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NOVEMBER 20, 2006
"Gangsters And Con Artists" At The Gate It's no surprise that since the faux reform of corporate corruption from the Enron era, BusinessWeek has been looking more like an issue of True Crime Stories. "Gluttons at the gate" (Cover Story, Oct. 30) details the schemes and vocabulary of private equity firms that are every bit as dangerous and deceitful as unregulated hedge funds, the difference being merely in terminology--"loans to own" rather than "side letters" and "side pockets." This is the language of gangsters and con artists rather than productive capitalists. Alan MacDonald Sanford, Maine Capital One: Our Customers Are Doing Fine, Thanks "Cap One's credit trap" (News & Insights, Nov. 6) was missing key facts about Capital One (COF ) and could have left readers with a false impression. Capital One (COF ) rigorously manages credit, and our charge-off rate is consistently among the lowest in the industry. It is not in anyone's interest for customers to have access to credit they can't handle. The vast majority of our customers have one card with us, and only a small fraction have more than two. However, there is nothing particularly notable about the fact that customers have more than one credit card, whether with one issuer or different issuers. CardWeb reports that Americans carry 6.3 bank credit cards per household on average. Also absent from your article was the fact that our customers can choose to consolidate their Capital One cards if their accounts with us are in good standing, except in very limited circumstances relating to specialized cards for small business and certain national retail partners. Finally, we do not knowingly let customers make payments on one Capital One card with another Capital One card. We are committed to delivering great products to our tens of millions of customers and to helping them manage credit responsibly. If any of our customers are struggling to meet their payment obligations, we will work with them to attempt to find a solution. Richard Woods Senior Vice-President, Corporate Affairs Capital One McLean, Va.   Analog Devices And So-Called Accounting Tricks Accelerated vesting in no way "pumped up profits for the company in 2005" because Analog Devices Inc. did not expense options in fiscal 2005 ("Master of the options universe," News & Insights, Oct. 23). Additionally, ADI's officers and directors were specifically excluded from the vesting change. The Financial Accounting Standards Boardrequirement that all companies expense stock options took effect in our fiscal 2006. FASB and Securities & Exchange Commission rules prescribe how to estimate stock option expense and expected volatility, which is one of the assumptions that determines the stock option expense. It is the stock market that drives the stock price volatility of all companies. ADI's stock price and those of our direct peers were much less volatile in 2005 than during earlier years, resulting in lower volatility assumptions. Alleging that this change amounted to "accounting tricks" ignores the rules and the fact that it is the stock market itself that drives the measurable price volatility of all companies. Finally, the article neglected to mention that, unlike many companies reviewing their stock option practices, ADI will not be required to restate any financial results due to issues with our options. Ray Stata Chairman Analog Devices Inc. Norwood, Mass. Editor's Note: The article incorrectly stated that accelerated vesting increased Analog Devices' profits in 2005. The correct time period was fiscal 2006. Webhelp's Roots Lie In Canada, Not France I read "Go East, young man" (Global Business, Oct. 30) with great disappointment. Your article failed to mention that the company Webhelp was the brainchild of Kerry Adler, Laura Hantho, Hugh Cumming, and Dan Walter. As veterans of the call center industry in North America, we launched Webhelp Worldwide in late 1999 and successfully raised more than $100 million. The concept was to take our years of business-process outsourcing experience to more cost-effective markets. India was first, followed by Sri Lanka, Mexico, and then Canada. With several thousand employees worldwide and two failed initial public offering attempts (during the dot-com crash), the company eventually merged with two other companies to form TWS Holdings. Webhelp France, which you refer to as Webhelp, was simply a licensee of ours that bought the rights to use the Webhelp name, business plan, and technology. We helped them build their business as a replica of our Canadian business model. Kerry E. Adler Founder, former president, and CEO Webhelp Worldwide Toronto Too Little Transparency In The Bond Market? Blame The SEC "What could stoke the bond market" (Finance, Oct. 30) did not mention that, for many years, the barrier to broader equity-type bond price disclosure--particularly for individual investors--has been, and remains, the SEC. Yet the SEC pats itself on the back for helping promote what is an inferior price-reporting system that hides the disclosure of prices and compensation paid on bond transactions. Here the SEC has utterly failed in its self-described role as the investor's advocate. Fred Siesel Former SEC staffer New York Jeff Skilling Might Have Been Better Off With No Defense "One of them is still laughing" (Up Front, Oct. 30) reports that Jeff Skilling paid $70 million for his defense, yet he ended up with 24 years. I wonder what the punishment might have been had he just pleaded guilty and paid nothing? T. Glenn Blakney Vice-President Brookwood Securities Partners Beverly, Mass. Yes, America Uses More Resources—To Produce More "America's supersized footprint" (Outside Shot, Oct. 30) bemoans the fact that the U.S., with 5% of global population, uses 25% of global resources. Victoria Markham should know, however, that a country's use of resources is closely related to its gross domestic product and therefore to its standard of living. The U.S. produces around 25% of the world's products and services. So on that basis, its use of resources is not out of line. In a number of countries, including Australia and Canada, the resource-to-GDP ratio is high. Is the author really arguing that the U.S. should use only 5% of the world's resources? Would she prefer that the U.S. have the standard of living of Bangladesh, Zimbabwe, or Haiti? Danek Bienkowski Almont, Colo.
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