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Originally published March 24, 2007 at 12:00 AM | Page modified March 24, 2007 at 2:00 AM

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Business Digest

Firm just acquired by Microsoft faces Rutgers suit

Pacific Northwest Tellme Networks, a phone software company being bought by Microsoft, has been sued by Rutgers University over a patent...

Tellme Networks, a phone software company being bought by Microsoft, has been sued by Rutgers University over a patent for providing audio access to Internet sites over a telephone.

The university sued March 19 in Newark, N.J. Rutgers, New Jersey's state university, is seeking unspecified cash and a court order to block further use of its invention.

The dispute is over technology that allows telephone callers to receive recorded data from the Internet. Closely held Tellme, based in Mountain View, Calif., makes voice-recognition software that lets users get a phone listing, order a pizza or search the Web.

Microsoft earlier this month said it agreed to buy the company. Financial terms weren't disclosed, but people familiar with the negotiations said the deal was worth more than $800 million, making it Microsoft's biggest acquisition since 2002.

Tellme spokeswoman Marci Pedrazzi said the company doesn't comment on pending litigation.

Morgan Stanley

Spinoff planned for Discovery card

Morgan Stanley announced Friday its long-expected plans to spin off its Discover credit-card operations in an initial public offering.

It was not immediately known how much the nation's second-largest investment house expected to raise from the IPO, which John Mack, chairman and chief executive officer, had promised would be undertaken after he took the leadership at Morgan Stanley in June 2005.

Discover, which recently announced a new version of its cards, called Motiva, is the fourth-largest debit and credit-card network, after Visa, MasterCard and American Express.

Freddie Mac

Slight increase in profit reported


Rising foreclosures slightly dented the quality of Freddie Mac's holdings last year, the mortgage finance giant said Friday as it reported a slight increase in profit to $2.2 billion.

Freddie Mac Chief Executive Richard Syron said he foresees some degree of economic contagion in the future from the turmoil in the high-risk mortgage market.

The government-sponsored company, emerging from an accounting scandal, also said it lost $480 million in the fourth quarter as a result of moves in interest rates that hurt its business of guaranteeing home loans.

The loss at Freddie Mac, which is the second-largest buyer and guarantor of home mortgages in the country, compared to profit of $684 million in the October-December period of 2005.

Amid the deteriorating market for subprime mortgages — higher-priced loans targeted to borrowers with tarnished credit or low incomes — Freddie Mac said last month that it will no longer buy those that it deems to be the most vulnerable to foreclosure.

Compiled from Bloomberg News and The Associated Press

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