The Business: Friday 17 May 2013
Company news, markets and financial talking points, available from 8am Monday to Friday
MPs have attacked internet giant Google over the way it reports its income for tax, says The Independent. Margaret Hodge, chair of the public accounts committee, says whistleblowers have told her that Google had sold advertising within the UK and invoiced customers in the UK, contradicting the firm's claim that UK customers paid Google in Ireland. She told its head of operations in Northern Europe, Matt Brittin, that the company has been “devious, calculating and unethical”. Ed Miliband said the internet giant is going to "extraordinary lengths" to avoid tax. Google's sales in the UK are worth £3.2bn. In 2011 it paid £6m in UK corporation tax.
Computer giant Dell has seen quarterly profits plunge 79% from a year ago as consumers shift away from PCs, reports the Daily Telegraph. Net profit for the first fiscal quarter slumped to $130m, as the firm is locked in a battle with dissident shareholders following a bid by founder Michael Dell to take the company private. Going private would allow Dell to sacrifice short-term profitability and take a long-term view, as consumers increasingly switch from PCs to smartphones and tablets. But dissident investors led by corporate raider Carl Icahn believe the $24.4bn bid undervalues Dell and argue that the private equity deal would be a "giveaway".
Billionaire investor Warren Buffett suffered a rare setback yesterday as Standard & Poor’s cut his investment vehicle’s credit rating, reports the Financial Times. The rating agency cited Berkshire Hathaway's over reliance on its insurance business and question marks over Buffett's succession plans for the one-notch cut to AA. Buffett said earlier this month that his board has identified his successor, and that little would change at Berkshire after his death, but they chose not to make the name public. Berkshire shares were down 0.6% by lunchtime in New York at about $168,000, a slight dip from Tuesday’s all-time high of $169,000.
The boss of Lloyds Banking Group promised to pull out of tax havens where the lender is not conducting genuine business during a stormy annual meeting yesterday, reports The Guardian. Chief executive António Horta-Osório said the bank is embarking on a systematic review of “so-called tax havens”. Investors attacked the bank's "cosy” boardroom and "appallingly high" bonuses. One complained the bank withheld dividends while paying bonuses totalling £1.2bn between 2010 and 2012. "Many [executives] earn more in one year than some of us have earned in our lifetime,” he complained.
BP has asked David Cameron to intervene over the escalating cost of compensating US companies for the Gulf of Mexico oil disaster, reports the BBC. The company fears its financial recovery is in jeopardy because the compensation system is being abused with inflated and fictitious claims. BP, which fears it could become the target of a takeover, wants Cameron to raise the issue with the US government. The 2010 disaster killed 11 oil rig workers and released an estimated four million barrels of oil into the Gulf and along the coastline. BP set aside $7.8bn (£5.2bn) for compensation, but now expects the final figure to be much higher.
Britain's fourth biggest supermarket Morrisons is to launch an online grocery service with Ocado in an attempt to turn around its fledgling fortunes. Unlike rivals Tesco, Sainsbury's and Asda, the supermarket has not previously offered an internet shopping service. Morrisons Chief Executive Dalton Philips said it was a "very good" deal for both parties: "We're going from a standing start to the fast lane in the blink of an eye." The supermarket said its website will have a clear "Morrisons look and feel" and that Morrisons.com will be delivering to customers by January 2014. They will pay £170m to acquire Ocado's distribution centre in Dordon, North Warwickshire and a further £46m to expand it, the BBC notes. Ocado said the Morrisons deal will not affect its ongoing partnership with Waitrose.
FTSE-100: down -0.09 to 6687.80
Dow Jones: down -0.28 to 15233.22
Dax: up +0.09 to 8369.87
Cac-40: down -0.08 to 3979.07
Nikkei: up +0.79 to 15156.01
Hang Seng: up +0.17 to 23082.68
US dollar: buys €0.77720 and £0.65610
Sterling: buys $1.52430 and €1.18510
Oil: Brent crude futures $103.72 up +0.2