News Archive

HP and Autonomy co-founder Lynch sue each other in London

LONDON (Reuters) – Hewlett-Packard Co (HPQ.N) has lodged a claim in London against Michael Lynch and a former colleague for damages of about $5.1 billion over their management of Autonomy, the company it bought in 2011.

Lynch will counter sue, seeking in excess of 100 million pounds ($149 million) for loss and damage caused by HP’s accusations, his representatives said in a statement on Tuesday.

Autonomy was supposed to be the $11.1 billion centerpiece of a shift into software for HP, but the deal turned sour a year later when it wrote off three-quarters of the British company’s value, accusing Lynch and his colleagues of financial mismanagement.

An HP spokeswoman said the company had filed a claim against Lynch, the co-founder of Autonomy, and Autonomy’s former finance director Sushovan Hussain in the Chancery Division of London’s High Court on Monday, alleging they engaged in fraudulent activities while executives at Autonomy.

“The lawsuit seeks damages from them of approximately $5.1 billion,” the spokeswoman added.

Lynch, speaking on behalf of Autonomy’s former management, has consistently denied any impropriety, saying the loss in value of the company was down to HP’s mismanagement.

California-based HP passed information in support of its allegations to the U.S. Department of Justice, the U.S. Securities and Exchange Commission and Britain’s Serious Fraud Office (SFO).

The SFO closed its investigation in January, saying there was not enough evidence to secure a conviction of Autonomy’s former executives. The other investigations are ongoing.

(Editing by Susan Thomas and Pravin Char)

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Pao faces tough court if she appeals Kleiner bias lawsuit

SAN FRANCISCO (Reuters) – Ellen Pao faces an uphill battle should she choose to appeal her defeat last week in a gender discrimination lawsuit against former employer Kleiner, Perkins, Caufield Byers, the Silicon Valley venture capital firm.

Not only did a San Francisco Superior Court judge side with Pao on some key evidentiary disputes in the run-up to trial, but employers have been highly successful litigating in the California appeals court where Pao’s case would land.

According to Westlaw data, out of 49 decisions involving discrimination and retaliation over the past two years, California’s First District Court of Appeal affirmed 26 of 31 cases where the employer won in the trial court, or 84 percent. Only five cases were reversed.

Conversely, the court – which covers San Francisco and 11 other Northern California counties – handed victory to employers in more than half of the cases they lost in the lower courts, reversing 10 of 18 cases.

Pao’s lawsuit helped spark a wide-ranging debate about the treatment of women in Silicon Valley, which has continued after a jury last Friday decided she had not proved Kleiner broke the law when it passed her over for promotion.

Pao has not said whether she plans to appeal. Legal experts said that may depend on whether Kleiner plans to seek reimbursement for litigation costs from Pao, such as deposition expenses and expert witness fees, which could run into the six figures.

Victorious employers often offer to withdraw their costs bid if the plaintiff agrees to forgo an appeal, labor attorneys said.

A Kleiner spokeswoman declined to comment. Any request for reimbursement of costs would likely be filed in the next three weeks.

Pao’s attorney Alan Exelrod, who has about two months to file an appeal, declined to comment on whether such a move was likely.

Resurrecting a case through the appellate system is always challenging. In 915 cases involving discrimination and retaliation over the past five years, California appellate courts have affirmed the lower court result 66 percent of the time, according to Westlaw data.

Should Pao lose at the First District, she could appeal to the California Supreme Court, though the high court opts to hear very few of the cases it reviews.

Beyond the numbers, San Francisco Superior Court Judge Harold Kahn made some important rulings in Pao’s favor, thus removing them as grounds for appeal. Kahn, for instance, allowed former Kleiner partner Trae Vassallo to testify over the firm’s fierce objections.

Vassallo provided explosive testimony about a male Kleiner partner showing up at her hotel room door in a bathrobe, holding a glass of wine. Pao had accused the same partner of lying to her in order to start an affair, and then retaliating against her after she ended it.

Kahn also forbid Kleiner from introducing evidence that Pao’s husband had financial problems, and from asking Pao whether that motivated her lawsuit.

One significant ruling that went against Pao was when her lawyers sought to compare her performance reviews with the reviews of other women partners, aiming to prove a pattern of discrimination. A judge last year ruled that Kleiner did not have to disclose the performance reviews of other women partners.

After the verdict, three jurors told Reuters they had focused on Pao’s increasingly negative performance reviews, which undermined her argument that she deserved to be promoted.

The ruling on the performance reviews would likely play a major part in any Pao appeal, though the legal standard for overturning a pretrial discovery order is very high, said Mark Schickman, a San Francisco employment attorney who primarily represents companies.

“It would be the greatest long shot,” Schickman said.

(Reporting by Dan Levine; Editing by Peter Henderson and Tiffany Wu)

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U.S. consumer confidence, house prices offer hope for economy

WASHINGTON (Reuters) – U.S. consumer confidence rebounded strongly in March amid optimism over the labor market while house prices increased in January, hopeful signs that a recent sharp slowdown in economic activity was probably a blip.

A combination of harsh winter weather, a now-settled labor dispute at the country’s busy West Coast ports, softer global demand and a strong dollar dampened growth early in the first quarter.

The moderation in activity is a replay of early 2014, when an unseasonably cold winter caused a contraction in output, which was followed by a sharp rebound in growth.

“Rising confidence and home prices adds to the belief that the first-quarter slowdown will be temporary,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.  

The Conference Board said on Tuesday its index of consumer attitudes rose to 101.3 this month from 98.8 in February. That was well above economists’ expectations for a reading of 96.

While consumers were less optimistic about the short-term outlook, they had greater confidence in the labor market, with the share of those anticipating more jobs in the months ahead increasing significantly.

The proportion of consumers expecting income growth also rose solidly, which should help to underpin consumer spending.

Consumption, which accounts for more than two-thirds of U.S. economic activity, has been soft in the last three months, despite households receiving a massive windfall from lower gasoline prices. Some of the weakness has been blamed on harsh weather that kept shoppers at home.

“Consumers have emerged from the winter blues. If they spend anywhere as great as they feel right now, then this economy is going to roar over the next few months,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.

The dollar rose against a basket of currencies, while U.S. stocks fell after a sharp rally on Monday. Prices for U.S. Treasury debt rose.


First-quarter growth estimates range between a 0.8 percent and 1.2 percent annual pace. The economy expanded at a 2.2 percent rate in the fourth quarter.

Some economists believe that weak first-quarter growth could cause the Federal Reserve to delay an interest rate increase to later this year.

Richmond Fed President Jeffrey Lacker, however, said on Tuesday that the U.S. central bank would have a “strong” case to tighten monetary policy in June, adding that transitory factors had weighed on growth in the first quarter.

A second report showed single-family home prices rose in January from a year earlier, in part boosted by a shortage of properties on the market.

The SP/Case Shiller composite index of 20 metropolitan areas gained 4.6 percent in January on a year-over-year basis after rising 4.4 percent in December.

Housing has been sluggish amid a dearth of properties, as insufficient equity keeps potential sellers from entering the market. The reacceleration in home prices could see more houses put up for sale.

“This report signaled healthy home price growth – strong enough to make current owners consider listing their homes, but slow enough to keep those homes within buyers’ reach,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.

“This is an important development ahead of the spring selling season, and should provide upside support for inventory growth in the first half of the year.”

For now, the economy remains in a soft patch.

In another report, the Institute for Supply Management-Chicago said its Business Barometer edged up to 46.3 from 45.8 in February. A reading below 50 indicates contraction in the region’s manufacturing sector.

New orders contracted for a second straight month, while inventories rose sharply. Economists said the persistently weak readings suggested the strong dollar and weak global demand are acting as a drag on manufacturing.

“The manufacturing sector is more exposed than the non-manufacturing sector to the negative effects of dollar appreciation and weaker foreign growth,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.

(Reporting by Ryan Vlastelica, Dan Burns and Rodrigo Campos; Writing by Lucia Mutikani; Editing by Paul Simao)

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Greece fails to reach initial deal on reforms with lenders

ATHENS (Reuters) – Greece failed to reach an initial deal with the European Union and the IMF to unlock aid after the creditors dismissed a package of reforms from Athens as ideas rather than a concrete plan, officials said on Tuesday.

The lack of a deal further raises pressure on Athens, which faces the prospect of running out of money in a few weeks unless it can convince lenders to dole out more financial help.

Athens put a brave face on the failure to reach an agreement with the “Brussels Group” of representatives from the EU and the IMF, saying it remained keen for a deal on the basis of its long-held demand that the measures it is asked to implement do not hurt economic growth. Lenders will intensify efforts to collect data in Athens, it said.

One source close to the talks said the halt in negotiations was not a sign of a rupture but an indication of slow-moving progress in the discussions.

Mistrust and acrimony have characterised much of Greece’s talks with lenders since Prime Minister Alexis Tsipras stormed to power in January pledging to end austerity and a bailout programme that has kept Greece afloat for over four years.

Greece and its European partners have sought to show publicly that relations have improved in recent weeks after Tsipras held a series of talks with EU leaders, but both sides remain far apart on issues ranging from pension reform to debt relief.

At issue now is a list of reforms that Greece presented to the Brussels Group representatives last week, in an effort to show lenders that it is committed to living up to pledges of financial discipline and is worthy of aid.

But euro zone officials panned the list as inadequate. One EU official said the lenders had yet to receive the list they had been waiting for.

A conference call of the Euro Working Group – euro zone deputy finance ministers – remains scheduled for Wednesday and will allow the bloc to take stock of developments so far, an official said.

“We obviously look forward to receiving a list as soon as possible,” the official said. “That’s the aim of the ongoing discussions: to exchange information on detailed reform measures and intentions.”

The Brussels Groups makes recommendations to the Euro Working Group which in turn informs the Eurogroup of euro zone finance ministers who make decisions to disburse aid.

Tsipras appealed on Monday for an “honest compromise” with lenders but warned it would not be won at any cost. [ID:L6N0WW124]

Calling for support from opposition parties, Tsipras reiterated that his government would implement a Feb. 20 deal struck with the euro zone.

But he also stressed that the government had non-negotiable “red lines” such as avoiding wage and pension cuts and mass layoffs, and avoiding a fire sale of asset sales in favour of concessions that allows the state to retain control.

Separately, Greek Finance Minister Yanis Varoufakis met on Tuesday with officials from major bond fund manager Pimco, which has large investments in euro zone peripheral debt. Pimco officials expressed interest in Greek Treasury bill auctions and bonds, a finance ministry official said.

(Additonal reporting by Jan Strupczewski in Brussels; Writing by Deepa Babington; Editing by Ruth Pitchford)

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Wall Street sees lower stock market gains due to rate worries

NEW YORK (Reuters) – U.S. stocks are forecast to post more modest gains this year than in 2014 as rising interest rates and a firmer dollar partly offset strong economic growth, a Reuters poll found.

The SP 500 .SPX .INX will rise to 2,200 by Dec. 31, according to the median forecast of more than 40 strategists polled by Reuters in the past week.

The year-end target, the same as in a December poll, would represent a 5 percent gain from Monday’s close of 2,086.24 and a 7 percent increase for 2015.

But that would be the lowest return since 2011 for the benchmark index, which closed out 2014 with an increase of more than 11 percent, its third consecutive year of double-digit gains.

Strategists are optimistic about U.S. economic prospects for 2015, but they said the market could pull back once the Federal Reserve raises interest rates.

The Fed is expected to do so for the first time in almost a decade later this year if the economy, especially the labor market, keeps improving.

A recent Reuters poll showed the majority of Wall Street’s top banks see the Fed acting in September. [FED/R]

“Ultimately we think the market is going to end higher, but it’s not going to be a straight line by any means,” said Dan Suzuki, senior U.S. equity strategist at Bank of America-Merrill Lynch, which has a 2,200 year-end target for the SP 500.

“We’re looking for a lot of volatility.”

Strategists lowered their midyear target for the SP to a median of 2,073 from 2,103 in a December poll and reduced the Dow Jones Industrial Average .DJI estimate to 18,000 from 18,500.

While concerns about the timing of the Fed’s first rate hike will keep investors anxious, the surging U.S. dollar is likely to keep suppressing earnings for U.S. multinationals, strategists said.

The dollar .DXY is up more than 24 percent against a basket of currencies since May 1, making it tougher for U.S. companies to compete overseas.

SP 500 earnings estimates for 2015 have fallen sharply since the start of the year, and profit growth for the year is now forecast to increase just 1.8 percent from 2014, Thomson Reuters data showed.

“Anyone who has any kind of U.S. multinational exposure is going to be looking for safe havens,” said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

The SP 500’s forward price-to-earnings ratio stands at 17.2, compared with 12.2 at the end of 2011 and 16.9 at the end of 2014, Thomson Reuters data showed.

There was little consensus among strategists on which sectors were likely to outperform but several liked technology, while they were bearish on energy and materials because of falling commodities prices.

They also expect utilities, which have done well because of extremely low interest rates, to underperform.

The Dow is expected to rise to 18,850 by year-end, 5 percent higher than Monday’s close and near the December target of 18,858.

(Editing by Lisa Von Ahn)

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Former Bombardier CEO’s pay cut 12 percent after missed targets

TORONTO (Reuters) – Bombardier Inc’s (BBDb.TO) former chief executive, Pierre Beaudoin, suffered a small pay cut in 2014 as the company struggled to complete development of its new CSeries jet, filings showed on Tuesday.

Beaudoin, who has since stepped down as chief executive and become the Canadian plane and train manufacturer’s executive chairman, received direct compensation of $5.1 million, down from $5.8 million in 2013.

His compensation had been linked to financial and nonfinancial targets for the company’s aerospace and transportation segments, as well as adjusted earnings per share and an undisclosed “specific value-added project for Bombardier Aerospace.”

In all four areas, Beaudoin was paid less than target bonuses set for him by the board, and he received no payment at all for the special project. The aerospace segment’s performance fell short of an undisclosed target for “on-time delivery” and transportation was docked for poor employee engagement.

Bombardier is pushing to bring its new CSeries, which is billions of dollars over budget and years behind schedule, into service. With several test planes flying, it is aiming to certify the aircraft by the end of this year.

(Reporting by Allison Martell; editing by Matthew Lewis)

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Reuters Poll: Market uncertainty tempers forecasts for equities’ gains this year

(Reuters) – Uncertainty surrounding the timing of the U.S. Federal Reserve’s interest rate hike has tempered analysts’ forecasts for stock market gains this year, Reuters polls showed on Tuesday.

Global stocks have largely rallied since the start of the year, with several indexes at or close to record highs as more than two dozen central banks have eased monetary policy.

Chinese and most European stocks have led the way with a stellar run, buoyed by stimulus from the People’s Bank of China and the European Central Bank.

But while the quarterly poll of around 300 analysts showed all of the 21 stock indexes surveyed are expected to rise between now and the year’s end, it is less bullish than December’s poll.

Fund managers and strategists also warned that the prospect of an interest rate rise by the U.S. Federal Reserve this year will create turbulence in global stock markets.

“The timing of the first hike in the Fed fund rate and its impact on the trend in global government bond yields will be a big factor in the coming months,” said Patrick Moonen, senior strategist at ING IM.

The SP 500 .SPX index of U.S. stocks is set to rise 7 percent this year, its lowest annual gain since 2011 as a potential rate rise and a firmer dollar partly offset a strong economy.

Markets around the world have been provided with ample liquidity as several central banks have cut interest rates or printed money this year as inflation fell. That flow of cheap cash has pushed up both equity and government bond prices.

Despite expectations for a U.S. rate hike this year, disinflation risks would keep major sovereign bond yields from rising significantly, a separate Reuters poll showed last week. [US/INT]


Emerging market stocks are expected to spearhead gains even as developed markets shares rise modestly.

The majority of end-2015 forecasts for emerging market indexes – including India, Russia, South Korea, Mexico, Hong Kong and China – point to significant gains from Monday’s closing levels. [EPOLL/CN] [EPOLL/IN] [EPOLL/RU] [EPOLL/BR]

The Shanghai Composite Index .SSEC has had a spectacular run, gaining more than 17 percent this year, after a 50 percent leap in 2014.

By end-December the Shanghai benchmark is expected to be at 4,000 points, its highest since early 2008, and almost 6 percent above Monday’s close of 3,787.69.

India’s benchmark BSE Sensex equity index .BSESN is expected to recover from a recent dip and reach a record high of 32,000 by end-December. [EPOLL/IN]

Taiwan’s benchmark index .TWII will be a laggard compared to its regional peers, predicted to rise only about 1 percent from Monday’s close of 9,521.87 points.

Brazil’s Bovespa stock index .BVSP will hold pretty steady through the year despite a struggling economy, while Mexican stocks should track exports higher in coming months. [EPOLL/BR]

The fairly hefty gains seen in major Western stock markets in 2014 and this year are expected to slow.

The SP 500 is set to dip to 2,073 by June, from Monday’s close of 2,086.24, but rebound to 2,200 by year-end. That would represent a 5.5 percent gain from Monday’s close and give a 7 percent annual return, lagging last year’s 11.4 percent rise. [EPOLL/US]

“Ultimately we think the market is going to end higher, but it’s not going to be a straight line by any means,” said Dan Suzuki, senior U.S. equity strategist at Bank of America-Merrill Lynch. “We’re looking for a lot of volatility.”

European shares, though, are set to extend their brisk rally this year as the European Central Bank’s massive asset-buying scheme and a weakening euro help revive economic growth and corporate profits. [EPOLL/FRDE]

The pan-European STOXX Europe 600 .STOXX index is forecast to rise more than 6 percent from current levels to 425 points by the end of 2015.

The STOXX 600, up almost 17 percent year-to-date, is set to record its strongest first quarter since 1998 and outshine nearly all major asset classes.

Britain’s top FTSE 100 .FTSE equity index is expected to stutter in the run-up to a May national election but then recover to set new record highs. [EPOLL/GB]

(Additional reporting and polling from reporters in Frankfurt, Hong Kong, Johannesburg, London, Milan, New York, Paris, Sao Paulo, Seoul, Shanghai, Sydney, Tokyo, Toronto and Bengaluru; Editing by Susan Fenton)

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Germanwings disaster will not affect image of budget air travel: easyJet

AMSTERDAM (Reuters) – The disaster at budget airline Germanwings which killed 150 people will not harm the image of low-cost air travel in Europe, easyJet (EZJ.L) chief executive Carolyn McCall said on Tuesday.

Airlines across the world were left reeling after investigators said they believed the co-pilot of a Germanwings flight locked himself alone in the cockpit and deliberately steered it into a mountain, killing everyone on board.

Germanwings, founded in 2002 as a budget carrier, was acquired by full-service airline Lufthansa (LHAG.DE) in 2009, and the parent company has expanded it into its main short-haul operator to battle competition from low-cost carriers such as easyJet and Ryanair (RYA.I).

McCall, in Amsterdam to open a new base for the airline, said the Germanwings crash was a matter for all airlines.

“This is not a budget airline issue. This is an airline issue. This is an industry thing,” she told Reuters in an interview.

EasyJet moved swiftly to change its cockpit policy as details emerged of what had caused the crash, requiring two crew members to be on the flightdeck at all times.

Under European regulations, pilots were permitted to leave the cockpit temporarily at certain times and under certain circumstances, leaving the other pilot alone. Since the crash, the EU has advised airlines to have two crew members on the flightdeck at all times.

“I think that every airline will be looking at everything they do in light of what’s happened,” McCall said.

After German prosecutors said Lubitz had hidden an illness from his employers, strict German laws on doctor-patient confidentiality have come under the spotlight.

Any changes to a pilot’s right to medical confidentiality would be an issue not just for the airline industry, but on a wider scale, McCall said.

“That’s an ethics issue. It’s something that the government will have to address. If they don’t do it in the Army, the Navy, there are equally sensitive areas that have the same levels of confidentiality. It would be a much bigger deal than just an airline thing.”

EasyJet, she added, has for years done more than is required by legislation to ensure the well-being of its pilots through its fatigue-reporting management system, which is used to keep a check on pilot tiredness.

Budget airlines have a reputation for pushing for the lowest pilot pay and the most flexible working arrangements to keep a lid on costs.

EasyJet, unlike some other carriers, said it employs staff directly on permanent contracts and aims to pay a median salary for the country where staff members are based, plus performance and company-related bonuses which can take pay higher.

But for McCall safety is about culture, not wages.

“I don’t think safety has anything to do with pay,” she said. “No one doubts that safety is the number one priority of the airline. I think that’s embedded in our culture.”

“Safety is entirely to do with the culture of an airline, with the professionalism of people that you employ, and that comes down to new recruits, how you recruit how you treat people and how the safety culture permeates the airline,” she said.

(Reporting by Sarah Young; Editing by Angus MacSwan)

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Comcast to form investment company with CFO at helm

(Reuters) – Comcast Corp (CMCSA.O) Chief Financial Officer Michael Angelakis will leave his position to head a new investment arm with up to $4.1 billion to invest in growth-oriented companies, Comcast said on Tuesday.

The largest U.S. cable operator will shell out $4 billion and Angelakis will invest at least $40 million with the rest coming from senior members of a team he will appoint.

Philadelphia-based Comcast, which already has a venture capital arm through Comcast Ventures, said the new company would begin operations in 2015 or early 2016.

Comcast Ventures makes investments in startups in the range of $2 million to $15 million. Investments include online publisher Vox Media and e-commerce startup Birchbox.

Investments made by Angelakis’ team would be in a range larger than Comcast Ventures but smaller than billion-dollar deals such as $45 billion purchase of Time Warner Cable, according to a source close to Comcast.

The new investment arm will likely identify late-stage startups and aim at “investing in and operating” them, the source said.

Technology, telecom and media companies such as Google Inc (GOOGL.O) , Verizon (VZ.N) and Intel Corp (INTC.O) have investment arms that have invested in up-and-coming startups from healthcare to online entertainment.

Industries that Comcast is looking to invest in have not been decided, the source said.

Angelakis, whose resignation will be effective upon the earlier of the date on which Comcast’s new CFO commences employment or June 30, 2016, will also work with Comcast as senior adviser.

Angelakis will receive annual compensation of $8 million in his role as the CEO, Comcast said in a regulatory filing. He will also receive $100,000 for his role as senior adviser.

Comcast shares, which closed at $56.47 Tuesday, were marginally down from Monday’s $56.61 close.

(Reporting By Lehar Maan and Devika Krishna Kumar in Bengaluru and Malathi Nayak in New York; Editing by Maju Samuel and Grant McCool)

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