08/01/2014 (4:16 am)
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GENEVA (AP) — Switzerland’s biggest bank, UBS, reported Tuesday a 15 percent rise in second-quarter profit, driven by strong results from its core wealth management business and trimmed-down investment banking franchises despite a tough market environment.
UBS said its net profit for the April-June period rose to 792 million Swiss francs ($876 million) from 690 million francs in the comparable period in 2013.
The Zurich-based bank also said it had settled an investigation in Germany of charges that the bank aided German clients suspected of evading taxes. UBS made a payment of about 300 million francs to put the case to rest, one of a number that it and other Swiss banks have been facing from U.S. and other foreign tax authorities hunting down suspected tax cheats.
The bank said its second-quarter results reflect 120 million francs it booked in the German case.
Its quarterly financial statement said all of its business divisions and regions delivered strong second-quarter operating performances, and that it continued to build its capital reserves in keeping with global and Swiss rules.
“We delivered strong underlying results in a market environment that remained challenging for our clients and the industry,” Chief Executive Sergio Ermotti said.
Looking ahead, the bank said the outlook is clouded by challenges in Europe, where economic growth remains fragile and fiscal and monetary policy issues in the U.S., where the Federal Reserve is gradually tightening its stimulus taps. It also cited global geopolitical instability, with Western powers considering more sanctions on Russia and with fighting on the rise parts of the Middle East.
Shares in UBS AG were trading down less than 1 percent, around 16.50 francs, soon after the start of trading on the Zurich exchange.
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GAZA, PALESTINE—Israeli tanks and warplanes bombarded the Gaza Strip on Thursday, as Hamas militants stuck to their demand for the lifting of an Israeli and Egyptian blockade amid international efforts to broker a cease-fire.
Six members of the same family and an 18-month-old infant boy were killed when an Israeli airstrike hit the Jebaliya refugee camp in the early morning hours, according to Gaza police and health officials. Twenty others were injured in the strike, they said, and rescuers were digging through the rubble of flattened homes, looking for survivors.
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An airstrike on a home in the southern Gaza town of Abassan killed five members of another family, said Gaza health official Ashraf al-Kidra. Abassan is near Khan Younis, in an area that saw intense fighting on Wednesday.
The 16-day conflict has claimed the lives of 736 Palestinians, most of them civilians, Palestinian health officials say. Israel has lost 32 soldiers, all since July 17, when it widened its air campaign into a full-scale ground operation it says is aimed at halting rocket fire from Gaza and destroying a sophisticated network of cross-border tunnels.
Two Israeli civilians and a Thai worker in Israel have also been killed.
Israeli Prime Minister Benjamin Netanyahu made no reference to the cease-fire efforts in underscoring his determination to neutralize the rocket and tunnel threats.
More than 2,000 rockets have been fired at Israel from Gaza since July 8, and the Israeli military says it has uncovered more than 30 tunnels leading from Gaza to Israel, some of which have been used by Hamas to carry out attacks.
“We started this operation to return peace and quiet to Israel… And we shall return it,” Netanyahu said at a joint appearance with visiting British Foreign Secretary Philip Hammond.
Heavy fighting was reported along the border of central Gaza, according to Gaza police spokesman Ayman Batniji. Israeli troops fired tank shells that reached parts of the Bureij and Maghazi refugee camps. There were no immediate reports of injuries.
Clashes also erupted between Palestinian fighters and Israeli troops in the northern town of Beit Lahiya, and the sound of explosions was audible across the town, Batniji said low fee payday loans.
Israeli naval vessels meanwhile fired more than 100 shells along the coast of Gaza City and northern Gaza, the spokesman said, adding that rescue teams were unable to operate in the area because of the heavy fire.
U.S. Secretary of State John Kerry flew to Israel Wednesday on an Air Force jet, despite a ban imposed a day earlier on commercial flights into Ben-Gurion International Airport by the U.S. Federal Aviation Administration because of Hamas rocket fire.
The FAA dropped the ban just before midnight, but European airlines have extended their cancellations through Thursday.
“We certainly have made steps forward,” Kerry said in Jerusalem Wednesday, without elaborating. “There’s still work to be done.”
Underscoring the challenges he faces, the leader of Hamas insisted the Islamic militants would not relent until their main demand of lifting an Egyptian-Israeli blockade of the Gaza Strip is met.
“When it comes to the balance of power in this crisis between us and Israel, they are the executioners, the aggressors, the occupiers, the settlers, and we are the true owners of the land,” Khaled Mashaal said in a televised speech from his home-in-exile in Doha, Qatar. “We will not accept anything but the end of the siege.”
Israel imposed the blockade in 2006 after Hamas and other militants abducted an Israeli soldier in a deadly cross-border raid. It tightened the siege in 2007 after Hamas seized power from forces loyal to Western-backed Palestinian President Mahmoud Abbas, but had eased some of the restrictions in recent years.
Egypt tightened its own restrictions last year after the overthrow of a Hamas-friendly government in Cairo and has destroyed many of the cross-border smuggling tunnels that sustained Gaza’s economy, and which were also used by Hamas to bring in arms.
Two U.S. airlines cancelled all flights to Israel until further notice, after a rocket landed near Tel Aviv’s Ben Gurion Airport.
Delta Air Lines and United Airlines said Tuesday they are suspending service between the U.S. and Israel indefinitely. US Airways scrapped its Tel Aviv service Tuesday and said it is monitoring the situation in regards to future flights.
Delta Air Lines’ one daily flight was already in the air. Delta said a Boeing 747 from New York was flying over the Mediterranean headed for Tel Aviv when it turned around and flew to Paris instead. Flight 468 had 273 passengers and 17 crew on board.
Israeli police confirmed that a rocket from Gaza landed in an area near the airport. Police spokeswomen Luba Samri said the rocket caused damage to a house and slightly wounded one Israeli.
Airlines and passengers are growing more anxious about safety since last week, when a Malaysia Airlines jet was shot down over Ukraine, killing all 298 people on board. Airlines have rerouted planes to avoid the area over eastern Ukraine where pro-Soviet separatists are battling the Ukrainian army cash advance flexible payments.
Officials from the Federal Aviation Administration had no immediate comment.
A Delta spokesman declined to go beyond the details released in a statement.
United Airlines has cancelled its two daily flights to Israel out of Newark, N.J., according to spokesman Rahsaan Johnson.
US Airways, which has one daily flight from Philadelphia, canceled that flight Tuesday and the return trip from Tel Aviv.
“We are in constant contact with the FAA and are monitoring the situation closely,” said Casey Norton, spokesman for US Airways’ parent company American Airlines. The airline has not yet made a decision about flights to Israel scheduled for Wednesday and beyond.
LOS ANGELES (AP) — Microsoft announced the biggest layoffs in its 39-year history Thursday, outlining plans to cut 18,000 jobs in a move that marked the CEO’s sharpest pivot yet away from his predecessor’s drive for the company to make its own devices.
Although some cuts had been expected ever since Microsoft acquired Nokia’s mobile-device unit, the number amounted to 14 percent of the Microsoft workforce — about twice what analysts had estimated.
The cuts will include some 12,500 jobs associated with the Nokia unit — nearly half of the 28,000 employees Microsoft brought on board in April through the acquisition.
When the cuts are complete, the company will still have about 10,000 employees from the Nokia acquisition, bringing its overall headcount to 109,000.
In a public email to employees, CEO Satya Nadella said the changes were needed for the company to “become more agile and move faster.” The move also pushes Nokia to focus solely on the Windows Phone operating system.
Nadella is clearly backing away from former CEO Steve Ballmer’s strategy of getting Microsoft to make its own smartphones and tablets.
“He’s making a pretty serious game-changing strategy move away from hardware,” said Michael Turits, managing director of equity research for financial services company Raymond James & Associates.
Nadella indicated that Microsoft will largely abandon low-price Nokia Asha phones — which work on their own non-Windows operating system — and reverse a strategically questionable move by Nokia in February to launch a line of phones called “X” that supported rival Google Inc.’s Android platform.
“To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsoft’s digital work and digital life experiences,” Nadella said in the memo.
Some 1,350 Seattle-area workers around Microsoft’s Redmond, Washington, headquarters were laid off Thursday, as were 1,800 workers in Hungary and nearly 370 in San Diego. The Nokia cuts include 1,100 jobs in Finland.
In addition, the company is closing its Xbox Entertainment Studios, a 2-year-old venture based in Santa Monica, California, that produced original video content but was seen as separate from Microsoft’s core business.
Microsoft Corp. expects charges of $1.1 billion to $1.6 billion over the next four quarters, largely for severance payments. The move puts the company on track to meet the target it set in September, when it announced the Nokia purchase, of saving $600 million in annual costs within 18 months after the deal closed. Ballmer announced the Nokia deal a month after he said he was resigning.
FBR Capital Markets analyst Daniel Ives said the cuts were about double what Wall Street was expecting.
“Microsoft needs to be a leaner and meaner technology giant over the coming years in order to strike the right balance of growth and profitability around its cloud and mobile endeavors,” he said.
The move dwarfs Microsoft’s previous biggest job cut, when it eliminated about 5,800 jobs in 2009. That was the company’s first widespread layoff.
Microsoft has been shifting its focus from traditional PC software to cloud computing and cloud-based products like its Office 365 productivity software that can operate on mobile devices.
With its $7.3 billion acquisition of Nokia’s cellphone business, Microsoft had sought to meld its software and hardware business into a cohesive package, similar to rival Apple.
But investors had lingering doubts about the strategy, especially because the two brands’ market share in smartphones and tablets was so far behind Apple and Samsung. According to the latest financials, the Surface and Nokia device units are both losing money.
Nokia phones ran a wide array of operating systems that were not helpful to Microsoft’s Windows brand. The Asha operating system, for instance, lacked features like the ability to use mobile versions of Office software or even GPS mapping.
Soon after the deal was announced, Nokia’s overall handset sales plunged 29 percent in the final quarter of last year, even as its high-end Lumia devices grew quickly.
The Nokia purchase “is not a deal that (Nadella) agreed upon or negotiated or perhaps really wanted,” said Scott Kessler, senior equity analyst at S&P Capital IQ. “Secondly, it seems that the market has changed pretty significantly over the last year … pretty traumatic cuts seem probably somewhat appropriate at this point.”
In a letter to employees, Executive Vice President Stephen Elop said the company will drive sales of its Windows Phone by targeting the lower-price smartphone market with its Lumia devices.
A separate memo by a Microsoft executive in India posted by the BGR website said the company will stop engaging with developers on new apps for Nokia X, Asha and Series 40 phones, but maintain support for customers who own the phones.
In a blog post a week ago, Nadella hinted at the move, saying Microsoft had to “change and evolve” its culture for the “mobile-first and cloud-first world.”
Nadella planned to provide more details when Microsoft reports fiscal 2014 results on Tuesday. He will also address staff Friday at a monthly question-and-answer session.
Shares of Microsoft closed up 45 cents, or 1 percent, to $44.53 on Thursday. The stock is up about 19 percent since the start of the year.
WATKINS GLEN, N.Y. • America is awash in propane, a byproduct of booming oil and natural gas production. Yet getting it to markets at home and abroad is challenging and controversial.
Long a niche in the energy sector, propane today is sexy. Record exports and supply disruptions this past winter have refocused attention on propane, after prices went through the roof for consumers, businesses and farmers alike.
Congress and President Barack Obama’s administration are studying a possible strategic propane reserve, to function like the ones for crude oil and home heating oil. Efforts to create additional private-sector propane storage are resisted at the local and state levels.
“If they could do it with heating oil, they could certainly do it with propane,” said Andrew Heaney, chief executive of Propane.pro, a national online marketplace that connects buyers and sellers of residential propane. “This is a vital fuel type, and there is a real danger of having another shortage … It just makes sense to put some kind of buffer into the system. It’s just common sense. It’s an insurance policy against disaster.”
About 50 million homes use propane for winter heating, water heaters, stoves and other appliances. Far from being a winter product used just in homes across the Midwest or New England states, propane has many farm and commercial uses. California, Florida, Illinois and North Carolina are among the largest users of propane.
America’s ongoing energy boom has meant a rapid rise in propane production. Propane is a hydrocarbon byproduct of the cleaning process in natural gas production and of petroleum refining.
Because of its ready availability and a growing global demand for it, drillers in such places as Texas, North Dakota, Ohio and Pennsylvania are increasingly producing liquefied petroleum gases, namely propane and butane.
The supply of LPG exceeds the American demand for it. Companies are racing to export the excess to Latin America, Europe and Asia. New export terminals are planned for such places as Beaumont, Texas, and Longview, Wash.
The Energy Information Administration projected last year that LPG exports would rise from about 100,000 barrels per day in 2011 to half a million barrels per day by 2017. U.S. exports hit a record 302,000 bpd last year, well on the way.
In contrast, U.S. demand for propane last November were more than 1.8 million barrels per day, powered by demand for propane to dry a record corn crop. Another record or near-record crop is projected for 2014.
Despite the boom, homeowners across the nation either couldn’t get propane last winter or paid dearly for it.
In Missouri, where about 10 percent of homes are heated by propane, skyrocketing prices in January caused an outcry and a call for an investigation by Attorney General Chris Koster. (easy pay day loans.pdf” href=”http://ago.mo.gov/newsreleases/2014/PropaneReport6-10-14.pdf” target=”_blank”>His report, issued in June, blamed “market forces” for the price spike.)
Facing a national supply crisis in February, federal regulators intervened, ordering pipeline operators to give priority to propane shipments to markets where some residents were without heat.
The winter crisis prompted a May 1 Senate hearing, triggered Energy Department studies and sparked calls for such measures as banning exports and creating a strategic reserve like those for oil, begun in 1974, and home heating oil, begun in 2000.
“The macro situation is that there are still no restrictions on export of propane, no controls on export of propane. The government has no idea how much propane there is in the country until it’s too late,” Heaney said, arguing for a strategic reserve. “What we saw last winter was an absolute disaster. The public is no less exposed at this point than it was at the beginning of last winter.”
“The real culprit is storage,” said Joe Rose, president of the Propane Gas Association of New England, arguing that whether it’s through the government or the private sector, more propane must be set aside over the lower-use summer months.
Steve Ahrens agreed. Ahrens, executive director of the Missouri Propane Gas Association, said he’d like to see more storage as a buffer and closer oversight of supplies and pricing after last year’s harsh winter.
“We certainly felt it was a natural disaster, like a hurricane or tornado, and that people should not be profit-taking,” said Ahrens, whose state uses propane on farms and to heat one in 10 homes.
“If you put a dollar amount on all the pain and suffering … last year, you might be able to support some sort of government purchase of propane through the summer to build those inventories.”
Propane inventories in the Midwest were lower than last year’s averages for much of the spring, keeping prices high. Storage has now slightly passed last summer’s levels, suggesting some relief, but the buildup before winter will be key to next winter’s prices. Low storage levels will likely mean high prices, Ahrens said. “That’s how markets allocate a scarce resource,” he said.
Except that propane isn’t scarce. It’s being produced and exported in record amounts.
That might explain why the Obama administration has said little about the idea of a strategic reserve for propane. The U.S. Department of Energy declined to comment.
At the Senate hearing in May, the agency’s director of energy policy testified that the crude and home-heating reserves were created when energy supplies were scarce, which is not the case with propane.
A labor crunch fueled by improving consumer confidence is cooking in the restaurant industry as venues from San Francisco to New York increase wages and benefits to attract cooks, servers and dishwashers.
DETROIT (AP) — General Motors’ deadly ignition switch flaws emerged from an effort to improve its cars.
As the company began developing new small cars in the late 1990s, it listened to customers who complained about “cheap-feeling” switches that required too much effort to turn. GM set about making switches that would work more smoothly and give drivers the impression that they were better designed, a GM switch engineer testified in a lawsuit deposition in the spring of 2013.
The switches, though, were too loose, touching off events that led to at least 13 deaths, more than 50 crashes and a raft of legal trouble for the Detroit automaker.
Former U.S. Attorney Anton Valukas, hired by GM in March to investigate the switch problems, told a congressional subcommittee last month that GM wanted each small-car ignition to “feel like it was a European sports car or something.” After years of lagging behind the Japanese, GM was eager to make better, more competitive small cars.
But as it turned out, the new switches in models such as the Chevrolet Cobalt and Saturn Ion can unexpectedly slip from “run” to “accessory,” causing engines to stall. That shuts off the power steering, making cars harder to control, and disables air bags in crashes. GM says the problem has caused at least 13 deaths, but some members of Congress put the death toll near 100.
The problem led GM to recall 2.6 million small cars in February, and forced the company to admit it knew about the switch troubles for more than a decade before taking action. It has touched off federal investigations and prodded GM to review other safety issues, leading to 54 recalls this year covering 29 million vehicles.
The Associated Press traced the history of the problem using Valukas’ report as well as a deposition of GM switch engineer Ray DeGiorgio that was released by a House subcommittee. The deposition was also released by lawyers suing GM, but DeGiorgio’s comments were redacted in that version.
In a wrongful death case in Georgia, DeGiorgio testified that he started out trying to make the switches easier to turn. But from the beginning he was consumed by electrical issues in the switch, not its mechanical parts.
When the switch supplier, Delphi, pointed out tests showing the switches turned too easily, DeGiorgio told Delphi not to change them because he was concerned mechanical alterations would harm the switch’s electrical performance, according to Valukas.
Delphi spokeswoman Claudia Tapia said the company isn’t commenting on the details of GM’s recall payday loans online.
In the end, DeGiorgio approved switches that were far below GM’s specifications for the force required to turn them. The result was a smooth-turning key, but also one that could slip out of position. Several years later, DeGiorgio signed off on a design change that fixed the problem, but he didn’t change the part number, which stymied later attempts to figure out what was wrong with the cars.
Repeated efforts to reach DeGiorgio have been unsuccessful. He was one of 15 employees dismissed by the company last month due to the recalls. At a House subcommittee hearing last month, GM CEO Mary Barra didn’t mince words when lawmakers asked her about DeGiorgio’s statements to Valukas and congressional investigators.
“I don’t find Mr. DeGiorgio credible,” Barra said.
GM spokesman Greg Martin said Valukas’ report cites several opportunities that the company missed to fix the problem before the switches went into production. “It should never have happened regardless of what the reasons for changing the initial specifications for the switches were,” he said.
Subsequent safety reviews also found ignition switch troubles in other cars. The company has issued five recalls for 17.1 million cars with switch problems this year.
Among the recalls are 3.4 million large cars like the Chevrolet Impala, which had switches DeGiorgio worked on. GM says the combined force of a large bump and a swinging key chain can cause those switches to slip and stall the engine. GM is changing the key hole from a slot to a small circle to limit how much key chains can swing and tug on the ignition.
Unlike the Cobalt and Ion switches, GM says the ignition switches on the large cars meet its specifications, and the key design is the problem. GM says it conducted eight different driving tests with the new key and the ignition didn’t move out of the “run” position in any of the tests.
But some experts believe the switches can still slip out of “run” too easily.
“They’re finding that it’s still possible for it to happen,” said Erin Shipp, a mechanical engineer who helped uncover the small-car ignition switch problems while working for attorneys suing GM.
The Central Bank of Kenya will probably hold its benchmark interest rate as it tries to contain accelerating inflation without stifling economic growth.