Business Blog

19 April 2013 Last updated at 09:38 ET

Staff at some of the UK's biggest post offices are on strike in a dispute over shop closures, jobs and pay.

To stem £40m-a-year losses across about 370 "crown" offices, the Post Office plans to move 70 from high streets into local retailers. About six will close.

The Communication Workers Union (CWU) says hundreds of jobs will be affected.

The walk-out began at lunchtime, and the CWU has warned that there could be further strike action.

The Post Office said it had to address losses. Some 97% of the network would operate as normal, it added.

Union warning

Crown offices are branches directly managed by the company - as opposed to locally-run by sub-post offices - mainly based in High Streets.

The CWU said the offices handle about a fifth of Post Office business and 40% of financial services sales.

The union said it expected Friday's action to close offices or lead to drastically reduced services and opening times.

CWU general secretary Billy Hayes said the plans amounted to "a Post Office closure programme in a desperate attempt to slash costs to meet government funding cuts by 2015".

He said the Post Office could "talk about transformation and sustainability all it likes".

"But the reality is that these are euphemisms for closing offices, drastically altering the make-up of the Post Office network and handing the running of services over to corporations which are built around other income streams and could walk away from Post Office services."

CWU national official Andy Furey warned that the dispute could escalate.

"If the Post Office doesn't face up to the concerns of its staff and the communities it's meant to serve, then we will waste no time in issuing notice for more strike action, increasing the frequency and duration," he told the BBC.

"We've tried to keep disruption to a minimum but this is clearly not getting through to Post Office management. Full day strikes will be next on the agenda."

'Not closing'

Kevin Gilliland, network and sales director at the Post Office, said it regretted "any inconvenience that may be caused by any strike action".

"Through our critical modernisation plans we intend to turn this part of our business around and keep Post Office branches on high streets across the UK.

"We will invest £70m in 300 Crown branches and are proposing to partner 70 branches with suitable retailers."

He stressed those 70 branches "are not closing".

"Any move to a retailer's premises would offer access to the same range of Post Office products and high levels of customer service in a new modern branch."

The CWU claims staff have not had a pay rise for two years and is calling for a rise in consolidated pay.

But the Post Office said a pay offer of three cash payments was "extremely fair".

"The CWU's unrealistic demands are delaying our people from receiving the first payment of £1,400, which is ready to be paid into their pay packets," Mr Gilliland said.

18 April 2013 Last updated at 21:59 ET

The head of the International Monetary Fund (IMF), Christine Lagarde, has expressed renewed concern over the health of the UK economy.

The UK's growth numbers are "not particularly good", Ms Lagarde said.

But speaking ahead of a high-level meeting of policymakers in Washington, she refused to be drawn on whether UK should reassess its austerity policy.

Her comments came as Mark Carney, the next governor of the Bank of England, hinted at his concerns over the UK.

In an interview ahead of the meeting between the IMF and the World Bank, he said the US recovery was leaving behind "crisis economies" that included the UK, the eurozone, and Japan.

Mr Carney has been reluctant to comment directly on the UK ahead of taking the helm of its central bank in July.

But he appeared to back Chancellor George Osborne's view that austerity measures were important to promoting growth.

"[Central banks] can provide the conditions for growth... but they can't deliver the long-term growth," he said. "That needs to come from true fiscal adjustment and fundamental structural reforms."

Consider adjustment?

Earlier this week, the IMF's chief economist, Olivier Blanchard, urged the UK to rethink its austerity policy in the face of continuing weakness in the economy.

But speaking to reporters on Thursday, Ms Lagarde refused to go as far.

"We clearly support the [austerity] policy," she said. "[But] we've also said that, should growth be particularly low, then there should be consideration to adjusting by way of slowing the pace [of austerity].

"Looking at numbers... the growth numbers are certainly not particularly good."

The IMF is due to arrive in the UK in May to conduct a thorough investigation of the UK's economy as part of its "Article IV" consultations.

The consultations are made annually, and allow the IMF to monitor member countries and issue recommendations about economic policy.

Ms Lagarde said she did not wish to pre-empt those consultations by giving a view on UK economic policy now.

So far, the IMF has supported Mr Osborne's policy of cuts to spending in order to reduce the budget deficit.

But in recent months there have been growing questions over whether austerity measures are doing more harm than good, not least due to weak economic numbers.

Since cuts were introduced in 2010, the UK's economic growth has consistently been below official forecasts, and borrowing has not been significantly reduced.

Earlier this week, the IMF cut its growth forecast for the UK. It now expects the economy to grow by just 0.7% this year, down from its January forecast of 1% growth.

However, Mr Osborne has insisted that the only way to ensure long term economic growth in the UK was to first bring down the deficit.

19 April 2013 Last updated at 03:41 ET

Technology giants Google and Microsoft have both reported rising profits.

Google's net profit climbed to $3.35bn (£2.19bn) in the first three months of the year, up 16% from a year earlier, boosted by online advertising revenue.

Microsoft said it made $6bn in profit during the same period, a jump of more than 17% from a year ago.

Its earnings, which beat market forecasts, came despite a lukewarm reception for Windows 8 and a decline in global PC sales during the period.

Meanwhile IBM reported a fall in first quarter profits and revenues after the technology services company failed to complete deals in time and was hit by the depreciation of the Japanese yen.

'Fantastic' margins

Analysts said that Microsoft's profits were boosted in part by changing the way its sold its products to corporate clients, as well as cost-cutting measures.

"Microsoft has successfully transitioned into an enterprise software company and these results show that," said Kim Caughey Forrest, a senior analyst at Fort Pitt Capital.

"The strength of server and tools, and the actual way they sell licences to business, is making up for the missing PC sales.

"The margins are fantastic and the online services division seems to lose less money each quarter," she added.

Meanwhile Google's profits were driven up by growing income from online advertising, which helped boost overall revenues to nearly $14bn for the quarter. That is up from $10.7bn during the same period last year.

The results also suggested that Google may be beginning to build confidence with advertisers. The amount paid per advert is still declining, but at a slower rate than last year.

Management changes

Despite the stronger-than-expected numbers, Microsoft announced that its chief financial officer (CFO), Peter Klien, would be leaving the firm at the end of June.

Mr Klein, who has been with the tech giant for 11 years, is the latest in a series of executives to leave the company.

His departure comes just months after the Steven Sinofsky, the head of Windows division, quit the firm.

The departures of the two senior figures have come as there have been questions over the leadership of chief executive Steve Ballmer.

These doubts have been driven in part by slowing growth, and amid concerns that Microsoft had not been able to make a significant impact in the new and fast-growing sectors such as the smartphone and tablet PC markets.

The leading smartphone and tablet PC makers, such as Samsung and Apple, rely more on operating systems such as Android and iOS, rather than Microsoft's Windows, which has enjoyed a dominance in the traditional PC market.

The fear for Microsoft is that as more people use smartphones and tablet PCs to access the internet, it may see its market share decline.

These concerns have grown after Windows 8, which is designed to make PCs work more like tablet computers, was greeted with mixed reviews at its launch last October.

More positively, analysts said that Mr Klien's departure from the firm suggested that an imminent departure of chief executive Steve Ballmer was unlikely.

"The CFO departure is a little bit troubling. We've had a lot of executives leaving Microsoft recently," said Brendan Barnicle, an analyst with Pacific Crest Securities.

"This also makes a departure by Steve Ballmer less likely. It would be very unusual to have a CEO leave soon after a CFO departure."

Yen impact

Also on Thursday, IBM reported first quarter earnings of $3bn, down 1% from a year earlier, with revenues falling 5% to $23.41bn - lower than analysts' expectations.

IBM said its results had been hit by delays in completing deals, with about $400m worth of contracts that were expected to be counted in the first quarter of the year now being moved into the second.

In addition, the company said that the recent weakening of the yen had affected its earnings. The depreciation of the yen means that it earns fewer dollars from sales in Japan.

"Despite a solid start and good client demand, we did not close a number of software and mainframe transactions that have moved into the second quarter,'' said IBM's chief executive, Ginni Rometty.

"The services business performed as expected with strong profit growth and significant new business in the quarter.''

IBM's chief financial officer Mark Loughridge said it was "hard to measure" whether the recent series of US budget cuts - the sequester - had affected the firm.

"I can tell you that our US federal business was down 13%, which was certainly a drag on the US performance," he said.

19 April 2013 Last updated at 09:02 ET

General Electric has reported a 16% rise in first quarter profits, helped by a one-off gain from the sale of its stake in NBC Universal.

It made a profit of $3.53bn (£2.3bn) in the quarter, up from $3.03bn last year. Revenue was flat at $35bn.

The conglomerate has been trying to put its focus back on core industrial businesses, which include aviation and energy infrastructure.

It said orders for its aviation equipment jumped 47%.

Orders for oil and gas equipment and services, such as turbines and plant maintenance, rose 24%, said GE chairman and chief executive Jeff Immelt.

"In growth markets, equipment and service orders grew 17%. We ended the quarter with our biggest backlog in history," he said. Orders grew to $216bn in the first quarter from $210bn in the fourth quarter of 2012.

In the first three months of 2013 GE was awarded a $620m maintenance contract for QGC's Queensland Curtis liquified natural gas plant off the east coast of Australia.

It also won a contract to provide power equipment for the Emirates Aluminum smelter complex in Abu Dhabi, and another maintenance contract for a LNG project in Russia.

But the company said it had been affected by weaker-than-expected sales in Europe, especially in sales of power and water equipment.

"GE's markets were mixed. The US and growth markets were in line with expectations. We planned for a continued challenging environment in Europe, but conditions weakened further with Industrial segment revenues in the region down 17%," said Mr Immelt.

"We always anticipated that the first half of 2013 would be our toughest comparison," he added.

During the quarter, the company sold its 49% stake in NBC Universal to Comcast for $18.1bn.

19 April 2013 Last updated at 06:52 ET

Lending to businesses in the UK has fallen by a further £4.8bn in the three months to February, the Bank of England has said.

That represents a fall of 4.4% in loans to companies and small firms from the same period a year earlier.

The Bank also said that the mortgage market was "broadly unchanged".

Figures from the Council of Mortgage Lenders (CML) paint a similar picture, with lending in the first quarter of 2013 the same as last year.

Lower lending

The Bank of England's figures show that loans to construction firms and housebuilders were particularly weak.

Lending to the real estate sector fell by 5.3% in December 2012 from a year earlier, the sharpest drop for more than three years.

The Bank of England also said that those banks participating in the Funding for Lending Scheme (FLS) were lending less money overall to households and businesses in the second half of 2012 than they were in the previous six months.

FLS was launched in August last year. The idea is that banks and building societies can borrow money from the Bank of England at low cost, providing they pass it on to businesses and individuals.

The scheme has been credited with helping to lower the cost of mortgages.

It is currently due to end in January 2014, but in his March Budget, the Chancellor, George Osborne, said he was considering extending it beyond that date.

The Bank of England has previously said that it will take some time for FLS to feed through to business loans in particular.

Mortgages 'improving'

The Bank described mortgage lending over the thee months to February as "positive, though weak".

The value of such lending grew by 0.7%, quarter on quarter, according to the Bank.

The CML figures suggest mortgage lending in March was noticeably better than in February.

But the total value of mortgage lending in the first quarter of 2013 was £33.8bn, virtually unchanged on the first quarter of 2012.

Nevertheless the CML is convinced that the market is picking up.

"Conditions in the housing and mortgage markets continue to show signs of improving," said Bob Pannell, the CML's chief economist.

"The improvement in funding markets over the past year, reinforced by the incremental benefits of the Funding for Lending Scheme (FLS), has been the key catalyst behind stronger housing activity," he said.

19 April 2013 Last updated at 10:03 ET

Blackstone has decided not to submit a bid for computer company Dell, citing falling sales and fears over the company's finances.

Blackstone said it was concerned by an "unprecedented" drop in PC sales.

Billionaire investor Carl Icahn and a consortium led by Michael Dell, the company's founder, are still in the bidding race.

Blackstone said it continued to view Dell as "a leading global company with strong market positions".

But it also said that the two worrying conditions meant it was nevertheless withdrawing its interest in the company.

Since Blackstone submitted its bid, Dell had reduced its operating income projections for the current year to $3 bn (£1.95bn), down from $3.7bn.

Michael Dell, joined by private-equity firm Silver Lake Partners, has proposed a $24.4bn buyout of the company.

The bid has drawn opposition from some shareholders who believe the offer is too low.