Wednesday's Worst Stocks in the World

Bad days. We all have them. Some of us deserve them.

Here are five stocks whose naughty ways drew investors' scorn on Wednesday.


Closing Price

CAPS Rating (5 Max)

% Change

52-Week Range

Hutchinson Technology (NASDAQ:HTCH)










Clearwire (NASDAQ:CLWR)





Steris (NYSE:STE)





Flagstar Bancorp (NYSE:FBC)





Sources: The Wall Street Journal, Yahoo! Finance, Motley Fool CAPS.

Well, OK, we can't exactly call these stocks naughty. There are days when four-star winners or newsletter recommendations appear here. Today, for example.

But if you're an investor, you'll have plenty of bad days. The trick is to avoid dating -- or, worse, marrying -- your losers. That's why I listen when our 83,000-person-strong Motley Fool CAPS community of stock pickers speaks with a poor rating or a negative pitch.

Thus, here is today's list of the worst stocks in the world.

We begin with Cymer, which told investors to expect a 15% decline in revenue from the fourth quarter to the first. Business is just that bad. Quoting CEO Bob Atkins from a company statement:

Over the past few weeks we have been chasing a downward moving demand target. We currently see the business with all three of our direct customers to be down in the first quarter over fourth quarter levels. This is due primarily to industry conditions resulting in push-outs from chipmakers, particularly for capacity tools, into late 2008 or even 2009, with similar effect on the build plans of our direct customers. [Emphasis added.]

Translation: You know those headwinds that are blowing though Yahoo! (Nasdaq: YHOO  ) headquarters? Yeah, we're feeling the winter breeze, too.

Next up is Clearwire, which said talks have resumed with Sprint Nextel (NYSE: S  ) . Wonderful news, right? I'll say. Clearwire and Sprint had been planning a nationwide high-speed wireless data network before negotiations stalled in November.

So what's the problem? Even with a deal with Sprint in the works, executives forecast (at best) 35% subscriber growth for 2008, well below historic norms. And I do mean "well below." Through December, Clearwire had improved its customer count by -- wait for it -- more than 300% a year since 2004.


But our winner is Flagstar Bancorp, which reported a $0.50-per-share fourth-quarter loss Tuesday after market close. Then, in a conference call with investors and analysts yesterday morning, company chairman Thomas Hammond hinted at suspending Flagstar's 2.76% dividend.

That's troubling on many levels. First, excellent firms tend to sponsor dividends in both good times and bad. Second, Flagstar is a slow grower -- investors could be depending on its payouts to juice their returns.

But worst of all, management didn't reveal the risk to its dividend in announcing poor earnings the night before the call with analysts. All CEO Mark Hammond copped to was operating in a troubled industry. Quoting from a company statement: "We will continue to focus on managing through a period of possible further real estate declines and a weakening economy. ... At the same time, we believe there are a number of positive trends and underlying fundamentals that are currently occurring or are on the horizon." [Emphasis added.]

Positive trends? Why even think of suspending the dividend, then? I applaud conservative management as much as the next Fool, but you can't have it both ways, sir. Either the market is turning in your favor or it isn't.

Flagstar Bancorp ... Wednesday's worst stock in the CAPS world.

Do you agree? Disagree? Let us know what you think by signing up for CAPS today. It's 100% free to participate.

I'll be back tomorrow with more stock horror stories.

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CLWR.DL $0.00 Down +0.00 +0.00%
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