eBay Dismay and a Little Respect

Readers sound off on recent articles.
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Dismayed About eBay

James Cramer:

In response to your column

No Breaks for eBay I am an

Oracle

DBA and a UNIX administrator, all rolled into one. I am also an independent database consultant to boot.

I would expect that several heads would have rolled at

eBay

(EBAY) - Get Report

for the most recent snafu. There is absolutely no excuse not to keep up with operating system updates, especially when you are using a relatively old version of a software product. This incident would certainly make me re-examine my thoughts on how decisions are made in the upper levels of eBay.

Absolutely avoidable -- and utterly unforgivable.

-- Stephen F. Cawley

(received 7/13)

James Cramer:

Maybe people

tolerated

AOL

(AOL)

back then because there were really no acceptable alternatives. What else was available? Compuserve or Prodigy? I don't think so! Everybody and their dogs have online auctions today. If these other players experience similar outage problems, I think people will come back to eBay like they did to AOL -- complaining all the way.

No positions in any of the stocks above.

-- Rhonda Arnold

(received 7/12)

Improving the Road to Respect

Caroline Humer:

In response to your article

For Online Brokers, It's Been a Long Road to Respect, I appreciate you covering this issue. From my experience in the industry, 15 years in the trenches at

PaineWebber

and

SmithBarney

, the systems used to go down at least once a month, sometimes more frequently and for as much as 24 to 48 hours. All trades had to be entered by phone during those times through the clerk and the trading terminal.

Up until recently, the ability of the individual investor to enter orders on a timely basis was severely disadvantaged. With the advent of online trading, that has changed. It will only improve with the movement to high-speed Internet access via cable and fiber-optics networks. The old saw that the individual investor doesn't know what he or she is doing is no longer true.

For those who lack skill, time, resources or inclination, there will always be a need for either investment advisers or brokers.

-- J. Dwight

(received 7/12)

Options Explanation

Erin Arvedlund:

In response to your column

FAQ Preview: Some Basic Questions on Options, I find

Murali Ramaswami's

explanation ridiculous. I am referring only to the first point he makes about the debt/equity ratio, how it changes when the market goes up/down and what this means to the volatility of future returns.

In my opinion, a company's leverage ratio does, in fact, fluctuate with the market value of its equity. But to say that a company's volatility of returns will be similarly affected is nonsense. Leverage as compared to cash flow or some close proxy is what determines the financial health of a company. A company with a high stock price is only financially better off than when its stock price was low, specifically with respect to leverage, if and only if it is assumed that the company will need to return to the equity market for financing. This may, of course, exert its own decidedly negative influence on the stock, as secondary offerings often do.

-- Rodney Watts

(received 7/12)

Mutual Fund Bench Check

Brenda Buttner:

In response to your column

When Your Fund Manager Leaves, Check the Strength of the Bench, that hit me right between the eyes. I've been with the

(WWWFX) - Get Report

Internet fund for about eight months; it's been a rocky ride, but I knew what I had gotten myself into except for

Ryan Jacob's

departure. I called the company and asked who was replacing him. They said a Steven something, another 30 year-old coming from the same background as Ryan, and they said

Pete Doyle

would still be on board but my feeling was always that Ryan ran the ship and picked the stocks.

The young man answering my barrage of questions just didn't know what to say. We thought that was very cathartic; however, it doesn't help my dilemma.

-- Bonnie Sirkin

(received 7/1)

Brenda Buttner:

Your question regarding

new money going to stocks from funds is an interesting one. I am a case in point. Up until this year, I was strictly an asset gatherer catering to mainly high-asset clients approaching or already in retirement. Now, since the October low, I have picked up eight trading accounts (minimum 100K) from existing clients at their request. I was a full-time stockbroker in the purest sense in the early '90s and before, so I am comfortable with daytrading.

The point is, these people want in on the action that individual stocks offer. They literally want the quick money. Now, if these older folks are caught up in this environment, you can imagine the lure to the younger crowd. All you have to look at is the number of online trading accounts and you can see where the former mutual fund money is going. My concern is that they will surely get burned and this money will be gone forever. Last October, were they buying or bailing? I suspect the latter! I sincerely hope they are not lambs waltzing into the lion's den.

-- Branson Willis

(received 7/1)

Waiting to Buy a Toy Idea

James Cramer

In response to

Toying With a Buy Idea, my opinion is that

Mattel

(MAT) - Get Report

bought a bill of goods in

The Learning Company

! Let's give them two quarters to make sure they know what they have on their hands. You yourself say that "you can't game fraud." I don't think Mattel is fraudulent, just mismanaged, but The Learning Company is another story! I have been tempted by this story but have decided to wait. Hopefully

Herb Greenberg

will latch his teeth onto this one again and we'll see what shakes out.

-- Dave McCabe

(received 7/9)

The Meaning of Valuation

James Cramer:

In response to your column

Mea Culpa, Yahoo!, I agree. However, on

Yahoo!

(YHOO)

and many of the Nets, you just can't ignore valuation forever! With a market cap of $33 billion and a P/E of 250 times the most optimistic Y2K estimates, the stock price reflects tremendous optimism and nothing but success going forward.

I'm probably responsible for 100-plus Yahoo! page hits every day and I've never read or opened a banner in my life -- honest! It's a great company. I wish I'd owned it during this run, and I will probably miss more of it, but jeez, how much should 11 cents be worth, at 170?!

Could it be that Yahoo! is already falling prey to the option expiration coming up next Friday? That would explain why the trading seems wrong.

-- Stanley J. Vitikas

James Cramer:

About your

column on Yahoo!, maybe we're looking at different charts, but a 50% move from the middle of June to two days ago is a super run in my book. I agree, it's not the magnitude of the previous runs, but what's ramping 30 points a day now?

-- Glenn Escovedo

(received 7/9)

Finding the Upside

James Cramer:

In response to your column

When Upside's No Surprise, I can't directly tell you what "the switch" was. However, last week, as a fun project with my nephew, we built a PC from parts. A screamer, 400MHz PII, 64 meg, 8.4 gig, all the hardware extras, no software, $675. We tried to buy the cheaper

Intel

(INTC) - Get Report

Celeron processors, but they were not in stock for the SLOT #1 type at many of the Net shopping sites.

This is the third PC they have in their home! I guess the PC is not dead. I am long

Dell

(DELL) - Get Report

, Intel,

Microsoft

(MSFT) - Get Report

and

Cisco

(CSCO) - Get Report

. I let go of my

Hewlett-Packard

(HWP)

. Rats!

-- Kevin Waite

(received 7/9)

Still Fuming

James Cramer:

In response to your

No MO Lies column, thanks for that piece. However, I have to believe that the class-action suit will be decertified. I have a hard time believing those tobacco executives are huddled in the boardroom, conniving new ways to misrepresent their products and trick smokers into believing they are safe and harmless.

Yes, they advertised to death the concept of sex and cigarettes. But somewhere people will finally wake up and realize that rather than being helpless victims in a trance, they are voluntary purchasers and users of a product that could harm them, a product that is entirely legal to produce, purchase as an adult and use.

I don't smoke anymore. I don't recommend that anybody use the product. But where does all this "evil empire" stuff come from? Personal responsibility has to begin somewhere.

--

Patrick Vale

(received 7/8)

James Cramer:

About

Philip Morris, I think that the court will not let stand a decision establishing blanket liability on tobacco given their rationale in this case. Class-action suits are intended for claims that are significantly similar in their facts. Smoking cases are inherently varied in their underlying facts.

But then again, I've been wrong before.

--

Randy Morley

(received 7/8)

Dismantling the Analysts

Suzanne Galante:

In response to your

The Ax: Henry Blodget vs. the Internet Queen, I've got a few comments:

  • The rise of securities analysts from "back-office functionaries" began long before the advent of the Meekers and Blodgets of this world.
  • Analysts' role of "high-profile opinion-shapers and rainmakers" and their close association with underwriting activities puts an end to any credibility they may have had as objective interpreters of companies and their stocks. They do not work for the "ordinary" investor.
  • On average and over the medium to long term, analysts' abilities to make short-term market "calls" is no better or worse than anybody's.
  • By and large, Internet analysts are "pumpers" of stocks in a hot sector. They have given up or glossed over any substantive analysis of real value.

Quite simply, analysts merely pander to investors' desire for short-term performance. They are purveyors of "sizzle" and ignore the "steak". They work for the "store" (and its underwriting customers), NOT for the

hoi polloi

.

--

Peter Irvine

(received 7/7)

Just Asking

Spencer Ante:

I found your article

Ask Jeeves: What's the Big Deal? interesting. However, why pick on

Ask Jeeves

(ASKJ)

? They do have a unique search engine. Try asking "What time is it in the U.S.?" on

Yahoo!

(YHOO)

and see what you get. It will take you all day to find out what time it is. Ask Jeeves the same question and you get the answer right away.

Such a service must be worth something.

--

Curtis Travis

(received 7/6)

Fireworks Online

James Cramer:

In response to a comment you made in your column

Intel Upgrades Make Hot Market Hotter, funny thing. I'm a subscriber from Canada and on Monday I came to work because all of the world's financial markets were open except in the U.S. I clicked on to

TheStreet.com

to get the latest commentary about the markets and found out this cyberpaper took most of the day off too!

--

David Dempsey

(received 7/6)

Listening for the Alarm

James Padinha

: Your column

Waiting for the Alarm to Sound echoes pretty much my own assessment, albeit I arrived at mine somewhat differently.

It seems to me that the

Fed

has, if not given up on stepping out with some view of the future, has at least exposed the economy to much greater volatility/risk rising from price/growth pressure than if it were to have put in a 50 basis point increase.

I believe the members are all probably humbled by the way things have worked out over the last three or four years.

Alan Greenspan

always did read something new and different happening. Many other members were far less sanguine about letting things stay. Alan Greenspan's success has, I'm sure, made them all question up and down, left and right.

Greenspan's own "absence of belief" is far more problematic as you suggest. More than ever, lining up the catalysts that can lead, suddenly or not, to a change are vital. Here is my own list of significance as catalyst for a violent Fed move.

Wages/big labor contract: I don't know where the next big labor contract is coming up for renewal, but a move to a big wage increase rather than other "soft issues" like outsourcing, overtime, etc. will be very significant, especially in reference to its broader implications and influence in other labor segments.

Housing/consumer spending: This sector continues to go higher and higher. The Fed will feel obligated to act very strongly, at least 50 basis points up.

I've been following markets for a while. I know how quickly sentiments change and suddenly everyone foretells doom and gloom. Federal budget outlooks could quickly digress to little surplus and cutbacks or, with a Democratically controlled Congress next year, a tax increase.

--

Mike Hirl

(received 7/6)

James Padinha:

Regarding your poll on the best

mystical-numbers biblical book, you neglected the most important book as part of the survey options:

Hitchiker's Guide to the Galaxy

, where everyone knows the answer is "42" to the question about "life, the universe and everything."

--

Ron Wizard

(received 7/6)

Grinning at the Grumps

Jim Cramer:

Your

Bring on the Grumps was a great dose of good ol' back to reality, get yourself back to work, Monday morning medicine. I needed that more than ever to motivate me when I'm looking at a five-day week that ends on Saturday this time around.

--

Joseph O'Brien

(received 7/6)

James Cramer:

In response to your column

Bring on the Grumps, finally, a piece that says it all! It coincides with my line of thinking that the bond people are overly paranoid and that their sentiment is what has driven rates higher. To me, the

Fed

awarded these "scarecrows" the consolation prize by only lifting Fed rates by 25 basis points. There was no big trophy or the hint of them getting one in the near future.

Part of my reasoning has to do with the things you mentioned and the Fed's continued printing of more and more money. Conditions just don't seem right for a big move, at least not yet. Therefore, I believe that the stock market will move up during earnings season as the bond people try to readjust their positions and more and more semi-annual pension funds pump money into stocks and bonds. So, with those beliefs, it seems logical that interest rates will get closer to 5% than to 7% and the stock market will post higher highs. However, the valuation of stocks seems very very rich and I'd sure hate to see a repeat of '87. But come October, I look for the Y2K hysteria to be in full force and "Wall Street come a tumblin' down."

Bruce Ayers

(received 7/6)

Questioning Medicare

Heather Moore:

Regarding

Columbia/HCA Healthcare Execs Found Guilty in Medicare Fraud Case, while the executives in charge certainly were responsible for some shenanigans, why hasn't anyone begun to question the people in charge of

Medicare

about their systems and controls? It's hard to believe that anyone doing business in the private sector would have allowed these massive frauds to take place for so long. It's pretty scary for us little old taxpayers to watch these bureaucrats and their hired help throw away precious capital like this.

But then again, it's not their money they're handling. It's ours!

--

Craig Kincaid

(7/3)

As originally published, this compilation of letters contained an error. Please see

Corrections and Clarifications.