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Harry Newton's In Search of The Perfect Investment Newton's In Search Of The Perfect Investment. Technology Investor.

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8:30 AM EST Friday, August 4, 2006:

Got one right. Qwest.

The company reported a profit for the second quarter. And Richard Notebaert, chairman and CEO, said Qwest's board will consider dividends, share repurchases, further debt reduction. The company reported a second quarter of $117 million, or 6 cents a share, compared with a loss of $164 million, or 9 cents a share, a year ago. Revenue was flat at $3.47 billion.

Qwest's good fortune reinforces one rule of investing: When a great executive takes over a troubled company whose shares in the toilet, the shares are probably a great bargain. But you got to be patient. Are you listening, Harry?

Not a brilliant week for us: Instead of Word, I wrote, try, They stopped accepting new users just after my column appeared. I wrote about a movie on radical Islam you should watch. It was here. Apparently someone got to Google and they removed it. I tried to find out from both Google and the movie's producer what happened but no one got back to me. The whole thing smells.

But there is good news, More and more companies are putting software up on the Internet, which you can use and share your results. Instead of running Excel on your computer, try, Want to share your calendar? Try Google Calendar.

Another neat airline site: Add to our list. You can look up the status of every flight in real time. Oodles of information to while away your time while you're waiting at your unfavorite airport for your delayed flight.

Useful tax software: Brendan Smith is my really great accountant. He writes:

Recently I subscribed to the CCH Tax Research Network switching over from RIA's checkpoint research software. CCH enables me to search tax topics providing me with both Primary (Federal and State Code's and Regulations) and Secondary (CCH and other third party commentary) on income tax and payroll tax related issues. The package also includes tax tools that help generate election and compliance statements.

The best feature of CCH is the Perform Plus II ASP software. When you subscribe to the service it gives you access to the most current Federal, State and Municipal Forms. Unlike other tax form software (Note this is not tax preparation software) Perform plus II updates daily and has the most complete listing of tax forms published. High net worth individuals have complicated investment vehicles that require additional disclosure statements not included in tax preparation software packages. I would have to complete these forms by hand preparing your individual return would be burdensome. In addition as part of the package I get to prepare payroll tax returns on the computer and have minimal chance of error.

For more, click here.

With YouTube, you own it, maybe: When you upload your videos to YouTube they get a free license to pretty well do whatever they want with your video for free. You should know this if you happen to have video that might be worth something if sold to a TV station, etc.

Buenos Aires is great: My friend Ed Sonderling just returned from a holiday there. He loved it:
1. Same time zone as Eastern US. No jet lag problems.
2. Fabulous flight. The length is perfect. You have enough time to sleep.
3. The place is dirt cheap now they've devalued the Peso. Ed says he ate the best filet mignon for $8.
4. The architecture is super. It's fun walking the cobbled streets.

My latest favorite gadget:

It's a "retro handset" for your cell phone. I love the idea of walking along the street talking on this while my Blackberry is safely in my pocket. Imagine pulling this thing out at meeting. $29.95. Click here.

Great news for the ailing telecom industry: A study has revealed that 8 out of 10 adults are so dependent on their cell phones that they can't bear to shut them off during sex.

A Bill Payer Falls Behind, Like [its] Clients. This article by Floyd Norris of the New York Times makes me sad that this sort of thing still happens at public companies.

In April, the company had a problem.

In June, the chief executive sold $16 million of stock.

In August, the company disclosed the problem, and the stock price plunged.

That is what happened at CheckFree, a company in the electronic bill-paying business. Its shares fell 14 percent yesterday after it reported disappointing earnings and advised analysts to lower their forecasts for the current quarter.

In a conference call with investors after the market closed on Tuesday, CheckFree said that in April a significant number of customers skipped making payments.

As a result, the company said, it was left with revenue and profits below what it had told Wall Street to expect.

If April had been normal, said Peter J. Kight, the company’s chairman and chief executive, in the conference call, “clearly, we wouldn’t be in the situation we are in now.” Instead, he said, the company would have reported a good quarter.

On June 14 and June 15, Mr. Kight sold 350,090 shares for $16.1 million, an average price of $46.06, according to the reports he filed with the Securities and Exchange Commission. Had he sold at yesterday’s closing price, he would have taken in $3.1 million less.

Judy DeRango Wicks, a spokeswoman for CheckFree, said last night that Mr. Kight had sold the shares to buy a winery, and said they represented only about 5 percent of his total holdings in the company.

She declined to say whether Mr. Kight had known of the April problem when he sold in June, or whether he had considered disclosing the problem before he made his sales. Mr. Kight was not available to comment.

Shares of CheckFree, traded on the Nasdaq market, plunged $5.93, to $37.20, on volume of 17.3 million shares, the highest daily volume in the more than 10 years that the company has been publicly traded. The low price for the day, $34.35, was the lowest figure in a year. The stock had been a strong performer this spring, rising as high as $57.08 in April, just as the problems were occurring.

CheckFree operates electronic bill-paying Web sites, in some cases as a contractor for banks whose names are on the sites. It speculated that the problem might have been partly caused by changes in when some banks actually transferred payments from customer accounts, confusing consumers who perhaps delayed payments or bounced checks as a result.

But CheckFree also told analysts that it might be that many skipped credit card payments in April, perhaps to pay their taxes. It is paid a fee for each payment it processes, and so suffers if fewer payments are made.

The company told analysts that the problem of below-normal payments continued, at reduced levels, in May and June, but that payments in July seemed to be back to normal. Still, the company cut its estimate of profits in the current quarter, the first of the new fiscal year, although it said it expected profits for the full year to stay on target, implying a strong recovery in later quarters.

Executives said they expected to cut research and marketing expenses. All other things being equal, that would raise reported profits.

“We are going to get to the bottom of it,” Mr. Kight said in the conference call about the April slowdown. “We’re going to figure out how to do something about it. I’m sure there are a lot of frustrated people out there on the call.” He went on to say he was still “positive and excited” about the company’s prospects.

“I love this business,” he said as the conference call ended.

Mr. Kight was not asked on the call about his share sales. But he was asked about a change the company made in the numbers it provides to analysts. It told them it expected to post free cash flow for fiscal 2007, ending next June, of $190 million to $195 million, an increase of as much as 15 percent from the year just ended.

Free cash flow normally is defined as consisting of a company’s operating cash flow less its capital spending, although companies sometimes change details. CheckFree had used a variant of that normal definition, but it said Tuesday that it was changing the definition it uses.

It expects to borrow about $85 million to build new data centers next year, and will count the loan receipts as part of free cash flow, thus raising the figure by that amount. Without the change, the company evidently would have had to forecast a large decline in its cash flow figure.

Counting the proceeds of borrowing in free cash flow is highly unusual, and, as the company said in a filing with the S.E.C., “CheckFree’s measure of free cash flow may not be comparable to similarly titled measures reported by other companies.”

I want to reach 80
I recently picked a new primary care physician. After two visits and exhaustive lab tests, he said I was doing "fairly well" for my age.

A little concerned about that comment, I couldn't resist asking him, "Do you think I'll live to be 80?"

He asked, "Do you smoke tobacco or drink alcoholic beverages?"

"Oh no," I replied. "I'm not doing drugs, either."

Then he asked, "Do you eat rib-eye steaks and barbecued ribs?"

I said, "No, my other doctor said that all red meat is very unhealthy!"

"Do you spend a lot of time in the sun, like playing golf, sailing, hiking, or bicycling?"

"No, I don't," I said.

He asked, "Do you gamble, drive fast cars, or have a lot of sex?"

"No," I said. "I don't do any of those things."

He looked at me carefully and asked, "Then why do you care about reaching 80?"

Church Restoration Project
There was a tradesman, a painter named Jack, who was very interested in making a dollar where he could. So he often would thin down his paint to make it go a wee bit further. As it happened, he got away with this for some time. Eventually the local church decided to do a big restoration project. Jack put in a painting bid and, because his price was so competitive, he got the job. And so he started, erecting the trestles and putting up the planks, and buying the paint and thinning it down with turpentine.

Jack was up on the scaffolding, painting away, the job nearly done, when suddenly there was a horrendous clap of thunder. The sky opened and the rain poured down, washing the thin paint from all over the church and knocking Jack off the scaffold to land on the lawn.

Jack was no fool. He knew this was a judgment from the Almighty, so he fell on his knees and cried, "Oh, God! Forgive me! What should I do?"

And from the thunder, a mighty Voice spoke, "Repaint! Repaint! And thin no more!"

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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