Business news in brief

QUOTE OF THE DAY

“The upbeat consumer mood bodes well for spending in 2014.”

Michael Dolega, senior economist at TD Economics, on the Conference Board report of U.S. consumer confidence Article, 1D

HP: 5,000 more to lose jobs by October

PALO ALTO, Calif. - Personal-computer giant Hewlett-Packard Co. has confirmed that it expects layoffs at the upper end of a range that it outlined last year, with 5,000 more workers than originally planned expected to lose jobs by October.

The company said in a securities filing Monday that “continued market and business pressures” were behind the move. The additional cuts, on top of the 29,000 positions it planned to cut in a May 2012 restructuring plan, will likely boost the accumulated restructuring charges to $4.1 billion from $3.6 billion, it said.

As part of its national restructuring, Hewlett-Packard in July laid off 500 of the 1,400 workers at its Conway customer-support center and allowed the workforce to dwindle to about 700. On Dec. 18, the company announced plans to hire more than 200 software engineers and programmers to work at its Faulkner County facility.

Hewlett-Packard said in March that its estimated cutbacks could vary by as much as 15 percent from its original estimate.

Cost cuts have helped the company weather revenue declines in PCs, printing and enterprise services. In the fiscal year through Oct. 31, revenue fell 7 percent to $112.3 billion, but the company posted $5.1 billion in net profit, compared with a $12.7 billion loss a year earlier.

Plant owners charged in Bangladesh fire

DHAKA, Bangladesh - A Bangladesh court Tuesday issued arrest warrants for two garment-factory owners and four of their employees on homicide charges in connection with the deaths of 112 workers in a fire that engulfed the factory in 2012.

It’s the first time Bangladesh has sought to prosecute factory owners in the lucrative garment industry, which is the world’s second largest after China. A series of deadly disasters - including the 2012 fire and a factory collapse in April that killed more than 1,100 workers - has exposed unsafe working conditions in the industry that employs 4 million Bangladeshis and provides clothing to major Western retailers.

The factory, which produced clothing for global brands including Wal-Mart, had no emergency fire exits, while its location in a narrow alley meant firefighters were unable to reach the flames, prosecutor Anwarul Kabir Babul said, citing a police investigation.

Police filed homicide charges Dec. 22 against 13 people, and the arrest warrants were issued for six who police say have fled.

Judge Wasim Sheikh issued the warrants for owner Delwar Hossain; his wife, Mahmuda Akter; and the others, Babul said.

He said the accused face a minimum of seven years to life in prison if convicted of failing to ensure safety at the sprawling factory, located outside Dhaka, the capital.

The investigation said managers and security guards told the workers that the blaze was part of a regular fire drill when it broke out.

  • The Associated Press

Push to halt Volcker Rule limits dropped

The American Bankers Association dropped its request for a federal judge to temporarily block Volcker Rule restrictions on collateralized debt obligations backed by trust-preferred securities.

The industry group said the temporary restraining order it had requested is no longer needed after regulators said Friday that they are reviewing challenged aspects of the rule, according to a filing Monday in federal court in Washington. The bankers group isn’t withdrawing the lawsuit it filed Dec. 24 and asked the judge to approve a schedule for it to proceed with seeking to halt the rule’s implementation for the duration of the lawsuit.

The American Bankers Association, which represents mostly community banks, alleged in its complaint against the Federal Deposit Insurance Corp. and other regulators that small banks will suffer about $600 million in losses because the final version of the Volcker Rule requires them to divest their holdings in some collateralized debt obligations.

The rule - named for former Federal Reserve Chairman Paul Volcker, who championed it as an adviser to President Barack Obama - was included in the 2010 Dodd-Frank Law that overhauled U.S. financial regulation as a way to restrict banks’ proprietary trading and other risky bets after the 2008 credit crisis. The Fed has given banks until July 21, 2015, to comply.

Regulators said Friday that they were reviewing whether it would be “appropriate and consistent” with the Volcker Rule to allow exemption of collateralized debt obligations backed by trust-preferred securities. They said they will address the matter by Jan. 15.

The case is American Bankers Association v. Federal Deposit Insurance Corp., 13-cv-02050, U.S. District Court, District of Columbia (Washington).

Buffett to swap stock for Phillips 66 arm

Berkshire Hathaway Inc. will swap about $1.4 billion in shares of Phillips 66 for full ownership of the energy firm’s pipeline-services business as billionaire Warren Buffett expands his bet on oil transportation.

Berkshire will exchange about 19 million shares, Phillips 66 said in a regulatory filing Monday. The exact number of shares Berkshire will pay for Phillips Specialty Products Inc. will be determined when the deal is completed, Phillips 66 said.

A U.S. drilling boom has expanded crude oil and natural gas production, prompting pipeline operators to boost capacity. Polymer-based additives, the focus of Phillips’ business unit, are used to move products through the pipe more efficiently by reducing drag. They can increase capacity at a time when approvals for new pipelines are coming slowly.

Berkshire has already benefited from the expansion of U.S. energy production. Its Burlington Northern Santa Fe railroad has been boosting shipments of crude oil and investing in infrastructure to haul more petroleum to refineries. The company also owns pipelines through MidAmerican Energy Holdings Co.

Buffett and his deputies also have invested in other energy companies this year. Berkshire said in November that it had accumulated 40.1 million shares of Exxon Mobil Corp., valued at more than $4 billion. The money managers also added holdings in energy producers National Oilwell Varco Inc. and Suncor Energy Inc.

Berkshire and Phillips 66 said in a statement that they expect to complete the deal in the first half of this year after regulatory reviews.

  • Bloomberg News

Business, Pages 26 on 01/01/2014

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