Rusting Rigs and Pharma Problems

Readers weigh in with their insights and comments.
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TheStreet.com publishes selected email received by the publication and its staff members. To send an email intended for publication in this section, write to letters@thestreet.com and include your full name and city. Letters may be edited for length, style, clarity and accuracy.

Is AOL Controling the Dice in the Broadband Game Table?

-- a response to "AOL's Possible Poker Play"

Pete Sarotte:

In response to your comments, as seen below, "Do you really believe that such a company wouldn't have a strategy regarding a new technology that could revolutionize the industry? And who wouldn't remain a customer of

AOL

(AOL)

for $10 or $15 per month without broadband or cheaper prices elsewhere?"

As to the latter: A whole lot of folks that want real internet connection...I'm one."

As to the former, that is the interesting area. "Strategy" is valid only in the areas that AOL can control--and they have done a superior job in those areas. They have built a great, and costly, backbone to their many POP's. That investment loses ALL significance when there is the move to broadband. They could have THEIR OWN strategy for their backbone/pops. They are at the mercy of others in going broadband. Strategy doesn't mean squat when you you don't control the dice. Cable doesn't want to play with AOL's ball and the telcos with their

ADSL

are going to want that same money. So what strategy does AOL employ to change all that? I can't see what it is...guess I'm missing something...all I can see is a huge investment being written off early in the traditional dialup area. That won't be a pretty balance sheet.

--

Ken Prevo

(received 8/19)

E*Trade and Online Mutual Fund Discounts

Joe Bousquin:

In response to your article

Internet Cost Savings Have Yet to Reach Mutual Fund Industry , 85 basis points for

E*Trade's

index fund sounds like a rip off to me! 85 bps to run an index fund? Please. . I'm getting sick of

E*Trade

(EGRP)

acting like everything they do is above reproach. The ad for this particular fund (¿a fund that rates high on the investor jealousy index") is typically pompous and lacking in substance.

I recently read a story in the

NY Times

about an online index fund which will be free. I don't recall the name, but the fund has been filed. The basic idea is to sell advertising and make fund investors access all information on line - a paperless fund. Sounds interesting. Maybe

Vanguard

will lose their place as the lowest cost

S&P 500 index

provider for the masses.As always, I continue to read and enjoy TSC.

--

Jim Benham

(received 8/19)

Respecting John Bogle

Brenda Buttner:

Good for you,

well said and I could not agree with you more. It was no different than asking

Bill Gates

to leave the board at seventy, the man started it and ran it for many years. Sometimes certain people deserve an elevated amount of respect for what they have accomplished,

John Bogle

is among that select number of people in our industry to deserve that recognition. Thanks for an insightful article and please keep up the good work.

--

Bill Kramer

(received 8/19)

Falcon's Optimistic Plans

Mavis Scanlon:

In response to your article

R&B Falcon, Talons-Deep in Cash, Says It's Ready to Take Flight, Charlie Ofner makes an appealing case for his company. I have to give management's decisions over the past couple of years -- along with many of the other drillers -- a very poor mark. The drop in oil prices can't be blamed for all the problems. Overexpansion and lack of long-term planning seem to be serious faults for them and the other drillers, too.

Does Charlie Ofner expect that the idled rigs, 14 jack-ups and 27 barge, will be back in service to assist in gaining that $1.6 billion in earnings before expenses? What about all the other drillers and their idled capacity and new rigs to be delivered against contracts that either are at reduced rates or no contracts at all? As I understand the situation on capacity, the shipbuilders are going to deliver much unneeded new capacity. If new contracts are obtained, they are probably going to barely break even. I'm sorry, but I think Charlie Ofner is a dreamer and a mighty good salesman. Don't those analysts remember the problems associated with the last drilling cycle when rigs were rusting all over Texas and Louisiana? I hope my fears are ill conceived.

-- Dean Walker

(received 8/19)

Some Rust in the AHP Pipelines

Jesse Eisinger:

In response to your article

Homely American Home Presenting a Potentially Pretty Pipeline, an interesting story, to be sure. However, as a pharmaco-epidemiologist,

American Home Products

(AHP)

is not particularly appealing. This is a company with problems. It always has, likely always will. There was

Premarin

in the '70s and '80s and

Redux

in the '90s. Not only do these problems cost big bucks, they also take up a lot of senior management's attention. I guess if you liked

Johns Manville

and

Raybestos-Manhattan

in the '70s and '80s, you'll love American Home Products in the first decade of the new millennium.

As for me, the

Mercks

(MRK) - Get Report

,

Bristols

(BMY) - Get Report

,

Pfizers

(PFE) - Get Report

,

Scherings

(SGP)

, etc., are pharm houses with better records, financial and otherwise that there are better places to work my dollars all the harder and without the headaches.

-- David E. Lilienfeld

(received 8/18)

AOL's Possible Poker Play

To the authors of the three letters (see below) posted from readers about

George Mannes' story on AOL, all I can say is ye of little faith!

The kitchen gets a little warm and all the cooks run. Why is it when a company, much like a good poker player, fails to disclose all the cards in its hand, nonbelievers run amok? If you seriously have a long-term focus and want to be an investor as opposed to a short-term traitor, (the spelling is correct), then you shouldn't be so quick to slight

America Online

(AOL)

, the company that brought millions of people to the Internet. Do you really believe that such a company wouldn't have a strategy regarding a new technology that could revolutionize the industry? And who wouldn't remain a customer of AOL for $10 or $15 per month without broadband or cheaper prices elsewhere?

Let's not forget the ease of use with AOL and the content. Perhaps cost savings would be enough for customers to remain, even with broadband and lower prices elsewhere. Not to mention that $21.95 per month leaves a lot of room for lower prices; don't forget that prices can come down too. I realize that this changes the model. I needed to help these people remember who they're dealing with.

-- Pete Sarotte

(received 8/18)

Fast-Track Approval

Jesse Eisinger:

In response to your article

Coulter Stock Falters Amid Worries on Bexxar Filing, if the

FDA

does have a problem with accepting the submission for approval of this important drug because of technicalities or outdated guidelines, it will be a very sad end to a road to dramatic improvement in the way this agency conducts business.

The fast-track approval process, as I understand it, is supposed to allow expedited approval of treatments for patients who have nowhere else to turn.

If the FDA fails to approve this important new treatment as soon as possible, I am convinced that hundreds and perhaps thousands of lives will be lost due to the delay. Withholding approval for treating patients who have nowhere else to turn just because all the normal procedures weren't followed would be inexcusable and, I hope, beneath the dignity of the FDA. In any case, as a cancer survivor, I would love nothing more than to see

Avalon

and others in the same position take it in the shorts on this one.

--

William L. Wolfe

(received 8/18)

Shopping for Winter Bargains in the Summer

Jesse Eisinger:

About your article

Homely American Home Presenting a Potentially Pretty Pipeline, I agree

American Home Products

(AHP)

is a bargain at this price. There is huge demand for a sleeping medicine that doesn't sedate in the daytime. I think

Sonata

will be a smash hit. The other medicines will contribute very well.

It's always cheapest to buy summer clothes in the winter. I think that in six months this stock will be hot and 15 points higher.

--

James McMurrer

(received 8/18)

Looking at Linux

Jim Seymour:

In response to your column

Understanding the Red Hat Phenomenon, I disagree with you. In it you say "Support starts at $225 per incident, and goes up to a one-year $55,000 24/7 unlimited-calls contract."

Tell me again why I wouldn't go with

Caldera

if its prices were more reasonable. We aren't all

Fortune 500

companies, you know. A chance to get a "preferred" operating system without having to deal with a monopoly,

Microsoft

(MSFT) - Get Report

to be specific, is one of

Linux's

strengths, don't you think?

--

Larry P. Zilioli

(received 8/17)

Broad-Based Demand

George Mannes:

In response to your article

There May Be Plenty of Tomorrows for AOL in Its Bid for Cable Access, I was once an

America Online

(AOL)

customer. I was once a customer of

IDT

(IDTC)

. I had both via phone, and both were unsatisfactory ISPs. Why? In a word, frustration! Get on? Maybe. Stay on for any length of time? Not! I had the 56K modem service, but it was still very slow. How do I know? I took a chance and signed up for

Cablevison's

(CVC)

Optimum online, which farmed out the service to

Excite@Home

(ATHM) - Get Report

.

I pay a little more but free up one phone line, with lower phone bills, and more importantly, I have zero frustration. I go online in the morning, stay on all day -- and all night, if I wish. Unbelievably quick downloads, limited only by the site's ability to deliver. It's simple to operate, and since January of this year, I have experienced only two minor downtimes, which were automatically corrected in short order. When the world discovers broadband, it'll go wild. No doubt about it!

--

Michael Gordon

(received 8/16)

George Mannes:

I have a

caution for AOL. The company should be worried about those vendors that are trying to offer free Internet access. If the argument is there are no applications around compelling enough to warrant high-speed access, then it stands to reason that the vendors which are offering free service have a strong argument: Why pay for dial-up service when you can get it for free?

I am inclined to believe AOL is more serious about broadband access than it's willing to admit. No company that big could be that short-sighted. Yes I am long AOL, but I am looking for the right selling opportunity. The company's public rhetoric is not giving me a warm fuzzy feeling about its strategy.

--

Paul Lue

(received 8/16)

George Mannes:

From which planet did you write about the

modest demand for broadband? I'm now hearing things like, "I'd only move into a town that offers broadband Internet access" from people, and they are not tech geeks!

AT&T's

(T) - Get Report

MediaOne/RoadRunner

service is great, and it is a bargain relative to inferior ISPs and dial-up phone lines. You are whistling past the graveyard on this issue. Get out and talk to consumers more, portfolio managers less.

--

John Beckos

(received 8/16)