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.

In Defense of Lernout

claims that


Herb Greenberg

nor his associates at

have a position in

Lernout & Hauspie




(the CEO of Lernout had been the CEO of Quarterdeck). It remains unclear still whether they ever


a position in Lernout or Quarterdeck. Regardless of the Clintonesque phrasing

might prefer to use, many investors like me will keep wondering about the motives for the manifest distortions in Greenberg's reporting on Lernout & Hauspie.

On April 7, Greenberg

wrote "Never mind that Lernout faces the same SEC restatements as Network Associates and other companies whose stocks have been shredded. Never mind that analysts have slashed its earnings estimates in anticipation of SEC-mandated restatements. Never mind that Lernout & Hauspie, once again, has delayed the report of its earnings."

But at the time of this article, Lernout had already released a few days earlier the results of the SEC review, yet Greenberg reported it as if it were still facing SEC restatements.


also wrote "But seriously, folks, based on Money's estimates, Lernout trades at more than 80 times expected earnings." On the day of the article, Lernout was trading at approximately 40 with a Street EPS estimate of approximately $1 per share for 1999. This equates to a P/E of 40 and not 80 as Greenberg cited in his article.

-- M. De Volder

(received 4/13)

Cendant's Incentives

In response to

Return to Cendant: Readers Respond I, like

Mr. Weintraub

, wonder why

Walter Forbes

has not been indicted. But I disagree with him on the issue of restating options. For us, our options are investments. For employees, it is incentive. Assuming the remaining employees had no part in the financial irregularities, we (as owners) want them to have incentive to perform. If you don't reinstate the options, you'll give them incentive to leave, further complicating



's ability to recover.

-- Jim Stewart

(received 4/19)

Changing Stripes

James Cramer:

In response to your column

Cramer Looks Back: A Trader Changes His Stripes, I can relate. I tried twice during the past 12 months to revert to a value strategy focused on small, high-growth companies. Both times I got killed.

The trader in me said to place the stops; my old instincts said to wait it out. Now, I trade the stops even if my profits are not so grand. At least I'm not losing money.

-- Stephen W. Hiemstra

(received 4/19)

James Cramer:

I appreciated your column on

intro/retrospection. Particularly appropriate, because it brings that grand benefactor "historical perspective" back to mind, on an evening when a "continuing beginner" needs to remember why he studied for two degrees in history in the first place. Selling is hard to learn.

-- Daniel Barnes

(received 4/10)

Clairvoyance Is Key

Aaron Task:

In response to your article

Esoteric Technical Tools Told Market's Tale of Woe Early: Too bad the article wasn't published just one day earlier. I'll grant that it is interesting information, albeit one day late. Any conclusions or opinions on the validity of the "arcane" technical bears would have been appreciated.

Should we attempt to subscribe to the same gurus the hedge fund managers use to get an opinion on tomorrow's movements?

-- Jim Ide

(received 4/19)

Learning Life's Lessons

Gary B. Smith:

I found your column

Taking Off the Kid Gloves quite interesting, and I must confess that I totally agree with your conclusions that kids shouldn't spend their time trading. This from a former Wall Street government bond trader.

After graduating from


, I had my heart set on being a professional tennis player; Vietnam took care of that notion. I was very successful on the Street, and as a result, I departed by age 34, well off but burned out.

Like you, I learned almost all of what I know about business from setting up my own commercial production company and being involved in every aspect of the company. I had a wonderful 21-year run.

My father passed on in late 1995, and my mother summoned me to run the considerable fortune he had left behind. Things have gone very well. Perhaps I have learned some lessons subliminally; perhaps I'm more mature. I still have funny feelings about trading for a living. It serves up a deadly cocktail. I wish I could be more articulate about all of this: It is just that your piece struck a real chord within me. I am certain that I would have made the same decision you did.

-- Craig Woodruff

(received 4/18)

Gary B. Smith:

As much fun as the market certainly is, one won't learn life's important

skills sending buy and sell orders to an ECN somewhere.

-- Doug Nagy

(received 4/18)

Phat Pfizer's Thin Soup

Jesse Eisinger:

In response to your story

Pfizer's Phat Quarter Leaves Thin Soup for Investors, I'd argue that Pfizer is worth buying precisely because it plows so much of its earnings into research and development for new drugs.

But then I'm not a trader. When you value a drug company, you have to make some allowance for the fact that the price-to-earnings not only discounts earnings, but also the research muscle and brain power behind the company.

-- Michael Fang

(receive 4/16)

Don't Stop Thinking About Tomorrow

Jesse Eisinger:

In response to your story

Shorts Find Themselves Knee-Deep as Biomatrix Prospers, in my opinion, you are too concerned with the short term. With drug companies you have to put as much cash into research and development as possible to fuel future growth.

Wall Street knows this. Where do you think


(PFE) - Get Report

will be 25 years from now when I retire? I think the stock will be higher. I think it will beat the


over time.

-- Dave Kehrl

(received 4/15)

Manipulating the Little Guy

James Cramer:

In response to your column

Go Ahead, Blame the Daytraders, this sector rotation looks like a big money manipulation of the market. The rotation into companies that have terrible earnings records and questionable future earnings looks to me like a way to blow out the daytraders. They must have lost billions over the past two days. I have been in the market for 30 years, and this looks like a very familiar pattern of faking out the little guy.

-- Bill Rouse

(received 4/15)

Making a Stink

James Cramer:

In response to your column

Yahoo-hah!, OK, so



was named by nerds. Now I'm always going to think of it as stinky. Who will buy it now, or does greed allow even an aroma-impaired stock in the portfolio?

-- Antoinette Burkett

(received 4/15)

Customer's Comeuppance

Marc Young:

In response to your story

Competition at Home Pressures Deutsche Telekom to Expand Abroad , it was in the cards for a long time. I had a telephone installed for my in-laws about 28 years ago in Germany. We had a lot of difficulty, a long waiting period and high charges to get the telephone installed. The service was rude beyond belief.

Some time after the phone had been installed, we queried the amount of an invoice. The reply was that

Deutsche Telekom

(DT) - Get Report

did not make mistakes. And they also ordered us to pay the amount invoiced, or they would remove the telephone, and we would have to pay a hefty charge for the removal. We asked for an itemized bill. They said they did not do that and had no plans for doing so in the future. We pointed out that itemized telephone bills have been the norm for many years in the U.S. The reply was "Go and live there if you want that service."

Last year, I spent considerable time in Germany, and Deutsche Telekom's service to customers, especially Internet customers, was still the arrogant, bullying, customer-be-damned attitude. I watched with glee as the competitors took it apart. Deutsche Telekom fully deserves all its current problems. It will be a long time before it is rid of the company culture that led to these problems.

It is nice to see corporate bullies learn how important it is to keep the customers they have vs. trying to gain new ones!

-- Conrad E. Maher

(received 4/16)

Understanding Goodwill

Jeff Bronchick:

In response to your column

When Goodwill Isn't, amortization is just an accountant's way of meeting the conservatism objective. How much is a brand or other intangible worth? Presumably, the worth can be measured from the increased cash flow, seen in future years above that of a similar company, with similar hard assets sans a brand. Therefore the accountant likes to "clean up" the balance sheet. He or she does this by writing it off, over some arbitrary period. It's based on the principle of conservatism. Some brands wither and some brands prosper postacquisition. Some brands grow internally. People are not allowed to add it to their balance sheets because that would obviously lead to wild subjectivity.

Consequently, it makes sense from a balance-sheet perspective to get rid of intangible values, if you want comparability between different companies. Some companies acquire brands; others build internally. Without the write-offs, a comparison of balance sheets would be meaningless. The write-offs have nothing to do with the earnings statement or cash flow. They simply inform parties such as bankers and investors what kind of risk they have if the implied value of the purchase price doesn't work out. It's a useful bit of knowledge.

So one should go ahead and value companies on a cash flow basis. Remember, the lowly accountant is dinking around with goodwill to alert investors of what the downside may be if the world ceases to be perfect.

-- Ian Kilgour

(Received 4/13)

Jeff Bronchick:

I very much enjoyed your

article regarding goodwill.

You're exactly on the mark about accounting. If I'm not mistaken, the primary purpose of accounting is to paint the best "numbers snapshot" of a company's health. Goodwill doesn't shed a lot of light, and neither does the fact that employee options are not rinsed through the income statement.

Economics are economics, and conveying a portion of the company to the employees is an economic cost to the shareholders. In most cases, it's more than offset by the economic benefit of gaining more talented and highly motivated employees. I'd imagine that the list goes on and on.

On the other hand, I'm always somewhat befuddled when an analyst loves a stock at 50 and then hates it at 25. They ought not to be that wrong that often! Perhaps the analysts need to express target prices, rather than differing degrees of buy recommendations, along with their reasoning for changes in their targets, i.e., revenue growth, cost issues, new products, etc.

-- Chad King

(received 4/14)

Wrong or REIT

Christopher Edmonds:

In response to your column

Analysts Look to Buffett to Boost REITs , I yield to no one in my admiration of

Warren Buffett

. However, beleaguered REITs bulls would do well to remember his recent foray into silver.

-- Galen Cawley

(received 4/13)

Christopher Edmonds:

I don't care how out of favor they are,

REITs offer the most potential bang for your buck at a very low risk, in most cases, in the markets today.

Savvy investors, as opposed to speculators, should be snatching them up NOW and forgetting about them for a year or more.

-- George Seay

(received 4/13)

Merrill Online: An Oxymoron?

James Cramer:

In response to your

chat with

John L. Steffens

on Yahoo!, I read the transcript, and indeed it had a warm and fuzzy feeling about it as Mr. Steffens conceded that online trading would become more and more important in the future.

The more interesting point, however, is how in the world is

Merrill Lynch


going to move to online trading? Having worked in private client services yourself, you know all about pounding the pavement, prospecting, etc., for potentially lucrative clients. How will Merrill provide incentives to its sales force to bring in assets, on which the commissions will be minimal?

I think that Merrill will have to bite the bullet and lower compensation for most of its financial consultants. The firm will no longer be the retail-driven force that

Charles Merrill

created. Then it should embrace online wholeheartedly. I worked at Merrill in both banking and sales and trading and know that this task is much easier said than done.

-- Greg Manabat

(received 4/13)

James Cramer:

In response to your column

More Web Converts, I thought you were very gracious to Launny Steffens during your Yahoo! chat. I doubt there are any agnostics, at least at Steffens' level -- maybe some ostriches. It's interesting to contemplate where


(MSFT) - Get Report

would be today without the rapid response several years ago of

Bill Gates

to the importance of the Internet to his company.

No doubt some companies that react and adjust late or slowly will find their futures eclipsed.



market cap, now almost 60% bigger than Merrill's, is of note, and I wonder if Merrill is not a step or two behind?

-- William C. Bitting

(received 4/13)

Jim Cramer:

I think you're WRONG about Merrill's ability to keep pace! The

Web allows for a disconnect between those who provide financial news, i.e.

, and those who provide access to the markets.

Buying and selling stock is about to become a commodity.




(AMTD) - Get Report

have it right. Merrill Lynch has it WRONG. Why pay $40 to $100 per trade when I can pay $10 to Datek?

-- David Wolfson

(received 4/13)

Ample Speed @Home

Spencer Ante:

There was a letter

posted here by a




(ATHM) - Get Report

user who had much negativity regarding @Home service. I signed up in November, and it took until January to get operational. Since then it has been nirvana with respect to service. It's fast and efficient, and I can stay on 24/7/365 and never get bumped off as happened so frequently with the various ISPs over telephone lines that I used before.

As far as speed of sites on to my monitor, @Home delivers as fast as the sender can send. That was absolutely NOT true with phone hookup.

Don't know what problem that contributor had with his service, but for me it has been nothing but fantastic!

-- Michael Gordon

(received 4/13)

More Competition for Boxmakers

Eric Moskowitz:

In response to your story

Looking for Answers at Compaq, has anyone figured in the impact of buying refurbished computers online instead of buying a new computer? I recently bought a refurbished computer online and paid approximately half the price of a new one. This has to have an impact on new PC sales.

Just something to think about.

-- George Ask

(received 4/13)