Dear Mr. Berko:  I want to buy 200 shares of Pfizer, but my broker thinks that  this new Viagra suit by some AIDS organization against Pfizer  could harm the company’s earnings and deplete its cash position  if Pfizer loses. Please tell me what this suit is about. I trust  my broker, but he’s often overly cautious, and his caution, while  I respect it, has caused me to lose out on several good opportunities  in the past three years.  E.B., Des Moines

Dear E.B.:

One of the most serious problems in  this country today, other than terrorists,  is the proliferation of a species  we call lawyers. Because of its  exponential growth, members  of this species cannot find  constructive employment, so  they must bottom-feed to generate  fees. They have done a  magnificent job persuading  the AIDS Healthcare Foundation  – which operates free  AIDS clinics in Africa, Asia,  Latin America and the  Caribbean, plus treatment centers  in Florida and California –  to sue Pfizer.

This foundation needs money, bigtime  money, to support the good work  it does. So miscreant lawyers convinced  the San Francisco-based foundation to  sue Pfizer (PFE-$26.55), claiming the  drug maker’s ads for Viagra promote  recreational sex, thus increasing the  public’s risk of contracting AIDS. In January, this group filed a complaint in a  state court in California.

I think this is a super time to buy  200 shares of Pfizer. The company is  struggling against fierce competition  from generic drug makers – PFE’s  Zoloft and Zithromax are now off  patent, and Lipitor loses protection in  2011 – but new management has been  aggressively making important changes  to ensure the company’s success in the  future. So even though revenues may  be flat as a cookie sheet this year, earnings for 2007 are expected to come in  at $2.20 a share versus $2.05 in 2006,  and 2008 earnings are projected at  $2.42. Not bad!

Management will cut more than  10,000 jobs and close five plants,which  should reduce costs by $2.2 billion.  This is on top of a plan announced last  year to reduce annual costs by $4 billion  beginning next year. In addition to closing three research sites in Michigan and manufacturing plants in Nebraska and New York, PFE will close research sites in Germany and France and sell a manufacturing plant in Germany.

Jeffrey Kindler, who  became PFE’s chief executive  officer last summer, is not  interested in incremental  changes; rather, his goal is fundamental  change. Kindler is a  brilliant, smart-charging, nononsense  manager who is  respected by his troops and  earns their loyalty. He’s a great  guy to run the world’s largest  pharmaceutical firm with $48  billion in revenues.

Pfizer dominates the landscape  and has the resources to  invest more in research and development  and marketing than its competitors.  Drug development is basically a  numbers game and PFE has muscle  with 153 drugs in its pipeline; it has  filed for 15 new drug approvals in the  past three years. Three of these recently  earned approval and each could be a  blockbuster, producing more than $1  billion in annual revenues. Meanwhile,

PFE spends billions on comparative  studies to demonstrate the superiority  of its products. These studies enable its  sales force to outshine the competition.  PFE’s 31 percent net profit margin is  impressive and so is its recently raised  dividend ($1.16), which yields a sweet  4.4 percent. PFE has raised this dividend  every year for at least 25 years,  and I expect that trend to continue.  Though the shares are not expected to  zoom, I believe PFE can give you a 10  percent to 14 percent annual return  over the next five years and beat the  averages in a slow or down market.

I am required to tell you that I and  many of my managed accounts own  shares of Pfizer.

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