Never underestimate buyers' stupidity

Hi Mike

I liked the comment in the story, "Hacks cheer as PR bunnies get shipped out." Who is "travel correspondent?"

It said, "But as PRs never seem to talk to journalists any more, never mind buy us drinks, or even return our calls, it all makes absolute sense to the Inquirer..."

We've been covering PR in the U.S. for 35 years in our newsletter, magazine and website and have noticed a strong trend for PR to be "done on the cheap" ever since the big ad conglomerates like Omnicom and WPP bought out 50 PR firms.

In the U.S., lunches or drinks bought by PR people have become almost non-existent. There are no holiday (Christmas) parties by the PR groups in New York any more. Attempts by PR people at both companies and agencies to build press relationships via nights on the town, lunches, dinners, breakfasts, whatever, have almost vanished.

The bottom line "profits" are the main obsession now.

Meanwhile, we the reporters are blamed for this, saying we have become too uppity to bother with PR people lest they compromise our morals.

Personally, I think it's the bottom line plus fear of what the press might find out. Also, companies don't like their employees becoming friends with reporters. Who knows what secrets might be blurted out?

Our site (No. 1 on Google worldwide for PR news) is here.

Jack O'Dwyer

Cher Prices

Hello Mike,

concerning this one:

Share prices mean nothing

I have to defend the _original_ article which is criticized by so many readers. It _does_ make sense to compare share prices.

In statistics you use linear regression between raw share prices to detect trends like

if INTC goes up, does AMD follow ? and how much ? if AMD goes down, does INTC follow ? and how much ?

Traders recognize these dependencies and ignore "market cap" happily if they can take advantage of a dependency of raw prices. Look at the attached image. Both raw share prices correlate strongly over a 1 year period. But since September 2004, the correlation is broken.

Here.

JK

Your story that AMD share price is nearing Intel share price - interesting, and a show of strength by the little guy - seems to have had an amazing and amusing effect on at least four of your readers, sending them into a real tiz. They fell all over themselves to state that share price is not proportional to total worth. Some even produced calculations and words (I'm surprised there were no diagrams.) to prove to you, your readers, the world, and the universe in general that having equal share prices doesn't mean two companies have equal market capitalizations - roughly, worth.

I doubt that many, if any, of your readers were confused on that point. You made no statement of the relative worth of the companies, you merely stated the fact that their share prices were near-equal.

One of your correspondents seems ignorant of the fact that 'cap' is an abbreviation of capitalization [Or perhaps we're supposed to be impressed by his use of what he considers to be 'in' market jargon.], another seems merely ignorant, and yet another assures us that share prices are irrelevant from all perspectives - a point of view with which stock market mavens would certainly take issue, as would those who now own or contemplate buying stock in either company!

In terms of trends, AMD stock is up about 20% from its high of last January, while Intel stock is down about 30% from its high of last January.

Did you make any deceptive claims about the near-equal share prices ? No. Was anyone who knows the least bit about stocks confused? No. Was the great world public confused ? Possibly, but the great world public includes people to whom "shares" and "share prices" are, and always will be, deeply mysterious - and others to whom shares and share prices are satanic creations of the demons of the West - and any number of pontificating letters are *not* going to affect that situation.

John B.

I DON'T CARE WHOSE BIGGEST, I NEED TO MAKE MONEY. TODAY MY MONEY WILL ALMOST BUY SAME NUMBER OF SHARES OF INTEL OR AMD. ITS REALLY QUESTION OF WHICH WILL GO UP FASTEST. TOTAL VALUE MORE TAX COLLECTORS FIGURE.SIGNED:PHYSICIAN THOMAS STEWART VON DRASHEK M.D.

Sir,

I have just read your article relating to credit card fraud (phishing) in which you mention that UK banks have refunded over £4.5 million to over 2000 customers.

What you have failed to mention is that although the bank has refunded their customer, in most cases the bank also takes the money from the retailer that carries out the fraudulent transaction.

I speak from experience. We have recently had a number of cases where someones identity has effectively been stolen through phishing. That persons registered address has then been changed with the credit card issuer. As an on-line retailer we carry out a name and address check for every mail order transaction that we process and even though we carry out this check and confirm that we are sending the goods to the address that the credit card is registered at, if the registered address has been changed by a fraudster, we still get a chargeback and lose the money. In one week alone we have lost over £7000 through credit card fraud, even though a name and address check was carried out for every transaction. Luckily we are in a good financial standing that these losses have not affected our business. However, for smaller retailers losses of this magnitude could cripple their business, particularly considering that it could take months for their bank to inform that that the transaction they have completed was fraudulent.

We have now resorted to asking our customers to either fax or e-mail a copy of their credit card to us prior to despatching any order over £500 in value. If the transaction is fraudulent then the person placing the order does not possess the credit card and only has the details of the card.

The banks in the UK are doing too little to protect retailers against this type of fraud and are making it too easy to change the registered address of a credit card. The banks are not failing customers by not carrying out sufficient anti-fraud checks but are failing retailers who in most cases are carrying losses which they cannot afford because of inadequacies in the ways that the banks are going about their business.

An article on Microscope.co.uk suggests a way of reducing fraud but the fraudsters are always one step ahead and I am not convinced that this system would work for a very long period of time.

One idea which I am sure would be taken up by a number of on-line retailers is a courier who either asked to see the Credit Card when delivering the goods, or asking the person receiving the goods to enter their card and pin number into a reader to confirm they are the actual cardholder. As far as I am aware there are no delivery companies offering this service, although I am sure that if there was the service would be used by a large number of online retailers.

Regards

Richard Overfield
Managing Director
RL Supplies Ltd

Please withhold my name and email address if you publish this. In one of the articles below, an article mentions a comment made by Gates about the competition with India and China driving the salaries of computer engineers elsewhere in the world down. Given the size of Microsoft's investment in India and China, I think an article about Microsoft's strategy w.r.t. driving down software development costs throughout the world would be interesting.)

http://www.chinadaily.com.cn/english/doc/2004-06/30/content_344068.htm

"In the past four years, Microsoft has opened three joint ventures in China, which is unprecedented for the software giant anywhere in the world."

http://www.forbes.com/forbes/2003/0217/078_print.html

"Microsoft also formed joint research labs with four Chinese universities--one in Beijing, one in the eastern city of Hangzhou, one in the northern city of Harbin and one in Hong Kong. The company donated another $5 million to pay teachers at 15 universities. It has named 59 Microsoft Fellows, who are China's best computer science Ph.D. students, and created an internship program that allows 200 grad students in computer science and electrical engineering to work at Microsoft's research lab in Beijing. "

http://www.cfo.com/article.cfm/3015475?f=related

"And yet Microsoft is pumping US$750 million in aid into China over three years—and that's on top of the approximately US$1 billion it spends there annually to run its business. The money is devoted to helping develop an infrastructure for a software industry via joint ventures and academic research and training."

http://asia.cnet.com/news/software/0,39037051,39038073,00.htm

"Additionally, Microsoft has awarded a global outsourcing contract to Wicresoft to provide technical support for Microsoft Windows and Office."

http://www.wicresoft.com/en/aboutus/

"Shanghai Wicresoft Co., Ltd., a joint venture between Microsoft Corporation and Shanghai Municipal Government, is an IT service focused software company extending business mainly in the fields of technical support, software development, solutions, and enterprise services."

http://asia.cnet.com/news/software/0,39037051,39013691,00.htm

"In an effort to provide software solutions for the enterprise market in China, Microsoft Corp has established a joint venture called Zhongguancun Software Co."

http://www.eobserver.com.cn/english/readnews.asp?ID=113

"Microsoft has originally promised to outsource hardware products amounting US$ 600 million to Chinese companies in three years. At present, Microsoft has transferred the outsourcing production of hardware products relating with Xbox game machines, mouse, keyboards, hand bars for game machines to China. The outsourcing amount has reached US$ 700 million in 2003 alone that means Microsoft has over-fulfilled its original promise."

http://www.asianlabour.org/archives/001931.php

"China has become a favorite hub for IT companies. In first quarter this year, China Research Institute reported that Microsoft poured in US$80 million worth of investments in 2003 into that country. Microsoft has also earmarked US$50 million to establish the Microsoft Asian Technology Center in Shanghai this year. Alcatel, Nokia, Siemens, and IBM, to name a few IT-enabled companies, have also made China their regional base in Asia."

http://www.rediff.com/money/2004/may/01wipro.htm

"The partnership, which started with software development, was extended last September to the BPO field. Wipro Spectramind has since then been providing customer and product support for multiple product lines across the retail and enterprise space from its Navi Mumbai facility."

http://asia.news.yahoo.com/041108/5/1r5tq.html

""There's about US$10 billion a year spent by U.S. companies in software applications development from the U.S. to India," he said. "For reasons of risk mitigation and diversification our customers are saying we're going to move 5% or 10% of that into China in the next 15 months. They're saying: we can't afford to be all India.""

http://www.businessweek.com/magazine/content/04_09/b3872001_mz001.htm

"Microsoft CEO Steven A. Ballmer says the shortfall of U.S. tech students worries him more than any other issue. "The U.S. is No. 3 now in the world and falling behind quickly No. 1 [India] and No. 2 [China] in terms of computer-science graduates," he said in late 2003 at a forum in New York."

http://www1.economictimes.indiatimes.com/articleshow/875175.cms

"Well, as the Microsoft man himself puts it across, jobs will continue to move overseas and salaries for computer engineers will fall as a result of great competition with countries offering cheap, yet skilled labour."

http://www.china.org.cn/english/China/75597.htm

In addition, Microsoft Corp and Hewlett-Packard have set up global software research and development centers in the city, while Ericsson AB has opened a teleco-munications software research and development center.

Name supplied

Microsoft showing signs of total disarray

I'm going to have to totally disagree with this:

If people are shopping for the cheapest machine, they are looking at the price tag, not for "Intel Inside."

From talking to many people over the phones in 3 years of tech support, and assembling dozens of PCs for friends, and being in PC stores long enough to overhear the customer's comments, these are the things that pop out the most:

"I want a Pentium with internet"
"What is AMD? I want Pentium, because Windows will work on it"
"No, my friends all said AMD is incompatible, everything is written for Intel"
"I don't want AMD because there is no Windows and Office for AMD"
"I want to play games and games will only run/run fast on Pentium"

Customers looking for Cheap PCs almost always buy a Celeron because it's Intel and has a high Mhz number. Customers buying a "high-end" PC will buy whatever is the most expensive and has the biggest number (Intel) because most expensive must mean fastest.

Lesson learned: Never underestimate the lack of knowledge among 90% of the population.

Mike L