Archive for July, 2008

Oracle expands charges against SAP in lawsuit (Reuters)

Monday, July 28th, 2008 | Finance News

BOSTON (Reuters) -
Oracle Corp (ORCL.O) amended its lawsuit
against SAP AG (SAPG.DE) on Monday, saying SAP executive board
members were warned that its TomorrowNow unit was engaged in
corporate theft before SAP bought TomorrowNow.

Oracle sued the German software maker in March 2007,
accusing its TomorrowNow software maintenance services business
of illegally using customer log-ins to steal copyrighted
materials from Oracle's website. Oracle said last month the
damages it seeks from SAP could top $1 billion.

In an amended court filing that cited internal SAP
documents, Oracle said four SAP board members, including
current co-chief executive Henning Kagermann, received a
confidential document on January 7, 2005, that "made clear
TomorrowNow did not operate legally."

It is the first time that Oracle has charged that top
executives at rival SAP had knowledge of the corporate theft
carried out by TomorrowNow -- both before and after the company
was acquired by SAP on Jan 19, 2005.

"SAP unlawfully accessed, copied and wrongfully used
Oracle's enterprise software applications and software and
support materials. It did so with the knowledge and consent of
the SAP AG executive board of directors," Oracle said in the
complaint filed in the U.S. District Court in San Francisco.

SAP spokesman Saswato Das said his company would respond to
the allegations in a legal filing that is due by September 11.

"Our filing is the most appropriate place to respond to
Oracle's allegations," Das said. "Ultimately it is the court
that will determine the facts and the remedies in this case and
we prefer to conduct the discussion through the legal system."

"INAPPROPRIATE"

He said that Kagermann was not immediately available for
comment. SAP is scheduled to release quarterly results on
Tuesday.

SAP said last week that it would shut down TomorrowNow
after an unsuccessful bid to sell the company.

The German company had disclosed in July 2007 that
employees of the Texas-based TomorrowNow had made "some
inappropriate downloads" of materials from Oracle's website.

SAP had said that employees of the parent company did not
have access to Oracle's intellectual property.

But Redwood City, California-based Oracle, in its amended
complaint which cited court depositions and internal SAP
documents, charged that employees of TomorrowNow and its parent
company accessed each other's computer systems and shared
content via e-mail.

Oracle claimed that one of those systems, SAPnet, allowed
employees of the parent to assist in "illegal development
efforts" by TomorrowNow.

"At the time Oracle filed its lawsuit, SAP had before it a
detailed road map for connecting virtually every piece of the
SAP (TomorrowNow) network to the SAP AG network," Oracle said.

TomorrowNow provides technical support for customers using
PeopleSoft and JD Edwards software. SAP bought the company in
2005 after Oracle bought PeopleSoft, which in turn had acquired
JD Edwards, aiming to persuade PeopleSoft and JD Edwards
customers to switch over to SAP's software.

SAP, the world's biggest maker of software that helps
companies manages business processes from accounting to
manufacturing, said it is working directly with more than 225
TomorrowNow customers to shut down its operations by October
31.

(Editing by Brian Moss)

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Treasury and banks kick-start home financing tool (Reuters)

Monday, July 28th, 2008 | Finance News

WASHINGTON (Reuters) -
The Treasury and the nation's four
biggest banks on Monday said they will kick-start a market for
an investment product to support home financing in the latest
effort to spur a slumping housing market.

Bank of America (BAC.N), Citigroup (C.N), JPMorgan Chase
(JPM.N) and Wells Fargo (WFC.N) said they planned to begin
issuing covered bonds, which are secured by pools of assets
like home loans.

And the Treasury released a set of "best practices" for
covered bonds, in a move designed to help develop the market
for the investment instrument.

"The key to the U.S. economy making a major improvement
will be turning the corner on housing finance and on the
housing correction," Treasury Secretary Henry Paulson told a
news conference. "We're not going to be able to do that unless
we have availability of mortgage financing, and this is an
attractive resource for mortgage financing."

The U.S. housing market has traditionally been supported by
mortgage-backed securities, which involves bundling loans into
securities and selling them to investors worldwide. Financing,
however, has dried up since the wave of foreclosures spawned by
the collapse of the subprime mortgage market last year.

Unlike mortgage securities, which pass all the risk to
investors, covered bonds collateralized with mortgages would
continue to perform even if the mortgages backing them default
-- as long as the bank remains solvent.

Covered bonds are widely used in Europe but have only
become attractive in the United States since the segment of the
mortgage securitization market driven by investment banks dried
up last year.

"I think there'll be some issuance very soon," Paulson
said. "There's not 100 percent certainty that it ever will
become very significant but this is an innovative tool and we
think it's one that we think is very promising."

Officials from the four banks, said in a statement, "We
look forward to being leading issuers as the U.S. covered bond
market develops."

Covered bond loans stay on the balance sheet of the bank
that issues the bond, so they are obligations on the bank. The
issuer retains control of the assets that back the loans, which
will be high-quality home mortgages in good standing.

Covered bonds are not totally new in the United States, but
have been a small factor in the nation's $11 trillion home
mortgage market
that Paulson thinks can become bigger with the
backing of the four big banks.

A Bank of America official said that, given time, covered
bond issuance might reach $1 trillion, enough to be considered
significant part of the mortgage market.

Whatever it amounts to, Paulson made clear that any new
source of mortgage financing was welcomed given the seriousness
of a housing downturn that is rated the worst since the Great
Depression
.

Two weeks ago, the Federal Deposit Insurance Corp. had
offered guidance specifying how investors would get their
collateral if an issuing bank failed, and the Treasury put
together the set of best practices in the hope of further
encouraging the market's development.

Federal Reserve Governor Kevin Warsh told the news
conference the U.S. central bank was willing to consider highly
rated, high-quality covered bonds as collateral for banks
seeking emergency funds from the Fed.

"A covered bond framework may attract investor interest and
facilitate greater access to mortgage credit," he said.

Some analysts, however, were skeptical covered bonds would
be the answer to the housing market's woes.

"Absent of (lowering) the capital requirement on covered
bonds, which would put them on the same footing as agency
mortgage-backed securities, this is like exercising on a
stationary bike," said Michael Youngblood, principal and
portfolio manager at Five Bridges Capital in Washington.

The Securities Industry and Financial Markets Association,
a bond market industry group, said a dedicated U.S. covered
bond trader would be appointed within each of its member firms
and those institutions would provide price information to
electronic platforms for covered bonds -- steps that could help
the market develop.

In another move to jump-start this market, Bank of New York
Mellon (BK.N) said banks can use covered bonds as collateral
for its repurchase program.

(Additional reporting by Richard Leong in New York and Mark
Felsenthal in Washington; Editing by Leslie Adler)

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Hartford Q2 operating earnings down (Reuters)

Monday, July 28th, 2008 | Finance News

NEW YORK (Reuters) -
Hartford Financial Services Group Inc
(HIG.N) earnings fell in the second quarter, hurt by higher
catastrophe claims and lower investment returns, but the
results still beat Wall Street expectations.

Hartford, a large life and property-casualty insurer, said
on Monday that operating earnings fell 9 percent to $696
million, or $2.22 a share. On that basis, analysts on average
expected the company to earn $2.10 a share, according to
Reuters Estimates.

The company's shares jumped nearly 4.5 percent to $60.80 a
share in post-market trading after closing down 3.86 percent at
$58.26 in the New York Stock Exchange's regular session.

Hartford's second-quarter net income was 13 percent lower
at $543 million, or $1.73 a share, compared with $627 million,
or $1.96 a share in the year-ago period.

The Hartford, Connecticut-based insurer said catastrophe
losses in the period were $171 million, a marked rise from $52
million in the same period a year ago, largely as a result of
losses from tornadoes and thunderstorms that ripped through
Mid-Western and South-Eastern parts of the United States
earlier this year.

Net investment income fell 8 percent to $1.2 billion and
investments in alternatives such as hedge funds and private
equity was less than a quarter of the prior-year period at $25
million.

Net realized capital losses were $156 million, compared
with $148 million in the second quarter of 2007.

(Reporting by Lilla Zuill; Editing by Andre Grenon)

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