The art of losing isn't hard to master;
so many things seem filled with the intent
to be lost that their loss is no disaster.

-- From "One Art," by Elizabeth Bishop

These three companies just didn't live up to Mr. Market's expectations last week. Sometimes an earnings stumble is a signal to sell, but digging in the dirt is also a good way to find turnaround candidates while they're getting beaten down. Let's strain the silt to separate the artful dodgers from the real disasters.

Then practice losing farther, losing faster
 Pfizer (NYSE: PFE) missed Wall Street's expectations of $0.66 in earnings per share by $0.05 per share (a mile in Street lingo). The patent on cash-cow cholesterol fighter Lipitor expires in 2010, and rival drug dealer Merck's (NYSE: MRK) Zocor alternative has already passed its best-before date. Generic Zocor knockoffs are flooding the anti-cholesterol market, luring away 18% of the patients who used Lipitor a year ago.

While Lipitor is the biggest traditional moneymaker in Pfizer's portfolio, it was by no means the only product that saw sales falling off a precipice: Hypertension drug Norvasc and allergy ameliorator Zyrtec already lost their patent protections and nearly $1 billion of their quarterly sales.

Management is sticking to their earlier forecast for 2008 because "the first-quarter 2008 is not comparable to the year-ago quarter due to the loss of U.S. exclusivity of Norvasc in late March 2007 and Zyrtec in late January 2008," and the company is in full-fledged cost-cutting mode right now.

Though the stock certainly looks cheap today at just 2.1 times book value -- well below historical norms -- I can't say I'm tempted to buy any. Where's the next miracle drug?

And look! my last, or next-to-last, of three loved houses went
Everyone expected Washington Mutual (NYSE: WM) to lose money this quarter, but nobody knew the bleeding would be this severe. America's largest savings-and-loan operation dropped $1.40 of red ink per share on an analyst crowd that expected just $1.05 of vermilion.

Management pointed to the deadly downturn in mortgage markets as the main reason behind this shortfall. "We saw a housing slowdown coming," said CEO Kerry Killinger in the usual conference call with analysts. "The board and management took major actions to prepare for the slowdown, but it wasn't enough. [...] In short, the actual magnitude of the housing downturn -- and the unprecedented disruptions in the capital markets -- has overcome much of our preparations."

WaMu is far from alone in this predicament, as financial institutions from Bank of America (NYSE: BAC) to Merrill Lynch (NYSE: MER), and even the corporate finance arm of General Electric (NYSE: GE), keep reporting major misfires under the duress of these extreme banking-market conditions.

The American economy will eventually hit rock bottom and start to bounce back up again, and the banks will perform that 180-degree turn with more flair and elan than most sectors. Until that time, I'm keeping my portfolio far away from what has become a band of value destroyers. You can come back when the times, they have a-changed, OK?

Accept the fluster of lost door keys, the hour badly spent
Let's end on a positive note this time. Online stock brokerage and consumer banking service E*Trade Financial (Nasdaq: ETFC) may have disappointed the analysts with a $0.20 loss per share while estimates called for a loss half that big, but it was still a much smaller disappointment than recent negative surprises, and management comments pointed to brighter days ahead. The stock price gained 20% in two days.

E*Trade still trades in penny-stock territory, but seems on track to turn things around if given some time. Management is selling "non-core assets," and the trading platform has reignited its stalled growth again. Cutting the company down to bare-bones basics and making money where there's some to be made sounds to me like an eminently reasonable strategy.

I miss them, but it wasn't a disaster
Some of these underperformers are victims of larger circumstances, while others might have only themselves to blame. It's up to you to decide which down-on-their-luck companies should be able to pull themselves up by the bootstraps, and which ones are stuck in the mud for real.

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