During a volatile week for stocks like this one, it's important to pay a lot less attention to the market and more attention to your investing approach. Is it sound and steady? Or does it sway back and forth with the market winds?

This week on Fool.com, Tom Gardner reprises his philosophy for finding those Hidden Gems in the market he sees as promising. He has learned from the masters like Buffett, Lynch, and Graham, and we think there's a thing or two we can learn from him, too. Get his investing take in Home Run Stock Redux.

In today's Motley Fool Take:

Cisco Might Pay Dividend

By Bill Mann (TMF Otter)

Cisco (Nasdaq: CSCO) CEO John Chambers said yesterday that the networking giant would probably pay a dividend to investors in the future. This represents a fairly significant tectonic shift for the company, but it said that for the time being most of its major investors preferred a share buyback at current prices.

The insinuation here is that Cisco's big investors believe that the stock is undervalued and that a share repurchase would be a better use of some of the company's $21 billion cash hoard than a simple repayment of dividends. This is not logic that I understand, but I don't have to -- I don't own the shares. Cisco's recent actions suggest that it agrees that the stock is undervalued, having used cash instead of equity in its recent acquisitions.

Cisco shareholders approved a measure in 2001 that authorized the company to repurchase up to $20 billion in shares. Thus far under the program, Cisco has retired more than $8 billion worth, $2 billion of which was repurchased this past quarter. This should reduce the total shares outstanding, so shareholders have a larger piece of the company.

Cisco, though, also has an extremely gracious options program for its employees. As such, these massive buybacks have the effect of only wiping out the dilution, and not really going toward the benefit of the shareholders themselves. Should Cisco go down the same path and pay a dividend as Microsoft(Nasdaq: MSFT) and Intel(Nasdaq: INTC) have elected to do, it could do so without breaking a sweat. It routinely generates more than $400 million in free cash flow each quarter, and has substantial liquid resources (including its stock) that it could pay for a regular dividend without any strain whatsoever.

But as we saw with Microsoft's dividend announcement, there is a belief among a subset of technology investors that a company's initiation of a dividend is tantamount to an admission that it is no longer a "growth company." I hope that Cisco's management does not allow such superficial considerations to affect its determination to make an optimal deployment of its excess capital.

Bill Mann owns none of the companies mentioned in this story.

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SCO's Unintended Consequences

By Tim Beyers

The technology industry has a history of producing unexpected innovations. For example, email spawned spam. Apple's(Nasdaq: AAPL) Macintosh computer begat desktop publishing. And the Web produced e-commerce, which in turn gave birth to Amazon(Nasdaq: AMZN), eBay(Nasdaq: EBAY), and Overstock.com(Nasdaq: OSTK).

So, it should come as no surprise that SCO Group's(Nasdaq: SCOX)lawsuit against the Linux industry has produced what could either be a profitable new market niche or a spectacular new scam: open source insurance.

According to technology trade journal InfoWorld, a New York-based start-up called Open Source Risk Management has decided to sell insurance to companies using open source software that fear they may be sued.

Insurance for the unexpected court date is nothing new. Journalists have had it for years. Doctors spend small fortunes on malpractice policies. But open source insurance just might be the legal equivalent of selling ice to Eskimos.

For one, the Open Source Development Labs (OSDL) has stitched together a $10 million legal defense fund for any Linux user to tap. An OSDL spokesperson confirmed that the organization has been in touch with DaimlerChrysler and AutoZone to offer assistance in defending against SCO lawsuits. Furthermore, published reports say that Hewlett-Packard(NYSE: HPQ) and Novell offer indemnification for users who don't alter the code in their Linux software.

As currently cast, open source insurance may be nothing more than snake oil. But it doesn't have to be that way. For example, there could be a market for insuring customers against open source software breakages. Because Linux isn't owned, it can be hard to find a responsible party to turn to when problems occur. And since fees for fixing broken software can be enormous, a hedge-like insurance could be attractive.

Hard as it may be to believe, SCO's pyrrhic volley against Linux has made the open source industry come together and mature quickly. Ultimately, that's good for customers, and probably for investors in Linux stalwarts like RedHat(Nasdaq: RHAT).

A lawsuit good for business? Only in America.

Motley Fool contributor Tim Beyers has never filed a lawsuit, but he's been the victim of unintended consequences far too many times. He has no stake in any companies mentioned here. View his Fool profile here.

Di scussion Board of the Day: Linux User's Group

Has SCO Group's lawsuit against Linux-using companies spurred consolidation and maturity in the open-source industry? Will Linux and open source software be the wave of the future? How will proprietary programs maintain their footing? Got any code you want to trade? All this and more, on the Linux User's Group discussion board.

Is Kmart OK?

By Alyce Lomax (TMF Lomax)

Kmart (Nasdaq: KMRT) may be known for its "blue-light special," but today, investors gave it the green-light treatment, bidding shares up nearly 10% this morning.

The enthusiasm was based on the discount retailer reporting its first profitable quarter since it lumbered out of bankruptcy. Also, Martha Stewart's guilty verdict apparently has not had any significant effect on sales of the Martha Stewart Everyday brand, which Kmart happens to carry. Still, today's enthusiasm seems a little much.

For the fourth quarter, Kmart reported net income of $276 million, or $2.78 per share. It reported a net loss of $1.1 billion last year. The company also managed to set aside $2.1 billion in cash and cash equivalents.

While that's good news, there's still reason for worry in this cutthroat retail environment. Wal-Mart(NYSE: WMT) and Target(NYSE: TGT) are very strong and growing contenders in the discounter environment and widely seen as reasons for Kmart's problems. Meanwhile, other department store names such as Sears(NYSE: S), Kohl's(NYSE: KSS), and J.C. Penney(NYSE: JCP) also compete for the same shoppers.

While Kmart's profitable quarter and the stash of cash are heartening -- the result of inventory management, cash flow from operations, and real estate sales -- same-store sales were down 13.5%, with overall sales down 25.8%. And then, of course, there's the issue of that relationship with Martha Stewart Living Omnimedia(NYSE: MSO), with the Martha Stewart Everyday product being one of the exclusive brands Kmart peddles.

In a regulatory filing, Kmart said that it is not seeing any drop-off in sales of the Martha Stewart Everyday brand, as of yet. I'm not too surprised. She may have been convicted of obstruction of justice, but that doesn't mean she's been convicted of bad taste and a complete inability to decorate. It's likely most Kmart shoppers see it that way, too.

So while the Martha Stewart angle may be no big deal, it's the highly competitive environment that seems the biggest reason for continued caution on Kmart.

Alyce Lomax does not own shares of any companies mentioned.

Qu ote of Note

"If you can count your money, you don't have a billion dollars." -- J. Paul Getty

Mo re on Fool.com Today

Loss of American jobs overseas and drug prescription costs. The two topics are already shaping up to be serious flash points in the upcoming presidential election. Find out what Fools are saying about the issues in Offshoring Outsourcing Soundoff and The Drug Cost Conundrum.

In other news:

For a list of all our stories from today, see our Today's Headlines page.