Dueling Fools Home on the Range
Bear Rebuttal

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Dueling Fools

By Rick Aristotle Munarriz (TMF Edible)

Mike's good. He starts off by pointing out how I ultimately won last year's Duel despite losing the popular vote. He ties that into politics. That hits awfully close to home, don't you think?

But reading his argument, while sound in some cases, just brought back memories of when I went to the Winchester Mystery House a few years ago. The popular San Jose attraction is the sprawling estate of rifle heiress Sarah Winchester. Whether she was haunted by ghosts of her legacy's trigger-happy past or just plain nuts, she did nothing but build on to her house for 38 years. Every day she had carpenters and craftsmen tearing rooms down only to rebuild them as they were. She even put in a stairway to nowhere.

That's where I see Home Depot. It's a company that has already built itself out. Domestically, adding new locations simply means ripping away at existing locations. Sarah Winchester? Meet Hannibal Lechter. Overseas, the company seems to be assuming that there's a demand in many cash-poor countries for marble kitchen countertops and chair rail mouldings. I'm not saying the company is nuts, but it definitely seems to be haunted by the ghosts of its legacy's growth-happy past.

Mike is psyched about Villager's Hardware and EXPO. Villager's is a fine small-box concept, but the key word there is "small." And I live near the original EXPO in Miami. Been there. Twice. Walked away empty-handed. Twice. The place was empty. Twice.

And e-tail? If the rise and recline of Furniture.com taught us anything, it's that heavy, bulky objects don't translate well to the online format. Beyond that, many jobs require instant implementation. HomeDepot.com is doing it right by providing huge amounts of reference material on its site. That's good. But watching it try to build out online stores and installing Internet kiosks in its real stores misses what has always been Home Depot core values -- its people and your patience.

At least Mike is concerned about the company's growth. With good reason, too. Mortgage applications shot up back in December, right? So that means Home Depot was probably a big beneficiary as the refinancing and mortgages closed over these past two months, right? This is Home Depot's time to shine! But why are projections for fiscal 2001 and 2002 showing just 10% and 14%, respectively, in expected earnings growth? Where is this "at least 23% growth rate" that Home Depot is striving to maintain?

I'll tell you where it is. I'll even tell you where it's going. Sarah, the carpenters are here, what do you want them to work on next? See, Sarah's got an amazing story to tell. If she were alive today, I'm sure she would be a picking up shares of Home Depot right now.

And she's buying a stairway to nowhere.

Rick Aristotle Munarriz hit his thumb with a hammer once. Maybe that's why he doesn't like Home Depot. Either way, he's never owned the stock. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.

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