Tablet Boom Leaves Intel Out In The Cold

Intel, the world's largest computer chip-maker, has announced a plunge in profits and predicted weak sales ahead, partly as a result of its failure to break into the tablet market.

The company said a weak global economy also combined to curb corporate spending on computers in its third quarter, resulting in a 14% fall in profit to $2.97bn (£1.8bn) compared to the same period last year.

As Intel had previously warned revenues fell, by 5%, while revenue from PC chips fell 8% in line with reports from research firms IDC and Gartner that said worldwide PC sales had fallen more than 8%.

The shift away from PCs toward tablets is a threat to Intel because most tablets do not use Intel processors but cheaper chips similar to the ones found in smartphones.

Intel wants to get its chips into tablets. The launch of Windows 8, Microsoft's new operating system, on October 26 gives it a chance to do so since the software is designed both for PCs and tablets.

But Intel's expectations for the Windows 8 launch are muted - as are its hopes for the Christmas period.                 

Normally, PC makers ramp up production for the holiday season but Intel CEO Paul Otellini said he expected that increase to be halved this year, in part because manufacturers are cautious about how consumers will take to Windows 8.

The new software is a radical departure from previous Windows versions in terms of how people are expected to use it to control their PCs.

"I'm very excited about this new operating system," Otellini said, but "we haven't had a chance to really judge how consumers will embrace this in the PC space."

Intel's shares fell 3.5% in extended trading in New York after the release of the results.

IBM also disappointed investors by announcing a flat performance over the same period - seeing a similar fall in its share price in after hours trading.

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Energy Bills: Cameron Promises New Laws

Energy firms will be forced to give customers the cheapest available tariff under new laws, David Cameron has announced.

Amid mounting concern about the soaring cost of power, the Prime Minister vowed to legislate to tackle the often-confusing array of prices.

"I can announce that we will be legislating so that energy companies have to give the lowest tariff to their customers," he told MPs during Prime Minister's Questions.

His intervention follows a string of above-inflation price hikes by major energy companies in recent days.

Ministers have previously encouraged customers to shop around to make sure they have the best deal.

They have also announced moves to require energy companies to inform their customers if they could be on cheaper tariffs.

But the forthcoming Energy Bill will go further by introducing a requirement for companies to give people the best tariff for their circumstances.

The announcement came after consumer body Which? called for an urgent independent review into the rising cost of household energy bills.

In a letter to the Prime Minister, Which? executive director Richard Lloyd said the energy market was "broken".

A review was needed to look at rising prices and whether competition between suppliers could be made to work more effectively to help consumers, he insisted.

With the average bill up 13% since a Government energy summit a year ago, "it is no wonder consumers tell us that energy prices are one of their top financial concerns," he said.

He claimed there was little evidence that the Government was living up to its promise to make energy companies more competitive, with 75% of consumers on the most expensive tariff, and the numbers switching suppliers continuing to decline.

Mr Lloyd said people were questioning whether they were being fairly charged for gas and electricity, as companies blamed wholesale price rises and the cost of implementing environmental and social policies for bill increases.

He added: "The time for action is now. Warm words alone are not enough to keep consumers from the cold this winter."

A spokesman for the Department of Energy and Climate Change said: "Households facing rising energy bills this winter aren't going to be helped by more inquiries or investigations that could take years to complete and implement.

"We know what the problems are, we want to get on with tackling them now. We're focusing on action, not more words.

"The fact is reforms by Government and Ofgem, including electricity market reform through the forthcoming Energy Bill and Ofgem's ongoing Retail Market Review, offer the quickest way to boost consumer confidence in the energy market."

Shadow energy secretary Caroline Flint said: "Which? are right to say that Britain's energy market is not working in the public interest.

"For too long energy companies have been able to get away with blaming wholesale prices when bills go up, but failing to pass on savings when wholesale prices fall."

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BP Poised To Take 10% Of Russia's Rosneft

By Mark Kleinman, City Editor

BP is poised to acquire a stake of more than 10% in Rosneft, the Russian state-owned oil giant, as part of a restructuring of its interests in the country.

I understand that BP expects to receive a cash-and-shares offer from Rosneft ahead of a 9am deadline tomorrow that would be valued at roughly $28bn (£17.3bn), the same price attributed to the 50% stake in TNK-BP held by a group of Russia-based businessmen.

Igor Sechin, the Rosneft chief executive, is due to meet Bob Dudley, his BP counterpart, at the British company's central London headquarters on Wednesday night to negotiate a deal. A team of BP executives is also basing itself at the City offices of Linklaters, its legal adviser on the proposed deal.

BP executives will discuss offers for its shareholding in the joint venture with their financial advisers tomorrow, with BP's board expected to decide on a preferred bidder when it meets on Friday afternoon.

I revealed earlier today that AAR, the quartet of oligarchs' holding company for their TNK-BP stake, had agreed an outline deal with Rosneft for the state-owned energy company to buy their stake for $28bn. The agreement was struck in Moscow on Tuesday night.

The exact size of BP's stake in Rosneft is not yet clear and will depend on whether Rosneft splits the $28bn price-tag equally between cash and shares.

A $14bn (£8.6bn) cash windfall would be welcomed by BP, which is continuing to negotiate over the final financial toll of the Gulf of Mexico oil spill with US authorities.

Senior BP executives believe that a stake of between 10% and 15% in Rosneft will give them prized access to alliances with what would become the world's largest publicly-listed oil company by virtue of its takeover of TNK-BP.

The deal would differ from a share swap agreed between BP and Rosneft in January 2011 in that Rosneft will not acquire a shareholding in BP as part of any agreement.

That transaction was scuppered by a legal battle with AAR. The oligarchs are considered likely to drop any remaining legal claims against BP if they complete a deal to sell their shareholding to Rosneft.

Major BP shareholders broadly welcomed news of the proposed shake-up of BP's Russian interests, with one saying it represented "a great price for Bob Dudley".

BP and AAR declined to comment.

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Benefits: Changes 'To Hit Disabled People'

Up to half a million disabled people and their families could be worse off under the new system of Universal Credit once it is fully implemented, according to a report.

It suggested some people might even be forced out of their homes as a result of the changes.

An inquiry headed by former wheelchair athlete Baroness Tanni Grey-Thompson said several "key" groups would lose out under the Universal Credit, which will start to replace much of the benefits and tax credits system from next year.

The study used research showing that once the changes are fully in place, 100,000 disabled children stand to lose up to £28 a week, 230,000 severely disabled people who do not have another adult to help them could receive between £28 and £58 a week less, and up to 116,000 disabled people who work could be at risk of losing around £40 a week.

The report said the impact of the cuts in support for disabled children could be "extremely severe" for families currently receiving the mid-rate "care component" of the Disability Living Allowance (DLA), a payment made where a child can be severely disabled but does not need care overnight.

Of those families affected, one in 10 expressed fears that they could no longer afford their own home, while two thirds said they would have to cut back on food, and more than a half said it would lead them into debt.

The report was led by Paralympic legend Baroness Tanni Grey-Thompson

In some of the most severe cases, some families said the changes to support for disabled children could result in their children having to be placed in full-time residential care.

The report said 83% of those eligible for the severe disability premium (SDP), which will be abolished under the changes, reported that a reduction in benefit levels would mean they would have to cut back on food and 80% said they would have to cut the amount they spent on heating.

The changes start to come into force from October next year and current benefit claimants who move on to Universal Credit will not see an immediate reduction in their payments.

But they will have their level of benefit frozen, with no increases to take into account rising prices, campaigners said, and they may see their support cut immediately if their household circumstances change.

The report, Holes in the Safety Net: the impact of universal credit on disabled people and their families, had the backing of The Children's Society, Citizens Advice and Disability Rights UK and drew on research from these bodies.

Lady Grey-Thompson, who shares the title of Great Britain's most successful female Paralympian with cyclist Sarah Storey, said the findings of the report did not make "easy reading".

"The clear message is that many households with disabled people are already struggling to keep their heads above water," she said.

"Reducing support for families with disabled children, disabled people who are living alone, families with young carers and disabled people in work, risk driving many over the edge in future."

A spokeswoman for the Department for Work and Pensions (DWP) said savings from abolishing the adult disability premiums and changes in the child rate would be "recycled" into higher payments for more severely disabled people.

She said the report was "highly selective and could result in irresponsible scaremongering", adding that Universal Credit would provide greater incentives for people - including disabled people - to try out work, and would reduce the financial and administrative barriers to work that exist in the current system.

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RBS Quits Treasury's Asset Protection Scheme

RBS has said it will withdraw from a Government insurance scheme set up during the banking crisis to cover its riskiest loans.

The bank said the Treasury had given it permission to opt out of the Asset Protection Scheme (APS) because its payments had reached the minimum £2.5bn.

The programme capped potential losses on almost £300bn of RBS' most toxic assets after the Government spent £45bn bailing it out during the financial crisis of 2008.

The bank, which has not made a claim, said it has reduced these assets by more than 60%.

Leaving the programme will save RBS around £500m a year in future premiums. 

Chief executive Stephen Hester said leaving the APS was a "significant milestone" in the recovery of the bank, which is 82%-owned by the British taxpayer.

"The APS has played a valuable role, buying time for the bank as we implemented change from the worrying days of 2009 to create the much stronger institution it is today," he said.

"RBS's capital, liquidity, and funding positions have been transformed in the past three years, so the time is now right for us to exit this scheme."

The Chancellor hailed the move as a step towards returning the state-owned lender to the private sector.

"The Government's strategy remains to return RBS to the private sector when it is value for the taxpayer to do so," George Osborne said. "Today is a step in that direction."

RBS' exit will give the bank a boost after its £1.65bn deal to sell 316 bank branches to Spain's Santander collapsed last week.

Its share price rose more than 2% on opening on Wednesday.

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Apple Supplier Foxconn Employs 14-Year-Olds

A company which makes products for tech giants Apple and Sony has admitted hiring children as young as 14 to work on its assembly lines in China.

Foxconn, which builds gadgets including the iPhone and iPad, said it employed the underage workers as part of an internship programme at a factory in eastern Shandong province.

It issued a statement saying: "This is not only a violation of China's labour law, it is also a violation of Foxconn policy.

"Immediate steps have been taken to return the interns in question to their educational institutions.

"We have found no evidence of similar violations in any of our other campuses in China, but we will not hesitate to take immediate action in any campus if any violations are discovered."

Foxconn is the world's biggest contract manufacturer

Foxconn employs 1.2 million people in China, around 3% of whom are interns.

Geoffrey Crothall, a spokesman for China Labour Bulletin, described them as a "cheap and convenient source of labour" that some vocational schools are happy to provide, as it helps boost their revenues.

"The enterprises tend to be factories that need more hands on the production line," he said. "There is no real training or apprenticeship involved here."

The discovery of underage workers is a fresh blow for Foxconn, just weeks after a brawl involving nearly 2,000 employees at one of its plants brought production to a halt.

The violence took four hours to bring under control

Earlier this year, the Fair Labour Association found some staff were forced to work more than 60 hours a week, and sometimes for more than 11 days in a row.

In 2010, 13 workers committed suicide amid claims that Foxconn ran a military-style prodution line on which employees were told to work overtime for low wages.

The company denied the claims, but promised to hire more counsellors and set up employee groups to watch for signs of emotional stress among staff.

Earlier this year, Apple chief executive Tim Cook visited Foxconn's Zhengzhou Technology Park, which employs an estimated 120,000 people in the northern province of Hebei.

The company's late founder Steve Jobs once claimed the company was "not a sweatshop".

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Part-Time Work Drives Britain To Record Employment

Official figures show employment has reached a new record high with the UK jobless rate falling to 7.9% despite the country being mired in recession.

Upbeat figures of recent months, which came as something of a surprise, have led economists to question how the Office for National Statistics (ONS) calculates GDP growth.

The latest employment figures, also released by the ONS, showed the number claiming Jobseeker's Allowance in September fell by 4,000 to 1.56 million.

The unemployment total fell by 50,000 between June and August to reach 2.528 million, helping the unemployment rate to drop to 7.9% from 8.1% the previous month.

The employment total of 29.59 million was the highest since records began in 1971. As in previous months, the performance was largely driven by people in temporary jobs.

The ONS also reported that part-time employment increased by 125,000 between March and May to a record high of 8.13 million.

The number of people in part-time jobs because they could not find full-time work was close to a record high at 1.4 million.

Youth unemployment fell by 62,000 to 957,000, the lowest figure for over a year but only 50 thousand were shown to have taken jobs.

Self-employment increased, up by 35,000 to 4.2 million while the data also showed a rise of 13,000 in the numbers on Government-supported training and employment programmes, leaving the total at 158,000.

Separate figures on pay growth show average wage settlements are still lagging behind inflation, standing at 2.2% annually in September.

The figures were welcomed by the Government.

Minister for Employment Mark Hoban said: "It's a real landmark to see more people in work than ever before. Despite the tough economic times, the private sector continues to create jobs and our welfare reforms are encouraging people to return to work - with 170,000 fewer people on the main out-of-work benefits than in May 2010.

"The big fall in youth unemployment is particularly welcome, but we know this remains a challenge, which is why we have the £1bn Youth Contract offering nearly 500,000 work experience places, apprenticeships and wage incentives to help young people get a job."

TUC General Secretary Brendan Barber said: "These may be the best figures for some time, but we still need to do much, much better.

"There are still hundreds of thousands of young people without work, over a million people working part-time who want full time-jobs and wages are still trailing below inflation."

Bernard Brown, partner and head of business services at KPMG added: "Today's workforce will not be around forever and unless businesses across the country put plans and people in place to share expertise and experience, they will find themselves bereft of the skills which can make them competitive.

"It's well known that organisations benefit from a blend of youth and experience. Employers will do well to remember this or risk an uncertain future for individuals and organisations alike."

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Gatwick Airport Planning Second Runway

Gatwick Airport bosses have started to draw up detailed options for a new runway which could help resolve the UK's air capacity crisis.

But Gatwick said it would honour a 1979 legal agreement that states no runway can be built at the West Sussex airport before 2019.

The options, to be submitted to a Government-appointed aviation commission, will assess the environmental and economic impacts of a new runway.

The chief executive of Gatwick, which serves 197 destinations and handles around 34 million passengers a year, said a new runway would benefit passengers.

"I believe a new runway at Gatwick could be affordable, practical and give passengers a greater choice of routes to key markets," Stewart Wingate said.

"We have the space, capability and access to financial resources."

London's busiest airport, Heathrow, is operating close to full capacity after the Government blocked a third runway because of the resulting increase in planes flying over the city.

Mr Wingate said a new runway at Gatwick had "clear practical advantages" over expansion at Heathrow.

"When compared with a third runway at Heathrow, we would have a significantly lower environmental impact whilst adding significantly more capacity," he said.

He added that it would also be preferable to other London alternatives.

"Stansted is half empty today, we already have much better surface transport links and feel our business case will be much stronger," he said.

"As for the Estuary airport concepts, there are major questions on affordability, environmental issues and whether they are deliverable."

But the Gatwick Area Conservation Campaign has always been opposed to a second runway at the airport on environmental grounds.

"We have had massive support from across Surrey, Sussex and west Kent," Gatwick Area Conservation Campaign's chairman, Brendon Sewill, said following the announcement.

"We have been supported by all the local MPs and all the county, district and parish councils in a wide area.

"If necessary, we will resume the battle."

Gatwick has safeguarded the land that would be required for a new runway since it was bought by Global Infrastructure Partners in 2009.

It estimates that for the rest of this decade, London's airports will be relying on their existing physical capacity.

As such, its submission to the commission will evaluate how the capacity of its existing runway can be maximised.

It will also argue that a second runway would help ensure that London's airports provide the South East and the rest of UK with the connectivity needed in the future.

The commission, led by the former head of the Financial Services Authority Sir Howard Davies, will make its full report into the South East's airport capacity in 2015.

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Paul Tucker Warns Worst 'Might Not Be Over'

The Bank of England's (BoE) deputy governor has warned "the worst may still be ahead" for the UK's finance industry, as he urged banks to boost their capital defences.

Paul Tucker - who is a front-runner for the job as BoE governor when Sir Mervyn King steps down next year - said threats to the industry persist.

"We are in very difficult circumstances at the moment in the sense that huge risks are behind us," he said.

"There is still a tangible probability - not a high probability - that the worst may still be ahead."

The UK's banks have been forced to build up large capital defences following the financial crisis of 2007-09, when banks including RBS and Lloyds had to be rescued by UK taxpayers.

But speaking at the British Bankers' Association's annual conference in London, Mr Tucker warned that even the new Basel rules for minimum reserves - designed after the financial crisis - were not enough.

"Basel I, II, III, IV and V are not calibrated for the kind of end of the world risks that lie within the realms of the possible at the moment," he said.

"If we get a tidal wave, we may all be grateful that there are a few billion more in capital here and there in the banking industry, keeping banks in the private sector rather than the dead hand of state ownership."

He also pushed for an overhaul in the way bank bosses are paid - proposing that they could be paid partly in debt to ensure they have a strong interest in their company's future.

"Having managers exposed to instruments whose value depends on the survival of their firm would give them a healthy incentive to maintain a safe and sound bank," he said.

Also at the conference, Rolls Royce's finance director urged regulators to find the right trade-off between regulation and financial stability.

"The balance between stability and growth is a fine judgement, which we feel is being overlooked more in favour of regulation rather than growth," Mark Morris said.

"If the patient is on the operating table, our view is, don't kill him, resuscitate him and try and keep him alive."

While Bill Michael, the head of financial services at KPMG, said the banking industry needs "a ground-breaking shift in culture and behaviour."

"Banks have treated customers like geese - there to be force-fed financial products, whether they're appropriate or not," he said.

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Nike Cancels Lance Armstrong Contract

Nike has terminated its contract with former champion cyclist Lance Armstrong as he prepares to step down as chairman of his Livestrong cancer-fighting charity.

Last week the US Anti-Doping Agency (Usada) released a massive report detailing allegations of widespread performance-enhancing drug use by Armstrong.

The document included testimony from 11 former teammates. Usada has ordered for 14 years of Armstrong's career results to be erased, including his seven Tour de France titles.

In a statement the sportswear firm said: "Due to the seemingly insurmountable evidence that Lance Armstrong participated in doping and misled Nike for more than a decade, it is with great sadness that we have terminated our contract with him.

"Nike does not condone the use of illegal performance enhancing drugs in any manner.

"Nike plans to continue support of the Livestrong initiatives created to unite, inspire and empower people affected by cancer. "

The announcement came minutes after Armstrong quit as chairman of his Livestrong cancer-fighting charity.

He said: "I have had the great honour of serving as this foundation's chairman for the last five years and its mission and success are my top priorities.

"Today therefore, to spare the foundation any negative effects as a result of controversy surrounding my cycling career, I will conclude my chairmanship."

The Lance Armstrong Foundation, commonly known as Livestrong, was founded in 1997 and has raised roughly $500m (£309m) to support cancer patients.

The group has scheduled its 15th anniversary celebration for this weekend. Armstrong will stay on the charity's board.

The cancer survivor strongly denies doping and says he stopped fighting Usada because its hearing process was unfair.

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