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:

Naughty?
Well, OK, we can't exactly call these stocks naughty. There are days when five-star winners and newsletter recommendations appear here. Today, for instance.

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 89,000-member Motley Fool CAPS community of stock pickers chimes in with a poor rating or a negative pitch. You should, too. Here's today's list of the worst stocks in the world:

Worse
We begin with Akamai Technologies (Nasdaq: AKAM) peer Internap, which on Tuesday asked the SEC for an extension in filing its 10-K annual report.

Such requests are rarely good news, and management's explanations offer little hope here:

Preparation of the financial statements of the Company has been delayed principally due to requests for customer credits subsequent to year end ... Internap's management has preliminarily concluded that Internap will increase its 2007 sales return allowance by between $1 and $2 million. Management's analysis of this matter, including its assessment of any potential control implications, and its impact on specific reporting periods, including the individual quarters of 2007, is still ongoing and subject to change. [Emphasis added.]

Ouch. While Akamai, Limelight Networks (Nasdaq: LLNW), and others in its industry are growing at a rapid pace, Internap's increase of sales return allowance implies that customers are asking for their money back -- much more than management had planned for.

Worser
Next up is SI International, which cut 2008 guidance because of delays in government-funded projects it had booked. Here's how CEO Brad Antle put it in a company statement:

SI International is experiencing a delay in the funding and start of several key programs that we had anticipated would make a positive contribution to our first quarter operating results. Specifically we have been carrying staff in anticipation of these program starts, which has resulted in a high level of unabsorbed overhead expense. [Emphasis added.]

Antle goes on to say that SI has made adjustments to its cost structure, and that investment in key growth areas will continue. Fair enough. Trouble is, "adjustments to cost structure" may be code-speak for layoffs, and having worked at a services firm, I know all too well the tension between staffing and profits.

Perhaps I'm cynical on this subject, but I don't see this as just a short-term issue.

Worst
And our winner? 3Com, which said it has thus far failed to close a deal that would take the company private at $5.30 per share, or more than double yesterday's close.

In truth, there may never be a deal. Why? The Feds. Regulators feared that handing part-ownership of 3Com to China's Huawei Technologies might put military secrets at risk. Talk about a high hurdle.

Nevertheless, management decided to ask shareholders to vote on the, um, possibly not-to-be-completed merger. A company statement may help explain why:

The company intends to convene the shareholders' meeting in order to fulfill its commitments under the merger agreement, which include holding a shareholders' meeting, and to preserve its rights under the merger agreement, including its right to pursue a break-up fee under certain circumstances. The 3Com Board of Directors continues to recommend that 3Com shareholders vote in favor of the proposal to adopt the merger agreement. [Emphasis added.]

Translation: We can't promise you $5.30 a share, but we'll try for a few pennies' worth of consolation in a breakup fee.

3Com and its costly Chinese connection ... Wednesday's Worst Stock in the CAPS world.

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