Welcome to the major leagues of debt. Collateralized debt obligations, almost always referred to as a CDOs, are horrendously complicated deals that often leave anyone without a MBA wondering what was put into these CDOs.

The first thing to understand about bonds, (aka debt) is that bonds are often backed by something else. Think about your home mortgage. If you don't pay your mortgage, the bank can take the house. You end up homeless, and the bank sells the house to pay off the rest of that mortgage. There is something "backing" that mortgage; something lender can fall back on, if you don't pay your bills like a good human being. That's called collateral.

CDOs are one flavor of an entire sector of investing called structured finance, and they are also backed. CDOs, in the simplest concept, are just bonds backed by something else. In most cases, a CDO is backed by a collection of various types of debt. CDOs can be home mortgages, or other types of debt like credit cards, auto loans, and personal loans. Most of these types of debt are usually considered a bit more risky and they don't have the backing that a home loan does. So, if you think it through, you can imagine that CDOs are usually considered a risky investment.

To take a step further, understand that CDOs have multiple flavors within each CDO. These flavors are called tranches. If you've taken French, you might recognize the word, it means "slice" or "portion." Each slice of that CDO you invest in is a little different and carries different amounts of risk.

You could invest in the lowest risk tranche of the CDO, which would provide you lower risk. But, you don't get a good return on that investment. Or, you can be the heroic adventurer of bonds and invest in the lowest-grade tranche of the CDO. You'll make an amazing return, but if the economy even looks at you wrong, you might lose the entire investment.

CDOs aren¿t easy, and are almost always invested in by mutual funds, insurance companies and hedge funds. As an individual investor, you will probably not come across a CDO you can participate in.

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Wednesday, August 20, 2008

Microsoft and Novell Expand Successful Interoperability Relationship

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WALTHAM, Massachusetts, Aug 20, 2008 (PR Newswire Europe via COMTEX) ----Additional resources, training and investments to address growing customer demand.

Microsoft Corp and Novell Inc are announcing an incremental investment in their relationship to meet accelerating customer demand for their business model solution, which is designed to build a bridge between open source and proprietary software to deliver interoperability and intellectual property (IP) peace of mind for organisations operating mixed-source IT environments.

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The investment focuses on enhanced programmes from Novell to provide tools, support, training and resources for customers seeking an enterprise-class Linux* platform and specifically, the optimal interoperability solution between Microsoft Windows Server and SUSE(R) Linux Enterprise Server from Novell(R). It also includes Microsoft's commitment to purchase up to US$100 million in certificates that those customers can redeem for expanded support from Novell that includes SUSE Linux Enterprise Server support and support for moving toward an enterprise-class Linux platform. The investments will take effect 1 Nov 2008, and between now and then Microsoft and Novell will solicit customer input and identify aspects of the support programmes that will be most useful to organisations running mixed-source environments.

Customer response to the Microsoft-Novell model has been significant since it began in November 2006. As part of the initial five-year partnership agreement, Microsoft purchased US$240 million of Novell certificates to sell to customers. Within 18 months, Novell invoiced more than US$157 million in certificate revenues, or 65 per cent of the original allotment. Customers who have already taken advantage of this opportunity to seamlessly run both Windows Server and SUSE Linux Enterprise Server include Wal-Mart Stores Inc, HSBC Holdings, Renault, Southwest Airlines Co, BMW and many other leading companies around the world.

"The collaboration between Microsoft and Novell has been built on our desire to meet our customers' real-life IT requirements as well as give our partners greater breadth in their solution offerings," said Kevin Turner, chief operating officer at Microsoft. "Some customers have told us they want to be able to run Windows Server and Linux together seamlessly, but in many cases, they need help with the transition to SUSE Linux Enterprise Server from other Linux environments. Our increased investment in the relationship with Novell is intended to give these customers and partners the best possible Windows-Linux interoperability solution, while also extending their existing Windows Server investments and helping to give them IP peace of mind."

"Cross-platform interoperability is something that we all want and need to achieve. But it's difficult to accomplish this," said Ulrich Koch, Head of License Management T-Systems Enterprise Services. "The pragmatic approach Microsoft and Novell are taking to address this complex challenge, including IP assurance, through engineering as well as offering tangible support and training programmes, will make it easier for us to develop a path forward."

"The strategic partnership between our companies continues to attract customers by building a bridge between proprietary and open source software," said Ron Hovsepian, president and CEO of Novell. "The interoperability delivered by Microsoft and Novell has resulted in very high demand for SUSE Linux Enterprise from customers and channel partners, further validating Novell's Linux strategy."

With today's announcement of the enhanced relationship, customers will continue to realise unprecedented choice and flexibility of running both SUSE Linux Enterprise Server and Windows Server with the confidence that both operating systems will work together seamlessly in the datacenter. Novell and Microsoft, through their joint interoperability lab in Cambridge, Massachusetts, and other initiatives, will continue their close technical collaboration on a wide variety of solutions including virtualisation, systems management, directory and identity federation, document format compatibility, accessibility technology, and the Moonlight multimedia framework.

More information about the Microsoft and Novell agreement can be found at http://www.moreinterop.com.

About Novell

Novell, Inc (Nasdaq: NOVL) delivers the best engineered, most interoperable Linux platform and a portfolio of integrated IT management software that helps customers around the world reduce cost, complexity and risk. With our infrastructure software and ecosystem of partnerships, Novell harmoniously integrates mixed IT environments, allowing people and technology to work as one. For more information, visit http://www.novell.com.

About Microsoft

Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in software, services and solutions that help people and businesses realise their full potential.

About Microsoft EMEA (Europe, Middle East and Africa)

Microsoft has operated in EMEA since 1982. In the region Microsoft employs more than 16,000 people in over 64 subsidiaries, delivering products and services in more than 139 countries and territories.

This material is for informational purposes only. Microsoft Corp disclaims all warranties and conditions with regard to use of the material for other purposes. Microsoft Corp shall not, at any time, be liable for any special, direct, indirect or consequential damages, whether in an action of contract, negligence or other action arising out of or in connection with the use or performance of the material. Nothing herein should be construed as constituting any kind of warranty.

Novell and SUSE are registered trademarks of Novell Inc in the US and other countries.

*Linux is a registered trademark of Linus Torvalds.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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