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Warren Buffett Has Kept the Faith


The answer to the question about General Re Corp. in "Buffett: Right again?" (Finance, Mar. 4) is Yes. As you quoted Berkshire Hathaway Inc. shareholder David J. Winters as saying, "Gen Re is incredibly well-positioned for the long run, and it will ultimately prove to be a shrewd acquisition." General Re Corp.'s underwriting results during our first three years under the Berkshire banner have been awful, and as then-CEO I feel fully accountable and responsible--and I am offering no denials or excuses here.

I must, however, take exception to the implication that Warren E. Buffett, while justifiably disappointed with our results, has lost faith and confidence in General Re or in me. I never observed or even felt that to be the case.

I had for some time thought about retiring at 60, mainly because we have an incredibly talented team to take the company forward. My retirement was foreshadowed by a major reorganization almost two years ago when Joe Brandon became CEO of our North American operations and two of our major Global Business Units. Ten months ago, I informed Mr. Buffett of my decision and plans, and they were announced on Sept. 5. I am confident that the company now led by Joe Brandon will prove Mr. Buffett and Mr. Winters to be right.

Ron Ferguson

Chairman

General Re Corp.

Stamford, Conn. I am writing to correct two points of fact in "A cleanup job for Corporate America" (Editorials, Mar. 4). You state: "Tyco International is but one of many companies whose paper is being dumped for its accounting sins." To what "sins" are you referring? Tyco's accounting is sound, properly disclosed, and in full accordance with the letter and spirit of generally accepted accounting principles. While there has been no shortage of allegations to the contrary, mostly from avowed short-sellers, no actual wrongdoing has been demonstrated by them or anyone else.

Second, you state: "When the Standard & Poor's rating agency cut Tyco by three notches in one fell swoop, it effectively shut the company out of the commercial paper market. Tyco then had to draw on its $8 billion backup bank lines of credit." As a point of fact, Tyco drew on its bank lines before S&P lowered its credit ratings.

These are treacherous times. For good reason, investors and others are skeptical of Corporate America. But if indeed, as you write, "America needs its chief executives to speak out and help restore credibility to the nation's business culture," then the media must also do its part. A more rigorous adherence to the facts would be a step in the right direction.

Brad McGee

Executive Vice-President

Tyco International

Exeter, N.H. "EMC: Turmoil at the top?" (Information Technology, Mar. 11) suggests that "tensions are brewing" between EMC Executive Chairman Mike Ruettgers and President and CEO Joe Tucci. I work closely with both of them and see their relationship firsthand. This characterization is entirely inconsistent with my experiences.

There is no turmoil at the top of EMC. The turmoil is with the global economy. Last year was tough for the entire information technology industry. We experienced a synchronized global recession and U.S. info-tech spending suffered its biggest annual decline since 1958. Challenges like that reveal the true character of leaders.

In such an environment it would be easy for a company's leaders to dispute each other's decisions and priorities, yet I have never seen or heard of that with Mike and Joe. Instead, what they have shown us over the past year is a very complementary, highly effective relationship based upon tremendous mutual respect.

They have also provided leadership on an impressive list of accomplishments: our new AutoIS software platform, partnership with Dell Computer Corp., acceleration of our networked storage and services businesses, and focused cost elimination. We at EMC feel very fortunate to have two of the industry's smartest and most experienced leaders.

William J. Teuber Jr.

Chief Financial Officer

EMC Corp.

Hopkinton, Mass. "Wake up, Chicago: It's the Electronic Age" (Finance, Mar. 11) was simplistic and missed the point of what the Chicago exchanges are accomplishing on behalf of their members and customers. The Chicago Board of Trade (CBOT) gives customers a choice by offering electronically assisted and efficient open-auction and electronic trading platforms with a pricing schedule designed to balance the two. Our goal is to create a single, deep pool of liquidity and provide a market where overall contract volumes grow. That strategy is working, with volume currently up more than 14% since 2001--our second-best year ever.

Open-auction markets ensure the price transparency and open communication necessary for the level playing field the CBOT offers customers. The information flow in an open-auction pit is greater than what exists in the screen environment. "Who's doing what?" is asked repeatedly by our customers. Such information creates tighter markets and wider participation.

Technology will influence the speed of product development and introduction. It will enhance product distribution as it provides direct market access at a lower cost to a greater number of users. It will lower the cost to participate and increase speed and efficiency and range of services. The CBOT is applying technology to each of these areas to better position ourselves for the future.

However, when you compare the CBOT with the numerous dot-coms or electronic platforms that were supposed to take away our business, none of them have the time-tested surveillance programs, the price transparency, or a triple-A credit rating backing of all their trades that you will find at our exchange. Customers like our liquidity, integrity, and flexibility, and we will continue to provide it for them in our open- auction and electronic trading platforms.

David P. Prosperi

Chicago Board of Trade

Chicago Lawrence H. Summers has the opportunity to build up the biotech industry while reforming higher education ("Harvard," Cover Story, Feb. 18). Biotech needs a long-term plan and private investment ("In biotech, private cash is king," Finance, Feb. 18). He can provide both. By hiring a young science faculty, by boosting science in the undergrad curriculum, by more interdisciplinary studies of computer sciences and biology, by erecting a biotech complex, and above all by spending some of that fat and fallow Harvard endowment, he can give biotech startups the leg up they need.

Government won't do it, nor will the market, but private cash will. Summers can provide the mature leadership. His Wall Street colleagues will be delighted. They can jump on board when everything is up and running at a profit, unlike the oscillating Web.

Stephen Unwin

Humble, Tex. "Moving more juice through the wires" (Science & Technology, Feb. 25) might lead readers to conclude that cooling requirements of motors using first-generation high-temperature superconductor wires make them too expensive. All HTS motors we know of can be cooled with off-the-shelf cryogenic systems. HTS can do far more than copper, increasing net electrical efficiency of generators or large industrial motors, and providing far more capacity to replace aging, overtaxed power transmission cables.

Greg Yurek, CEO

American Superconductor

Westborough, Mass.


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