BUSINESSWEEK ONLINE: JULY 5, 1999 ISSUE

Readers Report

Value Investing, My Eye

Nice try. Jeffrey M. Laderman and William Miller can call it ''new value investing'' if they want to, but I know growth stocks when I see them (''Value investing is back--with a twist,'' (AOL), Dell (DELL), and Microsoft (MSFT) are value stocks, then Graham and Dodd are surely turning in their graves.

If you want to enjoy success as an investor in a low-inflation era, buy growth. Remember the ''Nifty Fifty'' growth-stock era that ran from the onset of low inflation in the 1950s to the OPEC oil embargo of the early 1970s? After the embargo, with inflation raging, value investing became king. Someday, for much the same reasons, value will be king again. As for now, growth rules.

Thomas F. Heald
Eads & Heald Investment Counsel
Atlanta



The U.S. Should Stop Wavering on Taiwan

I recently came back from living in Taiwan for 1 1/2 years, and I can assure you the Taiwanese understand the Chinese threat to democracy in Taiwan (''Will China-bashers in Congress shower Taiwan with arms?'' International Outlook, June 7). They also understand that mainland China will one day ''reclaim'' Taiwan, and that the Taiwanese will be unable to beat China in any militaristic show of force without help from other countries (Taiwan's population is 22 million, China's is 1.4 billion).

Yet the U.S. may, of its own accord, lavish weapons on a Taiwan that doesn't want them. Clearly, U.S. lawmakers want to arm Taiwan for one reason: to provide jobs for their constituents.

If we arm Taiwan, will we be prepared to help them use the weapons against China and fight for Taiwanese independence? I doubt it; the consequences are too great. Hence, U.S. lawmakers are asking for trouble--souring our already tense relations with China and creating even more hard feelings between China and Taiwan. The U.S. needs to stop wavering in its stance and either fully support Taiwanese independence from China, or not at all.

Whitney C. Brown
Wichita



The Internet Is Not Bringing People Together

How ironic that your artwork for ''Open all night'' (News: Analysis & Commentary, June 14) is a spoof of Edward Hopper's Nighthawks. Long before the Internet era, Hopper was portraying the alienation in American life. Contrary to what those besotted with computers believe, technology is not bringing people closer together but is driving them further apart. When many people mistrust or do not know their neighbors, the fabric of community is shredded. Talking with strangers miles away through a chat room does not reverse the alienation Hopper documented, which continues to this day.

Deborah C. Sawyer
Buffalo



Microsoft Can Afford a Spending Spree

In ''Who do you want to buy today?'' ((T).

The economics of corporate finance point to a more obvious purpose for these acquisitions. Microsoft's capacity to generate cash is embarrassing. When businesses generate cash in excess of ordinary business needs, they have two options. Management can admit that shareholders are better able to invest this cash and declare a dividend. Alternatively, companies can invest excess cash on shareholders' behalf.

In the past, Microsoft has used cash to build a solid portfolio of Treasury securities. Chief Financial Officer Greg Maffei probably sensed that shareholders would soon question this strategy. T-bills were watering down company earnings while causing an embarrassing problem in the face of government scrutiny. If cash is a symptom of a monopoly, Microsoft is a big one. Accountants generally associate T-bills closely with cash on financial statements, and Microsoft's was growing beyond several years of company expenses.

With government regulators applying pressure and with shareholders' lofty expectations, Microsoft had little choice but to enter the acquisition trail in a big way. Look for Microsoft to turn up the heat on its acquisition binge as a matter of necessity.

Scott Moser
Bellevue, Wash.



Low-Skill Immigrants Are Driving Down Wages

''Immigrants' economic woes'' (Economic Trends, June 7) did an excellent job of highlighting the impact that the current high level of low-skill immigration has on immigrant workers. According to the U.S. Labor Dept., 35% of immigrants who arrived in the 1990s did not have a high school diploma. (By comparison, only 9% of native workers lack a high school diploma.)

With the job market saturated with low-skilled immigrants while the need for such workers declines, it is not surprising that average hourly wages for high school dropouts has fallen by 26% in real terms over the past 20 years.

The Labor Dept. and various industry analysts project that virtually all future new job growth will require workers with an education beyond the high school level, while the number of jobs that require less than a high school education will stagnate. Yet our immigration policy is going in the opposite direction, bringing in increasing numbers of uneducated workers while industries face growing shortages of skilled workers. You are right that policymakers need to focus on this problem.

Lamar S. Smith (R-Tex.)
Chair
House Subcommittee on
Immigration & Claims
Washington



''Acting on Principle Is a Dangerous Thing to Do''

I'm the Sheila McGough of The Crime of Sheila McGough, by Janet Malcolm. As your reviewer noted in ''Legal Puzzler'' (Book Briefs, May 24), Malcolm concluded I wasn't guilty as charged. I'm glad and grateful for that. But I disagree with her about the meaning of the case. To me, it's simply that acting on principle is a dangerous thing to do. I insisted that an ordinary man was entitled to the same representation of his interests in both civil and criminal defense matters that the rich, the celebrated, and the notorious get as a matter of course. Their lawyers are aggressive and persistent, avoid disclosing ''bad facts,'' craft legal theories to fit the situation, and protect the client any way they can within the law.

So did I. The difference was, doing so put me in the way of some federal prosecutors who used their considerable power to be rid of me permanently. I lost my civil rights, my career, and my freedom for several years because, even with the help of good legal counsel, I was no match for lawyers who could get away with using lies to win a conviction. Malcolm found me irritating because I kept writing and talking about evidence of prosecutorial misconduct. I told her she needed to go beyond government witnesses telling false stories and ask who directed the stories. Tiresome, maybe, but here in the Washington area, we call it staying on message.

Sheila McGough
Alexandria, Va.



''Manufacturing was never on the floor'' (Readers Report, June 14)

A line was inadvertently dropped from ''Manufacturing was never on the floor,'' (Readers Report, June 14). The affected paragraph should have read: ''In 1991-98, total manufactured output grew by 3.8% per year, while gross domestic product in manufacturing grew by an estimated 3.4% per year. By comparison, GDP in nonfarm business grew by only 3% annually. From 1990-98, manufacturing productivity grew by 3.7% annually, more than double the productivity growth rate of the overall nonfarm business sector.''



''Be your own jeweler--on the Net'' (Bits & Bytes, June 14, in some editions)

De Beers provided an incorrect Web site address in ''Be your own jeweler--on the Net,'' (Bits & Bytes, June 14, in some editions). The correct address is www.adiamondisforever.com.





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LETTERS:
Value Investing, My Eye

The U.S. Should Stop Wavering on Taiwan

The Internet Is Not Bringing People Together

Microsoft Can Afford a Spending Spree

Low-Skill Immigrants Are Driving Down Wages

''Acting on Principle Is a Dangerous Thing to Do''

CORRECTIONS & CLARIFICATIONS:
''Manufacturing was never on the floor'' (Readers Report, June 14)

''Be your own jeweler--on the Net'' (Bits & Bytes, June 14, in some editions)

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