5 Dumbest Things on Wall Street: Oct. 29

5. Halliburton Cement Lacking in Cement-like Qualities

When someone blows a recipe, we hope it's for something mundane like cookies or pumpkin pie, not cement intended for use on deep water oil rigs.

Leave it to Halliburton to not only mess up that recipe, but to spend months denying any culpability for the role its cement played in the BP (BP) oil spill. Halliburton's party line up to this point has been that their cement job was juuuust right, and that BP's inferior rig design was to blame for one of the worst environmental catastrophes in U.S. history.


According to a report issued on Thursday from the presidential commission investigating the disaster, three of four tests Halliburton conducted on the cement prior to the rig explosion showed it to be unstable. Two of those four cement recipes were identical to those Halliburton used for BP's Macondo well. The one set of test results that did show stable cement may not have even been available at the time of the work on the Macondo well.

Did Halliburton bother to sound the alarm as a result? Not exactly, said the commission. Halliburton appears to have communicated the cement test results, but didn't really do so in a way that would have, oh, maybe drawn some serious attention to the matter. Go figure.

Unfortunately for BP, the latest revelation in this mess by no means gets BP off the hook. Maybe former CEO Tony Hayward is getting some hollow satisfaction that his seemingly childish whines about Halliburton's "bad cement job" -- which he made repeatedly following the explosion and in the company's interim report -- have been proven to have some validity. The report even says that proper cement stability should have prevented the deepwater well blowout. That said, the commission also found that there were likely several causes of the explosion and that BP's full knowledge of the cement problems still isn't entirely known.

>>BP Oil Spill Report: Plenty of Blame to Go Around

Halliburton responded early on Thursday by posting a copy of its contract with BP. One portion of the contract makes clear that the onus was on Halliburton to communicate to BP any deficiencies in its work, but the onus then turned to BP to request any work modifications, after which Halliburton would no longer be held liable.

The company followed up at almost 11 p.m. on Thursday with a more formal rebuttal. "Halliburton believes that significant differences between its internal cement tests and the Commission's test results may be due to differences in the cement materials tested," reads the Halliburton statement. "The Commission tested off-the-shelf cement and additives, whereas Halliburton tested the unique blend of cement and additives that existed on the rig at the time Halliburton's tests were conducted."

Ultimately, and not surprisingly, Halliburton made sure to point the finger back at BP. "Halliburton believes that had BP conducted a cement bond log test, or had BP and others properly interpreted a negative-pressure test, these tests would have revealed any problems with Halliburton's cement. A cement bond log test is the only means available to evaluate the integrity of the cement bond. BP, as the well owner and operator, decided not to run a cement bond log test even though the appropriate personnel and equipment were on the rig and available to run that test. BP personnel have publicly testified they intended to conduct the cement bond log test at a later date and to perform any necessary remedial work at that time."

So, the takeaway here is that Halliburton can sell you shoddy cement but will make damn sure they've covered themselves legally for doing so. Yay, ethics! The end result doesn't change much. More layers of the tar ball that is the BP oil spill are being revealed. As you'd expect, each exposed layer only gets blacker and stickier.

4. BP's Dudley Inherits Hayward's Gift for the Gaffe

BP's (BP) gaffe-prone former CEO Tony Hayward was recently shown the door, but the oil company's new head is picking up where his predecessor left off.

Bob Dudley, who succeeded Hayward on Oct. 1, went on the offensive against BP's critics in an address delivered to a British lobbying organization. Even as he acknowledged the human toll of the Deepwater Horizon oil spill, Dudley criticized media coverage during the event, complaining at one point that "it frequently felt as if we were the only story on the news, 24/7."

Mr. Dudley, your company has taken the honors for causing one of the worst environmental disasters in U.S. history. You knew that when you took the job right? And now you can't fathom why BP was getting all the attention as its destroyed oil rig spewed millions of gallons of oil into the Gulf of Mexico?

Dudley went on to criticize "a rush to judgment" by observers and "some in our industry."

Dudley's insistence on playing the victim suggests that he failed to learn many of the lessons of his predecessor. Hayward was criticized for complaining that he'd like his life back as 11 oil rig workers lay dead and thousands on the Gulf feared for their livelihood. For Dudley to now complain months after the fact about a few inaccurate computer simulations regarding how far the oil could travel in the world's oceans smacks of the same victim complex that helped contribute to Hayward's ouster.

Too sweet

To be fair, BP deserves some credit for its post-spill response, including the $20 billion compensation fund it set up in June, of which nearly half a billion has been paid out. And this week it agreed to provide $20 million for enhanced seafood inspection and marketing efforts aimed at rehabilitating the Gulf Coast in the wake of the disaster.

But Dudley has promised a new culture of safety at BP and acknowledged a need to "earn back the trust" of various parties, from customers to governments to shareholders. This is a funny way of going about doing that.

3. Soda: Even Sweeter Than Advertised

Soda and one of its primary ingredients, high fructose corn syrup, have been pegged as the leading culprits in a range of ailments, from diabetes to childhood obesity. It's been hard to miss. New York City has taken out advertisements in the subway system to denounce the bubbly sugar water and last summer San Francisco banned all sodas from vending machines on city property.

Given the direct assault and the growing attention to health and nutritional labeling, you'd think beverage giants like Coke, Pepsi and Dr Pepper Snapple might find it in their interest to make sure their nutritional labeling is accurate -- really accurate. You'd probably want to have a rebuttal ready to go on the odd chance that someone tested your product to see if you were telling the truth, right? Best offense is a strong defense and all that.

Wall Street
Jaap Steinvoorte
Wall Street

That doesn't seem to be the case. A study conducted by the University of Southern California Childhood Obesity Research Center released this week found that sugar levels were often much higher than advertised on the majority of beverage brands. From 23 samples of drinks, the study found that total sugar content ranged from 85% to 128% of what was listed on the nutritional label. "The bottled samples of Coke, Sprite and Pepsi tested at 95% to 100% of what was listed," reads the report. Fountain drinks were, across the board, found to have actual sugar contents of 101% to 128% of what was listed.

The ratio of fructose – i.e., the bad stuff -- to glucose was also called into question. The Corn Refiners Association says HFCS is 42% or 55% fructose, but the USC study found that all the drinks it tested were 58% fructose or above, with Coke, Sprite and Pepsi coming in at 64% to 65% fructose. Why go higher on the fructose end? Well, it makes it taste sweeter, of course.

"Considering that the average American drinks 50 gallons of soda and other sweetened beverages each year, it is important that we have more precise information regarding what they contain, including a listing of the fructose content," concludes the report. "The overall consumption of added sugar is of concern as is the composition of the sugar."

The Corn Refiners Association responded the day the report came out, saying that the USC study "appears to have failed to use standard analytical procedures" and that USC's labs weren't "experienced in analyzing sugar content."

At least the CRA had a response preloaded. Coke and Pepsi, on the other hand, have yet to offer any rebuttal. So shareholders are left to ponder: Is it just that they'd prefer to leave this battle to the CRA, or did management really lack the foresight to realize this and other damning studies are inevitable?

Unfortunately for the CRA, the USC study comes about a month after the CRA launched its latest campaign to ditch the HFCS name for "corn sugar." The likelihood of that happening seems to grow slimmer with each passing day.

2. Larry Ellison: Tech Tough Guy, Fan of Legal Fees

Oracle's fiery CEO Larry Ellison is proving just how manly and cool a tech executive he is as he continues to take swings in a fight he has essentially already won.

Ellison has set his sights on new HP chief Léo Apotheker. This week he launched a stinging attack on Apotheker, alleging that he oversaw a scheme to steal Oracle's software during his previous role as CEO of German software giant SAP, a claim that HP described as harassment.

A jury trial to settle the case is set to begin next week and SAP has already admitted wrongdoing, but is challenging the extent of Oracle's claim for damages. Oracle is reportedly seeking $2 billion, whereas SAP argues that a settlement in the "tens of millions (of dollars), at most" would be fair. On Thursday Oracle's lawyers even went so far as to betray some confidentially to disclose that SAP would be admitting contributory copyright infringement.

The political problem

Ellison has clearly given word that he wants things to be dirty, but it's hard to see the benefit to Oracle or its shareholders. Nobody really gathers to see the two school dorks slug it out, but Ellison seems to believe if he throws in enough sexy words and some tough talk he'll be seen as a leader.

"A few weeks ago I accused HP's new CEO, Leo Apotheker, of overseeing an industrial espionage scheme centering on the repeated theft of massive amounts of Oracle's software." Oh no you didn't! "A major portion of this theft occurred while Mr. Apotheker was CEO of SAP," claimed Ellison on Tuesday. "HP's Chairman, Ray Lane, immediately came to Mr. Apotheker's defense by writing a letter stating, 'Oracle has been litigating this case for years and has never offered any evidence that Mr. Apotheker was involved.' Well, that's what we are planning to do during the trial that starts next Monday." Sorry Larry, we're still not interested in the nerd battle royal and neither is HP.

Ellison doesn't want Oracle to just win, he wants to humiliate HP and Apotheker in the process. But again, when the other party has already acquiesced, what's the point? Does Ellison like his lawyers so much that he's willing to manufacture ways for them to exponentially boost their billable hours? Three years in court isn't enough?

Ellison has sunk to the "bet you're too scared to come around here" level. They've been unable to subpoena Apotheker to testify because he previously lived outside of the San Francisco area, and Ellison said HP chairman Ray Lane would keep Apoteker "far, far away from the courthouse until this trial is over."

Uh, yeah. As an HP spokesperson noted in an email to TheStreet this week. "Oracle had ample opportunity to question Leo during his sworn deposition in October 2008 and chose not to include him as a trial witness until he was named CEO of HP."

1. Political Spending Maxes Out

Good news. Unemployment remains high, the housing market shows very little sign of improvement and banks have made a mess of mortgages. But take heart, because politicians are spending more money than ever to convince you that they can fix all of this.

According to the Center for Responsive Politics, campaign spending will "obliterate spending records for a midterm contest" by a hefty $1 billion. CRP puts their conservative estimate for the total price tag at $3.7 billion, but believes it's more likely to "flirt with the $4 billion mark" when all is said and done.

"This kind of money in 2010 makes the 2000 presidential election -- hardly a distant memory -- look like a bargain at $3.1 billion," said Sheila Krumholz, executive director of the Center for Responsive Politics. "And tens of millions of dollars of it is now coming from organizations who, by law, need not disclose their donors. It's now more difficult than ever for voters to determine whether the outside groups flooding their television and radio airwaves with political messages are doing so for any reason other than promoting their own, narrow set of special interests."

CRP offered more than a few points of comparison. The 2006 federal midterm elections racked up a $2.85 billion tab compared with a 1998 total of $1.61 billion. The 2004 presidential election cost $4.14 billion. The 2008 presidential election, however, retains the top spot at $5.3 billion. Money well spent?

It may come as little surprise that CRP found that the Republicans have been particularly adept at exploiting the changes to their advantage. "Identifiably conservative organizations are spending more than $2 on advertisements and other communications for every $1 liberal organizations do," said the report.


Despite this, the Democrats aren't as far behind as one might think, or frankly, expect. So far the CRP estimates that Republicans have raised $1.64 billion compared with Democrats' $1.59 billion. The 2006 federal midterm elections racked up a $2.85 billion tab compared with a 1998 total of $1.61 billion. Even the 2004 presidential election cost $4.14 billion. The 2008 presidential election, however, retains the top spot at $5.3 billion.

Democrats won the White House and Congress by arguing that spending had gotten out of control. Republicans are now deriding Democrats for their uncontrollable spending. Based on CRP's research, it seems that both sides are excelling at uncontrollable spending. In fact, they practice it in their campaigns so they're ready to go once they get in office. How can we fault them?

Well, the holidays are upon us. Let's get back to focusing on those ridiculous Wall Street bonuses. Tsk-tsk, Wall Street.

In light of all this dumbness, we now ask you: Which is this week's dumbest of the dumb stories? Take the poll below to see what TheStreet has to say.

Take our poll: Which is this week's dumbest of the dumb Wall Street stories?


CNBC Data Pages: