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To: Little Joe who wrote (82089)	2/14/2002 5:22:50 PM
From: long-gone	Respond to of 116790

I fully agree, and was in no way was attempting to justify or rationalize the actions of the heads of Enron, but consider that it is more than possible there are more deserving blame than simply those that ran Enron. Many educated parties are now looking toward Enron's bankers as also being far from guilt free.

To: Little Joe who wrote (82089)	2/14/2002 6:25:59 PM
From: long-gone	Respond to of 116790

Morningstar.com Bill Miller to Corporate America: Clean up Your Act By Christopher J. Traulsen One of the mutual fund world's brightest lights thinks it's high time for everyone, Wall Street analysts in particular, to throw away their rose-colored glasses. In his just-released fourth-quarter shareholder letter, Bill Miller, manager of the highly successful Legg Mason Value Trust LMVTX, takes companies, analysts, and investors to task for focusing more on near-term growth hurdles than on building shareholder value. With regards to Value Trust itself, Miller doesn't have much to report. The fund didn't buy a single new position or eliminate any positions in 2001's fourth quarter, and Miller says he thinks the market is fairly valued: ``Even after two down years, the stock market is, we think, roughly fairly valued on normalized earnings and interest rates. So, even as we see companies meet expectations, stock prices react negatively.'' He does note that the fund's holdings are focused in several areas where he thinks there is opportunity: financials; attractively priced growth stocks; undervalued industries; and cyclicals. He includes retailer Amazon.com AMZN, telecom-equipment concern Lucent Technologies LU, and wireless carrier Nextel NXTL--all holdings of Value Trust as of Dec. 31, 2001--in the last group. He identifies supermarkets (the fund owned Albertson's ABS and Kroger KR at the end of 2001) as an industry he considers undervalued. That said, there were a few changes to the portfolio that Miller didn't address in his shareholder letter. One involves independent power producer AES AES. Miller initially snapped up AES shares in the third quarter of 2001, and he more than doubled the fund's stake in the fourth quarter. AES accounted for 2.9% of the fund's assets at the close of 2001. Miller also sharply reduced the fund's Berkshire Hathaway stake in the fourth quarter, cutting it from 1.8% of assets to just 0.1% of assets. In the technology sector, Miller trimmed Corning GLW and Gateway GTW and added a bit to Comverse Technology CMVT. Much of Miller's letter was reserved for a scathing criticism of Wall Street's focus on upside surprises and corporate manager's consequent attempts to ``massage'' analysts' expectations. ``Analysts, investors, and corporate managements observed that companies that exceeded expectations outperformed in the short run, while those that met expectations did not. This led companies to underpromise and overdeliver, and led analysts to be conservative in their published reports in order to be able to write that the company was doing better than expected and therefore its stock should outperform. Another factor in the whisper number game was that prices were so expensive that even the most obtuse analyst could understand that prices could not be justified by any reasonable set of published estimates, but only by results that were better than expected (exactly how much better they had to be to underpin valuations was ignored).'' Miller is also underwhelmed by the current focus on ``earnings visibility.'' ``Visibility is the same now as it was then: nonexistent...when companies say they have no visibility, it just means they don't like what they see; good visibility means current business is strong.'' The result of the emphasis on near-term surprises, Miller says, is that corporate management is incented to pursue the wrong goals. He holds up Enron as a prominent example of what can go wrong. ``The incentives of management, the company's auditors, of the board, <v>and of Wall Street analysts and investment bankers were all to perpetuate the perception of strong growth while obscuring the costs of that growth, which were carefully hidden off the balance sheet.'' Miller also has some suggestions he thinks would help clean up the system. First, companies should report results that ``portray clearly the businesses results and underlying economics.'' Second, companies should stop giving guidance--the future is too unpredictable for guidance to be much good. biz.yahoo.com