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"Dozens of companies use the word 'spam' in their legal and commercial names and no one confuses any of us with the Hormel canned meat product." -- Brian Cartmell, CEO of SpamArrest, responding to Hormel's legal challenge against his company Government contractors are struggling to make the U.S. more secure. It's not the enormity of task. They simply can't get security clearances for their employees. The Pentagon concedes that it has a huge backlog of more than 240,000 applications.

Without clearances, which can take at least six months, private-sector workers can't handle classified projects. That's slowing work on many government contracts. "Cleared personnel are in short supply," says Peter LaMontagne, a senior vice-president at ManTech International, which does background checks for the Pentagon.

Herndon (Va.)-based tech services supplier WAM!NET Government Services, for example, wants to expand its workforce from 500 to 750 to help fulfill a $7 billion contract from the Navy to design and operate a computer network. But employees need security clearances to get onto 100 bases around the world. Company President Michael J. Barbee says he has 117 workers waiting for approval. One worker has been hoping for a green light for 16 months. And there's no end in sight, either, since security requests have been rising. The $600 billion hedge-fund industry is producing its own version of Survivor -- only it's no hit with investors. The average fund has supposedly returned 7.9% this year, but thanks to the hedge-fund world's extreme secrecy and so-called survivor bias, the real number could be much lower. The SEC is considering new disclosure rules to address the first problem.

Survivor bias may be trickier to tackle. It's the tendency of overall performance data to include healthy funds and ignore flops. Since hedge funds aren't required to report returns, weak funds often don't. Funds that liquidate -- and there have been plenty, thanks to the stock market rout -- aren't usually included in industry averages. Once a fund finishes raising money, managers have little incentive to report returns to outsiders. Investors get quarterly reports, often unaudited.

The result: Hedge funds' average annual returns could be inflated by 3.7 percentage points, according to a study by the Investment Management Consultants Assn., a trade group. Richard Dahab, of investment advisers Dahab Associates, says investors should have "low expectations." The big question: How low? A little-noticed provision in the Sarbanes-Oxley Act could have some surprising consequences -- good for investors and bad for trial lawyers. Under a July 28 settlement, J.P. Morgan Chase (JPM) Citigroup (C) agreed to pay $305 million to resolve charges that they helped Enron (ENRNQ) and Dynegy (DYN) defraud investors.

But all that money won't be kept by the government. Instead, the SEC is using the law to direct $236 million to Enron victims and an additional $19 million to Dynegy victims. "It's unusual because up until last year all SEC fines went into the U.S. Treasury," says Georgetown law professor Donald C. Langevoort.

The provision is a boon for investors, who should get some payback much faster than any lawsuit could be resolved. To ensure companies don't pay the same victims twice, those payments should be credited toward any future civil verdicts against the two banks, including shareholder class actions.

The big losers are the plaintiff's lawyers. They are paid on a contingency basis -- generally 25% to 30% of the final settlement or verdict. Any reduction due to SEC fines will only lower the total that their fee is taken from. To big business, that's justice. Is it time for Eastman Kodak (EK) to cut its dividend? On July 23, Kodak reported that second-quarter earnings fell 61%, to $112 million, while sales of $3.4 billion were flat compared with a year ago. Worse, the company says U.S. film sales may drop 8% this year.

To offset sliding sales in its core photography biz, Kodak has been steadily building a health-and-commercial-imaging business. On July 21, it announced the purchase of PracticeWorks (PRWK), a dental-imaging company. To do more deals, Kodak may cut its dividend at its September board meeting, freeing up some of the $500 million it's slated to pay shareholders this year. "It has almost become a necessity because they need the cash," says analyst Richard Stice of Standard & Poor's (MHP).

Cutting the dividend could be a catch-22. At $1.80 a share, or 21% more than estimated 2003 earnings, the dividend has been a lure for investors. Reducing it could torpedo the share price. But other choices aren't much better. The stock is too volatile to use for acquisitions, and debt is now more expensive because credit agencies downgraded Kodak, saying PracticeWorks initially will boost debt but not earnings.

It could use cash to make more deals. Kodak says it has $838 million in the bank and expects up to $500 million in free cash flow this year after capital spending and dividends. The company says it is reviewing the dividend but won't say what action, if any, it will take. Good thing Manchester United nearly sold out its four-match tour in the U.S. before trading superstar soccer player David Beckham to rival Real Madrid for $40 million. ManU, the world's most popular and profitable sports team, should pocket about $3 million for the matches, BusinessWeek has learned. But the absence of Becks, as the club's 53 million global fans call him, could dampen efforts to establish its brand in the U.S. one of the world's last untapped soccer markets.

As the tour rolls to its final match in Philadelphia on Aug. 3, it's clear that hardcore U.S. soccer fans want to see the club even without Beckham. "No one has asked for a refund," says ManU CEO Peter Kenyon.

ManU, however, needs to hook casual fans to popularize the sport. "Becks's absence will hurt the club with North American TV viewers and in merchandise sales," says Jeffrey Bliss, president of sports marketer Javelin Group. In the age of global marketing, even European soccer clubs need a pretty face to hawk their goods. Just ask Real Madrid. It's a tech marketer's dream: buyers who are 19% more likely to shop online and 35% more likely to have speedy Web access. Who are they? Gays and lesbians, says a new report from Forrester Research (FORR). Forrester also says marketers are forfeiting up to 5% of the $96 billion retail tech market by ignoring them.

The survey polled 60,000 adults, of whom 7% identified themselves as lesbian, gay, or bisexual. The poll found 29% of gays have been online for seven years, vs. 18% of straights. That's partly because gays used the Net early on as a link to the gay community, says Forrester.

Tech companies are starting to pay attention. Sirius Satellite Radio (SIRI) will run ads on Gay.com in August. And EarthLink (ELNK) put free CDs in recent issues of Out. "It has been a great strategic fit for us," says EarthLink brand manager Elizabeth Halkos. It could be a boost for techdom, too.


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