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Busy Signals and Short Stories

TheStreet.com

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E*Trade Goes AWOL

Amy Olmstead

: The

TST Recommends

biggest trouble with the online brokers, well, at least

E*Trade

(EGRP)

, is that they're having these problems while simultaneously taking on new customers! It's expected that there will be problems; to add new customers when you can't handle the current load is completely irresponsible. I've had to call customer service a number of times in the last couple of days; each time, I've been on hold for at least an hour. Just for fun, I called the phone number for new subscribers, only a fifteen minute wait!

Roger Thornhill

(Received 2/3)

Just got done viewing the

Victoria's Secret

(IBI)

runway show (11 p.m. EST). Tried to surf their site and they have an "unusually high traffic can't process your request" banner. I didn't know that I was at E*Trade's website.

Brad White

(Received 2/3)

Hot Shorts

Jesse Eisinger

: Here's a

short story for you. Bought some

Hershey

(HSY) - Get Report

puts right before earnings came out. They miss. The stock drops 9 points. Nice. The next day a big brokerage house gives them a buy rating. The stock starts back up. I had the same problem trying to short

DuPont

(DD) - Get Report

. Stock drifts lower to the point of no return but refuses to cave in.

Here's the problem with going short, there is an invisible line drawn underneath even the worst looking chart. The shorts are covering because the downside is limited, and the short side is no place to try and pick up dimes in front of a bulldozer. I made some cash on HSY but the stock never tested the previous low before it rallied. On down days it's the out of favor issues that are holding up the market. Which is bullish, I think?

Dave Reutter

(Received 2/4)

Agreeing with Greenberg

Herb Greenberg

: Nice

column on

Dell

(DELL) - Get Report

. I agree with you. Dell is a great company, but the current stock price carries enormous risk.

I chat on some of the Internet chat sites and whenever I comment on the high valuations of Dell,

Compaq

(CPQ)

,

Sun Microsystems

(SUNW) - Get Report

etc., I get the same incendiary replies. They don't seem to think valuations based on earnings or revenues matter.

All they care about is that the company's stock price runs up, then splits, runs up again, then splits again and on and on and on. I'm all for making money, but at some point the party ends.

Tech sector investors seem to have no fear of high prices, but then again I suppose some have never seen falling prices that are falling faster than a speeding bullet.

John Daly

(Received 2/2)

Herb Greenberg

: I sympathize with your

coffeemaker crisis. I recently ordered, and after 2 weeks received a PCI 56k modem from

CpuMicromart

(EBIZ) - Get Report

. After 4 days, I managed to crash my system, rebuild it, then find out on Monday from my ISP tech support that the modem was defective. So I went to

Best Buy

(BBY) - Get Report

and bought a

Zoom

. Had it up and running in 30 minutes, no problem!

Sent an email to CpuMicromart via their website, for a return request authorization, explaining the debacle. I got a prompt reply stating that their policy does not allow for refunds, but I should send them the modem. They will check it out, repair, or replace it, and then return it. But since I was a stockholder, they would see what they could do. I filled out the online RMA form, got a reply of receipt. That was in early December. To this date have not heard a single word. Needless to say, I am no longer a stock holder.

I sent one more email stating that customer satisfaction and word of mouth, especially via the Net can make or break a company. No response to date. I notice their stock isn't holding up too well either!

Carey Smith

(Received 2/3)

Big Deals and The Average Joe

Jim Seymour

: Sorry, but the whole

AT&T

(T) - Get Report

,

TCI

(TCOMA)

,

Time Warner

(TWX)

, business leaves me profoundly cold and skeptical that the average Joes across the country will see any of these grandiose hypes coming our way for years at best.

You

put your finger on a very critical point. As a long-time TCI customer, and I'm not sure that's the right word for our relationship, I can't see myself ever entrusting my internet access and telephone service to the most user unfriendly and unreliable outfit I have ever encountered.

Henry J. Costanzo

(Received 2/1)

Bandwidth Junkies

James Cramer

: I agree that sooner or later someone will screw it up (

Won't Anybody Screw It Up?), but I think all the companies that you listed still can handle the competition, and then some. The masses will demand more speed and more reliability.

Bandwidth has become the Internet user's drug. We use everything they can give us through more enhanced services. We freak out when the system doesn't work or doesn't work fast enough. We can no longer accept busy signals or "unable to connect" messages. Until Internet access is as regular as turning on a light switch, and the bulb gives off its full 150 watts every time, there is room for competition.

Until that time, they can keep on merging and new companies can enter the fray. The larger companies will provide the more regular services and the smaller companies will continue to come up with entrepreneurial new solutions. Then, the larger companies will continue to buy the smaller ones. When the pipe is big enough and the service consistent enough, then we will begin to see some screw ups. Until then, there is more than enough demand to satisfy all these ISPs and suppliers.

I think the benefits from the current spate of transactions will outweigh any write offs that may occur from a bad transaction or two. By way of example, I remember thinking "it can't get any better than this" when

Prodigy

first offered 14.4 access upgrading from 9,600. It got better and it's still not fast enough.

Michael Feinsod

(Received 2/2)

Looking for Loot

Jim Seymour

said in

The Decapitalization of America: Consider

Time Warner's

(TWX)

balance sheet, which for the most recent quarter showed that cash had fallen over the same quarter in the previous year to $393 million, from $761 million -- a 94% drop.

NOOOOOOOO! Absolutely NOT!

A 94% drop from $761 million would leave Time Warner with a mere $45.66 million, not $393 million. Perhaps you meant to say that $761 million is a 94% increase over $393 million (761 = 393 x 1.94), but that makes no sense unless you can make time run backwards.

In computing percentage changes from a base, remember this simple rule: the divisor is always the number you started with, in this case, $761. Divide 393 by 761 and you get 0.5165. This means that the 393 you are left with is .5165. That implies a 48.35% drop; not a 94% drop

If

TheStreet.com

wants to inspire confidence in its financial analyses, your editors will have to pay more attention to weeding out mistakes of simple arithmetic, like the above.

David Hack

(Received 1/31)

Closing the Gate

Eric Moskowitz

: I think that's a

great article, and may help put the lie to the mass market frenzy over these kinds of stocks. IMHO 90% of the value of a PC is the service you get with it, unless of course you really don't use it. If you're paying 35 times earnings for a company, that means you're paying up front for the next 35 years profits. With the kind of service you describe, it's hard to see them being around for 35 years.

My take on the

Gateway

(GTW)

stores is that they're destroying the one

raison d'etre

Gateway has -- people don't pay sales tax on mail order. Sales tax is more than the entire margin on a PC for most of the Northeast.

John O'Donnell

(Received 2/1)

Eric Moskowitz: Your piece was right on the mark. I have been certain that Gateway would ultimately get in trouble for the customer prevention policy they have implemented in their retail stores. In the Burlington, MA store, you cannot buy in the store unless you are a Gateway customer.

I have been in the store several times to browse or buy printers, monitors, etc. Each time when I was ready, I was asked, "Are you a Gateway customer?" When I replied, "Not yet," they said they were sorry but they couldn't sell me anything.

Catch 22?

Gil Roeder

(Received 2/1)