.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:

Dear N.N.:

Walgreen Co. (WAG-$37), which earlier this year nearly traded at $50, is now slogging and bumbling between $35 and $41. WAG stumbled from $49 all the way down to $35.80 because it missed its earnings forecast by a lousy penny a share, reporting second-quarter earnings of 40 cents a share vs. the Street’s expectation of 41 cents a share. So the trigger-happy traders dropped the stock 7 points in a single day.

Meanwhile, the company reported record revenues, continually rising same-store sales and a 25 percent rise in its pharmacy business, which accounts for 64 percent of WAG’s $54 billion in revenues.

I called four physicians in Boca Raton, and only one of them is reluctant to call prescriptions in to WAG. He told me a prescription call-in can take as long as 10 minutes for a WAG technician or pharmacist to answer the phone and record the information. His office calls in eight to 12 prescriptions daily (some call in many more), and that’s over an hour of wasted time.

Walgreens has high personnel turnover in its pharmacies, and many of its employees can’t correctly take down the name of the drug, the correct dosage and proper dosage instructions. Meanwhile, pharmacy folks at WAG are grossly overworked. When you next wait in line at a Walgreens pharmacy, note that the ambience may have a stressful feel and be mindful that stressed people are error-prone.

WAG management in Deerfield, Ill., should increase the pharmacy staff in its many busy stores. An average pharmacy day for WAG is about 300 prescriptions, and during a 10-hour day, that’s one prescription every two minutes. An impossible task for two pharmacists and three helpers, most of whom can’t spell Cialis or pronounce Pfizer. When I watch technicians counting pills and putting them in a medicine bottle, I get nervous. Perhaps those are the reasons your two docs won’t call in a prescription to Walgreens.

Walgreens is the largest drugstore chain in the nation, with 5,700 locations averaging about $9 million in revenues per unit. WAG’s long-term record of revenue growth is impressive. The company’s earnings disappointment does not indicate softness in its store traffic. Its earnings miss was margin-related, and those weak margins may persist for the next two or three quarters as management attempts to rein in its expenses. However, in the next four years, WAG expects to have 8,000 stores producing about $85 billion in revenues and earnings of $3.75 a share.

WAG also owns some mighty impressive real estate, a result of management’s decision to build larger free-standing stores on convenient, high-traffic corners. Walgreens now owns a strong real estate portfolio from internally generated funds with zero long-term debt. Not bad for a company with expected 2008 revenues of almost $61 billion.

Basically WAG is experiencing a few normal short-term blips and bleeps on its way to higher revenues and earnings. The large drop in the company’s share price could be an attractive buying opportunity, and I’m stone-ginger certain that management will have earnings back on track next year. Stay the course and hold your WAG stock.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.© Copley News Service