Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Friday, March 18, 2005: Life
goes through its paces. You start a business. You grow it. You sell it. Then you
invest in other people's businesses you can't control. This is frustrating. Your
"perfect" investment is now Valium. Eventually we accommodate to the
pain of other people's stupidities, and we make the best of a bad situation.
My favorite economist,
John Kenneth Galbraith, interviewed in Vanity Fair was asked "What
is the trait you most deplore in others?"
He answered: "The habit of offering uncontrolled repetitive counsel
Worse, no one
listens -- especially the entrepreneurs in whom I invest.
How to get the my aged "wisdom" into their hyperactive, but closed
brains? The $64 million question!
Here's my idea. It seems to work. I explain businesses are like stools. Each
business has four disciplines that makes the business stand up. Publishing (which
I worked in) has circulation, editorial, production and sales. You need to have
them all working in synch or the chair (the business) falls over.
You can't do everything
to fix each of the four legs. You don't have that many hours in each day. But
you can make a list of what you could do and rank them from most
effective on down. Suddenly, you're not giving counsel and advice.
You're analyzing the business. Get your entrepreneur to analyze along with you.
Bingo, you have taught your entrepreneur. And he/she has listened and heard
1. What will make his business successful in the long run.
2. How critical it is to focus each day on only the few critical tasks.
Analyze, set priorities and do the critical things. What could be simpler?
of the telecommunications industry. When I first came into telecom
in 1969, the industry was the Bell System, i.e. AT&T. Its managers actually
believed in treating their shareholders, their customers and their community
fairly and with respect. Their big problem was arrogance born of stupidity and
ignorance. They lived in their own isolated world. They hired no one from outside.
They listened to no one from the outside. In fact most of them didn't read.
They believed they had all the answers. This arrogance made them an easy
target for every crook and semi-crook from Bernie Ebbers to Joe Nacchio (who
ironically came from AT&T).
The above is from
me. Now read today's New York Times piece by Floyd Norris, business reporter,
headed "Did Qwest Use Fraud to Arrange a Disastrous Merger With U
S West?" The article reads:
annals of Wall Street disasters, a special place of dishonor should be reserved
for the bosses of good companies who were so gullible or foolish that they agreed
to exchange their company's stock for shares in a company whose value was inflated
by fraud or fad.
several memorable deals in the recent bubble. Time Warner agreed to surrender
most of its stock to owners of America Online, which was riding high, and became
AOL Time Warner. MCI, a solid company in a declining business, sold out for
shares in WorldCom, which had been put together by Bernard J. Ebbers, a man
who now tells us that he never knew much of anything about either finance or
the saddest deal was the one in which U S West, a regional Bell telephone company,
was swallowed by Qwest, which had wowed investors with a plan to build a huge
fiber optics network that turned out to be worth a small fraction of what it
cost. Investors who cherished safety and dividends got neither.
Of those companies,
Qwest is the only one not to have tried to obliterate the memory of its deal.
Time Warner has dropped AOL from its name. WorldCom is now MCI. But Qwest has
shown no desire to abandon a name that brings back memories of bubbles and funny
At least the
Qwest people had a sense of humor. Their favored accounting tactic, according
to the Securities and Exchange Commission, was to arrange, with companies like
Enron, offsetting sales and purchases of the right to use fiber optic cable.
That produced dubious profits without anything like adequate disclosure. Many
deals seem to have been shams, with side agreements that made it improper to
report any profits from them.
the S.E.C. said in filing a civil suit against several former Qwest officers
this week, were known inside Qwest as "simultaneous legally unrelated transactions."
suit was filed in federal court on the same day that a jury convicted Mr. Ebbers
in the WorldCom fraud. The S.E.C. suit asks that Qwest's former chief executive,
Joseph P. Nacchio, be required to give back $216 million in salary, bonus and
profits from stock sales.
It is notable
that Mr. Nacchio, who denies wrongdoing, does not face criminal charges. The
Justice Department failed in its prosecution of some lower-level officials,
and seems to have decided to abandon the Qwest quest.
In big financial
frauds, it may be that juries are inclined to feel sympathy for lowly accountants
who say they were following orders they did not understand to be illegal, but
not to give a break to the bosses. There were no documents tying Mr. Ebbers
to the WorldCom fraud, but his claim of ignorant innocence was not believed
As it happens,
Qwest is in a takeover battle now to buy MCI, whose new shares went to former
creditors of the company after prebankruptcy shareholders were wiped out; yesterday
Qwest raised its offer. In a sign of disrespect for the value of the Qwest stock
being offered, MCI has preferred a lower offer from Verizon.
is the latest indignity for those who own Qwest because they invested in U S
West. Back in mid-2000, just as Qwest bought U S West, Bell Atlantic changed
its name to Verizon. A $10,000 investment in Bell Atlantic then is now worth
about $7,000. That is not good, but a similar investment in U S West has shrunk
to less than $800.
Qwest has restated
its financial results and paid $250 million to settle an S.E.C. suit. The new
S.E.C. action may cost some former Qwest managers a lot of money, but none are
in danger of going to prison.
fraud, the S.E.C. says, there would have been no merger. Without the merger,
shares in the original Qwest would be worthless. Who says crime does not pay?"
Giving new meaning to gardening.
A California friend is having his new garden planted.
took this picture two days ago. I don't make this stuff up. It just makes you
wonder what God could do if only He had the money. I pray the tree lives.
today on a sad note. Life is short. There are marvelous things to
see, and wonderful things to do. We must not ignore them in our search for the
perfect investment. My eyes welled and I shed tears last night when I opened
my laptop and read this email from an old friend:
I saw you in NYC the first thing you said to me is how people need to slow down,
take care, take a breath, because they are getting all kinds of diseases and
maladies. You mentioned among the litany- prostate cancer.
Well, I was
just about to have a biopsy for the male dreaded disease -- and did have it
Bad news- I
have prostate cancer -- very early stages and not life threatening.
I'm not a happy
guy about this. The amount of information I am being deluged with is overwhelming
and annoying- but I am talking to lots of doctors . All of the treatments have
very annoying side effects. But, if Rudy, Joe Torre, Kerry , Powell and on and
on can deal with - so can I.
Thank you again.
I'll be in touch again soon."
was St. Patrick's Day. Hence, I must publish
the worst Irish jokes.
McQuillan walked into a bar and ordered martini after martini, each time removing
the olives and placing them in a jar.
When the jar was
filled with olives and all the drinks consumed, the Irishman started to leave.
said a customer, who was puzzled over what McQuillan had done, "what was
that all about?"
said the Irishman, "my wife just sent me out for a jar of olives!"
An Irish priest is driving down to New York and gets stopped for speeding in
The state trooper
smells alcohol on the priest's breath and then sees an empty wine bottle on
the floor of the car. He says, "Sir, have you been drinking?"
says the priest.
The trooper says,
"Then why do I smell wine?"
The priest looks
at the bottle and says, "Good Lord! He's done it again!"
Two Irishmen were sitting at a pub having beer and watching the brothel
across the street.
They saw a Baptist
minister walk into the brothel, and one of them said, "Aye, 'tis a shame
to see a man of the cloth goin' bad."
Then they saw
a rabbi enter the brothel, and the other Irishman said, "Aye, 'tis a shame
to see that the Jews are fallin' victim to temptation as well."
Then they see
a catholic priest enter the brothel, and one of the Irishmen said, "What
a terrible pity...one of the girls must be dying.
Three Irishmen, Paddy, Sean and Seamus, were stumbling home from the pub
late one night and found themselves on the road which led past the old graveyard..
a look over here," says Paddy, "It's Michael O'Grady's grave, God
bless his soul. He lived to the ripe old age of 87."
says Sean, "here's one named Patrick O'Toole, it says here that he was
95 when he died."!
Just then, Seamus
yells out, "Good God, here's a fella that got to be 145!"
his name?" asks Paddy.
around a bit, awkwardly lights a match to see what else is written on the stone
marker, and exclaims,
Drunk Ole Mulvihill (From the Northern Irish Clan) staggers into a Catholic
Church, enters a confessional box, sits down but says nothing.
The Priest coughs
a few times to get his attention but the Ole just sits there.
Finally, the Priest
pounds three times on the wall.
The drunk mumbles,
"ain't no use knockin, there's no paper on this side either."
Mary Clancy goes up to Father O'Grady's after his Sunday morning service,
and she's in tears.
He says, "So
what's bothering you, Mary my dear?"
She says, "Oh,
Father, I've got terrible news. My husband passed away last night."
The priest says,
"Oh, Mary, that's terrible. Tell me, did he have any last requests?"
She says, "That
he did, Father..."
The priest says,
"What did he ask, Mary?"
She says, "He
said, 'Please Mary, put down that damn gun!'
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 .
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