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Beyond the Music and IPOs

Readers respond to recent stories. publishes selected email received by the publication and its staff members. To send an email intended for publication in this section, write to and include your full name and city. Letters may be edited for length, style, clarity and accuracy.

Performance Pricing

Ben Holmes:

In response to

Enough of the One Hand Clapping Sound, Already!, looking at IPO performance one day postoffering is not always the best measure of transaction strength. It is possible, for example, that the underwriter may have underpriced an offering to ensure a strong pop at pricing. I suspect this is particularly true in choppy market conditions.

A more reasonable measure is to look at the after-market performance over one day, one week, 30-day and 60-day periods postoffering. Strong deals should hold up throughout that time period and, in fact, even appreciate. So I'm not sure your assessment is a truly valid way of measuring underwriter performance.


Susan Baker

(received 9/6)

Beyond the Music

Kaya Laterman:

About your

The Coming Week in Asia: The Japanese Stock Market Sings a New Tune , I don't "get" the rock and roll terminology used in your article referring to stock information. I have absolutely no idea of the names used or their relation to stock movement. Is it a code for those under 35? Sorry, I'm past that. Keep in mind, our generation is the one with the money!


Dr. Dale Tompkins

(received 9/6)

Kaya Laterman:

Your article on the

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TheStreet Recommends

Japanese stock market has one too many references to songs I've never heard!

I get the point, I'm 22 years old, with about four years of active investing experience. But I'm hoping this industry doesn't push me to these extremes. Let me know now, because I might take up baseball cards or beenie babies.


Duchuy Huynh

(received 9/5)

Advertising Edge

James Cramer:


Why the Dot-Coms Cannot Live on Ads Alone, I think too many sites try to have it both ways. If I am going to pay a fee, I expect a fast site where I do not have to wade through a lot of junk to find the content. Some sites have excellent content, but many mornings I simply do not have the time to wait for the graphics to load. I find that the services I rely on are those that deliver their content by email.


Mike Hugo

(received 9/6)

James Cramer:

You're right.

Web sites will never make it on advertising alone. Just look at TV and Radio!


David Ruvin

(received 9/4)

It Was the Best of Times, It Was the Worst of Times

David A. Gaffen:

Only the most naive would believe the slant of

David Gaffen's


Stock Wealth and Spending Don't Go Hand in Hand. Stock ownership is probably higher than he cites due to 401ks, IRAs, etc., and if they feel richer, they spend! Greenspan thinks so, and I do also. Writing just to offer a contrary slant will not benefit most of us.

-- Jack Salkovics

(received 9/2)

David A. Gaffen:


piece on the wealth effect and its play on consumer spending. I think you are right on the mark when you write that we haven't even seen a spending boom based on wealth generated from the stock market. Last year's continued spending right in the middle of the late summer/early fall correction proved that consumer spending has been fueled by something other than the stock market. Personally, I have just finished refinancing my home and took cash out. No spending spree just yet, however. I'm a manager at


and I'm waiting to see what our pending IPO holds. I'm hoping to take the cash from my refinancing and get in pre-IPO. In fact, I was planning to put this cash into UPS stock before our purchases were suspended. After the IPO ... save me a parking space at the mall!

-- Scott Love

(received 9/2)

A Cabletronoid Speaks Out

Dan Colarusso:

In reply to your article,

Cabletron Rumors Aren't Adding Up, the fact is that



is a company on the move.


is a sharp guy who knows the business and what needs to take place in order for this company to compete in the marketplace. CS may never be a



, but it can be a profitable, well-performing company. And who cares about a buyout if the company is performing? I think earnings are going to surprise some people and that is why the stock is up. I purchased CS in May '99 for a little over 7.

-- Matt Meyer

(received 9/2)

Globalstar: Lost In Space

Bill Simon:

Your comments (see below) on

Herb Greenberg's

analysis of




Why Some Investment Pros Are 'Bonding' With Globalstar, should be tilted "Globalstar: No Hope" instead of "Globalstar: New Hope." They are in trouble and Bill can be sure he'll be the last to know. The $500 million Bill refers to in his comments was secured by



, whom Bill should know owns a 42% stake in Globalstar. In other words, Globalstar was able to get their most recent financing closed not because

Bernie Schwartz

and company were able to convince the bankers at

Bank of America


that Globalstar would be a commercial success and able to pay back their debt, but because Loral secured it. One is left to presume that, without such security, Globalstar would NOT have been able to raise this money from the street. Bill should know, being a regular reader of


, that no one is putting any fresh money to work on satellite phone deals -- not now.

The Street is done dumping money on these satellite phone deals unless and until one of them can prove there is sustainable demand for their service -- and, in light of the absolute failure of



-- to prove that there is only propaganda left until the rubber meets the road. For Globalstar, that time is coming sooner rather than later.

If Globalstar doesn't show a significant number of subscribers (at least 100,000) within the first six months of operations, which according to Mr. Schwartz will begin "on a limited basis by September 1999," shareholders won't need to wait for the company's cash to run out to hear the wake-up call. Instead, they'll be trying to sell their shares in Globalstar on



, as a retail holder of Iridium's stock tried to do a few days ago


Iridium was delisted. EBAY quickly forced the hapless fellow to pull his offer; instead, those shares are only worth the paper they're printed on.

-- Gregory W. DeFelice

(received 9/2)

Exodus and the Right Stuff

Spencer Ante:

I applaud your recent article,

As Exodus Stock Rises, So Do Customer Complaints, on finding every possible negative detail imaginable about



communications. I have three years experience on Wall Street meeting with companies such as Exodus,












, and many others. In addition, I have two years experience working in the datacenter business. Exodus was my main competitor and I can guarantee that they've made many mistakes. However, if you are going to write an article criticizing the effectiveness of a company, why don't you do some homework and see what the industry average is for latency, customer service, network downtime, etc.

Take a look at Exodus' revenue line compared to its closest competitors. And make sure you understand who its competitors ("rivals") are. They are not Qwest and


as you stated in your article. As a matter of fact, Exodus has no competition with those guys at all. They are Abovenet, Digex,



, etc.

As you can probably guess, I own some Exodus stock. I also own some Qwest, Globix, Digex, and Abovenet. Why? Because it is the best sector to be in. You got that right, but you seem to have gotten just about everything else wrong. Hopefully you will do a little more research next time.

-- Dan Vene

(received 9/1)


hit the nail on the head with Exodus, but there is one problem with your story and that is you forgot to mention

Digital Island


. In addition to increasing our domestic customer base we also have a distinct advantage internationally with a presence in over 20 countries. As the international economy starts to come back to life and the dollar continues to get hammered, our service becomes even more attractive overseas. Stay tuned, the sleeping giant will awaken.

-- Ronald Wikander

(received 8/31)

Taking A Step Back With Coulter

Jesse Eisinger:

Thanks for a great job with your article

Coulter Investors Gulp After FDA Says "Resubmit", which saved me some real pain. I know you wrote that first article in a fair, even-handed manner. I made my decision to sell my stock in



based on the accuracy of your reporting, and I was able to get out of a risky position early. My reasoning went pretty much as follows:

I felt the rumor had some validity. The analyst at


gave specific reasons why the application might be rejected. The price of the stock seemed to be based on a favorable ruling, and I wondered how high the stock could go? On the other hand, the downside loss could be staggering. The risk did not seem worth it. I held those shares nearly a year. I had even added to my holdings a month before. (Their annual report is very compelling, it includes testimonials from patients using the drug.) I hope the rejection of the application does not hurt their chances for a full recovery, but I don't think it can help. But if something is true and good, it usually survives the rumors and the doubts concerning its efficacy. In the meantime, I will follow Coulter and I may reinvest at some time in the future. Thanks again.

-- Dave Reutter

(received 9/1)

Globalstar: New Hope

Herb Greenberg:

Your column titled

Why the ICO Bankruptcy May Not Be Good for Globalstar is not only wrong, it's bordering on fraudulent. He believes



will have to "raise more cash, and raise it sooner rather than later," and that "the capital markets are closed to the concept." Globalstar has had no problems in raising capital and in fact has a $500 million credit facility in place, which according to CEO Bernard Schwartz, is more than adequate to start service, including all promotion/advertising costs.

-- Bill Simon

(received 8/31)

It's All About the Benjamins

Ian McDonald:

I am writing in response to your article

Commission Practice Has Fund Investors on Lookout for Conflicts. As you already know this practice is still pretty pervasive and in my 10 years or so in the business most fund families have run this at one point or another. The biggest culprits are the "proprietary" shops (i.e.

Merrill Lynch

) where the incentives are very much slanted toward what they want the representative to sell. My experience is that the extra comp is too strong for most reps to resist for even the biggest producers who still worry about where their next buck is coming from.

-- Joseph Reeves

(received 8/31)

Dave & Buster's Revisited

TSC Readers:

Seems like most of the

responses are from investors older than the typical crowd at



-- that's why they are wrong! In your twenties and tired of that old bar scene? Yes. Then, go to Dave & Buster's! It's everything the 21-to-30-year-old age group ever dreamed of. Where else can you find booze, pool, gambling (fake, of course) and simply amazing arcade games all wrapped up into one. Sure it's a theme restaurant, but it's much more. That's the uniqueness of the company and why investors who categorize D&B as your typical theme establishment -- a la Planet Hollywood


or Rain Forest Cafe


-- are missing the boat on this one. Seems to me that a great deal of investing opportunities come from overreactions to news and/or misunderstandings about a company's business. Add in a clean balance sheet, and this could very well be one of those rare buys we all look for.

-- Dan Bernstein

(received 8/31)

Investing vs. Daytrading

James J. Cramer:

I really loved your


column from Aug. 23. It's remarkably close to the op-ed piece I did for

The New York Times

on Aug. 23 -- a timely coincidence, that. (Jim Cramer also wrote

about this topic on

.) Yes, there is a difference between a do-it-yourself investor and a daytrader. And I trust my piece in

The New York Times

was clear in making the same differentiation that your fine column did. A casino mentality is a formula for failure. By the way, you were wonderful to

stand up for me a few weeks ago. Life is full of surprises ... but it will go on!

-- John Bogle

(received 8/30)

Latin Tea

James J. Cramer:

About your comment on oil at the end of

The Cutting Room: Dave Kansas and Jim Cramer Both Get a Word in Edgewise , I think your repeated calls on oil are wrong. In my opinion, Saudi Arabia knows Venezuela's current internal problems, and even more so its history of adherence or nonadherence to its quota. Why did Saudi Arabia go to Venezuela in advance of the next


meeting? I think it was to warn Venezuela that if it doesn't adhere to its quota, Saudi Arabia will open the taps and crush them. Saudi Arabia can stand the pain more than Venezuela, or anybody else for that matter. Saudi Arabia and the other "smart" OPEC nations don't want oil much above $20 or other fields in the world become economical to explore and produce. People forget or don't realize how cheap it is for Saudi Arabia and other Middle East countries to produce oil -- most load crude on tankers for less than $4 to $5 a barrel. Maybe I'm wrong about the direction of oil prices, but I feel I have an edge in this part of the market. I worked in Middle East for almost 20 years and am still in this industry -- now as a consultant for the drillers. Here's my prediction for oil: $15 to $25 through 2001.

-- Thomas S. Pessarra

(received 8/30)

Some Light Cream

Cory Johnson:

About your column

Tomorrow's News: Making Crime Pay. Lighten up on

John Daly

! Your attempt at humor is misplaced and out of line! Daly is attempting to combat personal health problems. Golf fans, people suffering from similar problems and compassionate people from around the world wish him success and hope to see him back playing championship golf. Ridiculing Daly when he is down shows a total lack of ethics on your part. SHAME!

-- Peter Holst

(received 8/30) You got me! Thanks,

I needed that . I take this stuff way too seriously.

-- Jeff Fletcher

(received 8/30)

Simplicity Rules

Gary B. Smith:


column Turn Off the Tube, Log Off the Boards and KISS Off Complex Strategies was right on. I believe in the MIS KIS strategy: Make It Simple and Keep It Simple. My simple rules are based on simple assumptions: Most of the volume in stock trades comes from the fund people. When's the last time you bought a million shares of anything? The people who do most of the trading, the fund people, establish the price. This is simple supply and demand. Most of the fund people receive the majority of their compensation based on short-term performance. That's why they are nervous and trade a lot. Trading a lot with short-term focus makes them trade with mob psychology. Why else, when



announced that its growth rate would "slow" to 40%, would every other PC hardware stock fall? So here are the Simple Rules: If you buy what the fund managers are buying, you are going to win. If you buy what the fund managers are selling, you are going to lose. Oh yeah, one more acronym: BAH, or Buy And Hold! -- David. M. Johnson (received 8/30)

Gary B. Smith: According to your

Turn Off the Tube, Log Off the Boards column, I should resolve to read only one column per day on

. This would certainly make things much simpler. I become confused when I read a column like that and then turn to the excellent

opinion on



shared by Jeff Matthews in

Herb Greenberg's

column. How can I keep things simple if I am analyzing the sequential sales growth of new Internet companies?! Anyway, keep up the fine writing. I'll just resolve to stay confused.

-- Mike Squillace

(received 8/30)

Early Birds Hit the (Tri)Mark

Dan Colarusso:

What a scoop on

In the Clear: Merrill Sets Back-Office Deal With Knight/Trimark , with the

Merrill Lynch





agreement. Two days later NITE is trading up 20%-plus. Great reporting! I'm certainly glad to have the opportunity to average down on NITE. You've made my subscription a bargain!

-- Stan Starr

(received 8/26)

Miss America, the Beautiful

James Padinha:

Thank you for writing

Pulp Fiction: The New Era Growth/Productivity Squeeze at

and explaining a very dry subject, such as the economy, in such a way that it makes easy reading. Because I am not so good at American English (I live in Vienna) I could not follow your polls at the beginning. Now I believe they are just fun. I take them every day trying to guess which answer will create the most responses. I have no clue what the correct answer is, but I try to predict the correct, or majority, answer. Like the market, I don't know which way it will go, but I'm still trying to get it right. Carry on.

-- Alois Lippert

(received 8/26)

James Padinha:

Don't tell me you missed

Maine .

-- Kristopher Day

(received 8/26)

Ask Not...

James J. Cramer:

As for your comments on the cribbers, in

Real Clough-t , the attitude is why wear out your shoe leather looking for stories when you can lift information from better-informed sources? This is the ethics of the '90s and it started with

Bill Clinton's

way of operating. Be unethical, lie and apologize. Have you noticed that many more things go wrong through lack of commitment to customers, clients, etc. People think when they say, "We apologize, etc.," the slate is wiped clean. We are on our way to becoming a second-class nation because of complacency instead of commitment.

-- Peter Green

(received 8/27)

At the Margins

James K. Galbraith:

In your column

The Fed's Fighting the Wrong Battle , you state, "Since 1993, margin borrowing has tripled in relation to GDP. In relation to capitalization, margin debt now stands at levels surpassed only in the run-up to the crash of 1987. The actual volume of margin debt, $177 billion in June, is up 80% over 1996." What I really want to know is the dollar amount of margin debt by all holders, compared to the dollar amount of stocks, bonds and other financial assets held by these same players. My personal margin debt might have increased 200% in the past three years. But if the stocks, bonds and other financial assets held to secure this debt has increased by 500%, then I am really being more conservative than before. The fact that margin debt is up 80% since 1996 is not particularly relevant in and of itself. Since 1996, the


is up about 99% and the


is up about 143%. So as I see it, margin debt as a percentage of stock market valuation is actually falling.

-- Richard Ranney

(received 8/26)

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