion in market cap from Merrill Lynch stock. The good news is that the brokerage stocks continued their rise and Merrill’s stock recovered.  Butchers can chop off their own fingers if they take too big of cuts at a time.

TD Ameritrade (NASDAQ:AMTD) announced that over 6 million of its client accounts had personal contact information taken in a data hack, and customers have received unwanted email ads that the company disclosed in its SPAM investigation.  This is just a runner up because it could have been far worse.

Syntax-Brillian (NASDAQ:BRLC) is no runner-up, it really screwed up after it delayed its earnings by a day.  It wasn’t the report from the last quarter that hurt it, but the guidance and extraordinary back-items did hurt.  Oh yeah, and the CFO left the company. Ouch.

The worst timed analyst call on Wall Street this week: A.G.Edwards on Cardica (NASDAQ:CRDC).  Shares in Cardica (CRDC) fell of a cliff after an A.G. Edwards analyst downgraded the stock on muted enthusiasm for its new surgical product. The fellow must have felt a bit embarrassed after the stock popped 20% initially on news the company "received a key European approval for its new device for connecting blood vessels during heart bypass surgery." This call wasn’t the analysts fault, but was probably still a problem.  In the financial markets you can be right on your call and accurate in your prediction, but you can still go bankrupt because of other issues.

I have always known that the way the current ethanol mandates in the US were implemented and how they are mandatory was a slick sales job at best, even though I am a supporter of alternative and renewable energy.  But a report surfaced this week that gave the "Climate Change" crowd a jump over the "Global Warming" crowd.  Apparently, those who claim to have lower emissions are, well, exaggerating or just lying.

Who said there is no such thing as a funny side of Wall Street?

Jon C. Ogg
September 14, 2007