SAN FRANCISCO | Fri Jan 18, 2013 8:07pm EST

SAN FRANCISCO (Reuters) - Evan Williams and Biz Stone, the co-founders of Twitter, have leased three sprawling floors in a historic downtown San Francisco tower for their low-profile start-up incubator, The Obvious Corporation.

Obvious said Friday it leased 75,000 square feet at the busy 760 Market Street location - known as the Phelan Building - in one of the city's larger commercial real estate deals in recent months.

The downtown space will be able to hold roughly 500 employees and signals ambitions at Obvious, which was re-constituted when Williams and Stone both left Twitter in 2011.

The incubator, with no more than two dozen employees, has mostly stayed out of the press except when it unveiled two new blogging platforms called Medium and Branch last September.

Although still thinly staffed, Obvious's new space is larger than start-up Pinterest's recently inked lease in the city.

"We need the right space from which to grow the Medium team and position Obvious to focus on bringing our new ideas to life," Obvious CEO Williams said in a statement Friday about the new lease.

The company will occupy the seventh, eighth and ninth floors of the triangular building, which wraps around a central courtyard, said Jenny Haeg, a real estate agent who has brokered leases for Square Inc, Dropbox, Airbnb and other large tech startups.

(Reporting by Gerry Shih; Editing by Bob Burgdorfer)

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1 of 4. A visitor tries Apple Inc's iPad at an electronics store in central Seoul January 18, 2013. Sharp Corp has nearly halted production of 9.7-inch screens for Apple Inc's iPad, two sources said, as demand shifts to its smaller iPad mini.

TOKYO/SEOUL | Fri Jan 18, 2013 3:48pm EST

TOKYO/SEOUL (Reuters) - Sharp Corp has nearly halted production of 9.7-inch screens for Apple Inc's iPad, two sources said, possibly as demand shifts to its smaller iPad mini.

Sharp's iPad screen production line at its Kameyama plant in central Japan has fallen to the minimal level to keep the line running this month after a gradual slowdown began at the end of 2012 as Apple manages its inventory, the industry sources with knowledge of Sharp's production plans told Reuters.

Sharp has stopped shipping iPad panels, the people with knowledge of the near total production shutdown said. The exact level of remaining screen output at Sharp was not immediately clear but it was extremely limited, they said.

Company spokeswoman Miyuki Nakayama said: "We don't disclose production levels."

Apple officials, contacted late in the evening after normal business hours in California, did not have an immediate comment.

The sources didn't say exactly why production had nearly halted. Among the possibilities are a seasonal drop in demand, a switch to another supplier, a shift in the balance of sales to the mini iPad, or an update in the design of the product.

Macquarie Research has estimated that iPad shipments will tumble nearly 40 percent in the current quarter to about 8 million from about 13 million in the fourth quarter, although Apple's total tablet shipments will show a much smaller decrease due to strong iPad mini sales.

APPLE SHARES

Any indication that iPad sales are struggling could add to concern that the appeal of Apple products is waning after earlier media reports said it is slashing orders for iPhone 5 screens and other components from its Asian suppliers.

Those reports helped knock Apple's shares temporarily below $500 this week, the first time its stock had been below the threshold mark in almost one year.

Apple, the reports said, has asked state-managed Japan Display, Sharp and LG Display to halve supplies of iPhone panels from an initial plan for about 65 million screens in January-March. Apple is losing ground to Samsung, as well as emerging rivals including China's Huawei Technologies Co Ltd and ZTE Corp.

NO BIG CHANGE AT OTHER MAKERS

In addition to Sharp, Apple also buys iPad screens from LG Display Co Ltd, its biggest supplier, and Samsung Display, a flat-panel unit of Samsung Electronics.

Both LG Display and Samsung Display declined to comment.

A source at Samsung Display, however, said there had not been any significant change in its panel business with Apple, which has been steadily reducing panel purchases from the South Korean firm.

A person who is familiar with the situation at LG Display said iPad screen production in the current quarter had fallen from the previous quarter ending in December, mainly due to weak seasonal demand that is typical after the busy year-end holiday sales period.

Sterne Agee analyst Shaw Wu said some of the product cutbacks at Sharp are probably seasonal.

"The March quarter is almost always weaker than the December quarter," he said, adding that Apple also consolidates suppliers of certain components during quarters with weaker demand. "The Korean manufacturers are more efficient and typically have lower costs."

Apple's iPad sales may have also suffered amid a weak Christmas shopping period that hurt other consumer gadget makers as well.

CROWD OF RIVAL PRODUCTS

Apple also faces stiffening competition in tablets from a growing crowd of rival products from makers including Samsung with its Galaxy and Microsoft Corp's Surface. A consumer shift to smaller 7-inch screen devices, which Apple responded to late last year by launching its iPad mini for $329, are adding pressure.

BNP Paribas expects the iPad mini will eat into sales of the full-sized iPad, with the mini rise to 60 percent of total iPad shipments in the January-March quarter.

Looking to cut into Apple's market share in the smaller segment are Amazon.com Inc with its Kindle and Google Inc with its Nexus 7.

CEO Tim Cook, who is credited with building Apple's Asian supply chain, has overseen several gadget launches, including the iPhone 5, the latest iPad models and the iPad mini during his first year, is under pressure to deliver the kind of product innovations that wowed consumers during Steve Jobs' tenure to keep his company's profit growth stellar.

Sharp, which also supplies screens for the iPhone, has been working with its main banks on a restructuring plan after posting a $5.6 billion loss for the past fiscal year. To secure emergency financing from lenders including Mizuho Financial Group and Mitsubishi Financial Group it had mortgaged its domestic factories and offices including the one building screens for Apple.

In December, Qualcomm Inc agreed to invest as much as $120 million in Sharp and the two companies said they would work to develop new power-saving screens.

(Additional reporting by Poornima Gupta in San Francisco; Writing by Tim Kelly; Editing by Ken Wills and Richard Chang)

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A Hewlett-Packard logo is seen at the company's Executive Briefing Center in Palo Alto, California January 16, 2013.

NEW YORK | Fri Jan 18, 2013 4:10pm EST

NEW YORK (Reuters) - A U.S. investor activist group affiliated with large labor unions is asking Hewlett-Packard Co to replace its auditor, Ernst & Young, over the technology giant's troubled acquisition of UK software company Autonomy.

Change to Win Investment Group (CtW), based in Washington, D.C., also is seeking a revamp of HP's audit committee, which is responsible for overseeing Ernst & Young's long-standing relationship as the auditor that reviews HP's books.

Spokesmen for HP and Ernst & Young declined to comment.

Labor union pension funds own large stakes in many U.S. companies and often use them as platforms to push for changes in how those corporations are managed. Union pension funds tied to CtW invest more than $200 billion in stocks, including shares in HP, said CtW in a letter to an HP board member on Thursday.

CtW questioned why Ernst & Young did not spot problems at Autonomy. "HP is clearly a company facing serious challenges," CtW said in its letter. "Unfortunately, the highly conflicted, decade-long relationship between Ernst & Young and HP cannot provide shareholders with the reassurance they need."

Auditors are outside accounting firms retained by corporations to vet their books regularly and offer an opinion on the validity of financial results. The four firms that dominate auditing worldwide - Ernst & Young, KPMG, Deloitte and PricewaterhouseCoopers - are faced with ever-rising scrutiny of their role in investor losses and accounting lapses.

The CtW letter was addressed to Rajiv Gupta, chairman of the corporate governance committee of HP's board. It was signed by William Patterson, executive director of CtW Investment Group.

Gupta could not be reached for comment.

HP, AUTONOMY CLASH

HP said in November that it overpaid for Autonomy in 2011. HP accused Autonomy of serious accounting improprieties. Autonomy has rejected the allegations and said HP was looking for "scapegoats."

CtW urged HP to name an independent special master to investigate and report to shareholders on the Autonomy deal, as well as on an earlier acquisition of Electronic Data Systems Corp (EDS), which CtW said was "equally disastrous."

HP has said it is deferring to U.S. and UK regulators to investigate the allegations it has made against Autonomy.

HP in August swung to an $8.9 billion quarterly loss as it swallowed a write-down linked to its $13.9 billion purchase of EDS. That was followed in November by an $8.8 billion writedown on Autonomy's value, which HP blamed largely on improper accounting at the software company.

Ernst & Young was not Autonomy's auditor. But according to CtW, the accounting firm had an opportunity to spot Autonomy's problems when it reviewed the goodwill, or intangible value, that HP recorded for its acquisition of Autonomy.

However, one risk expert said CtW was putting the blame in the wrong place. A separate due diligence team, not the auditor, was responsible for determining the value of Autonomy, said Peter Bible, chief risk officer at EisnerAmper, an accounting and consulting firm.

"The auditors didn't buy the company, HP did. And the people inside HP ought to be the ones held accountable for the purchase price that was paid," Bible said.

CtW questioned whether Ernst & Young was independent enough to audit HP because of the large amount of non-audit services Ernst provided to HP, including tax consulting and lobbying.

Washington Council, a tax lobbying firm acquired by Ernst in 2000, lobbied for HP from 2000 to 2004, CtW said.

AUDITING, LOBBYING EYED

Government lobbying records and U.S. Securities and Exchange Commission filings show that Ernst & Young was HP's auditor while Washington Council was registered as a lobbyist for HP.

Reuters reported last week that the SEC was investigating whether Ernst violated auditor rules by letting its lobbying unit perform work for some major audit clients.

Ernst has said all of its services for audit clients undergo considerable scrutiny to be sure they are within the rules.

U.S. independence rules bar auditors from serving in an "advocacy role" for audit clients. The goal of this rule is to ensure that auditors are objective regarding companies they audit so that they can serve as watchdogs for investors.

It is not clear what type of lobbying activities would be barred under the prohibition against advocacy.

The 2002 Sarbanes-Oxley Act restricted the type of non-audit services that audit firms can provide, but broad exceptions were granted for tax consulting services.

CtW said that HP was out of step with its peers in using Ernst for significant services other than audit work. The other fees paid to Ernst are much higher than those paid by Dell Inc and Apple Inc to their audit firms, CtW said.

CtW also questioned the HP audit committee's willingness to allow Ernst to perform "multiple and conflicting roles" for HP.

Board audit committees hire and oversee outside auditors, while also governing non-audit services.

(Additional reporting by Sarah Lynch and David Ingram in Washington; Editing by Kevin Drawbaugh)

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An illustration picture shows a Google logo with two one Euro coins, taken in Munich January 15, 2013.

SAN FRANCISCO | Fri Jan 18, 2013 3:46pm EST

SAN FRANCISCO (Reuters) - Google Inc issued a rare advisory to Wall Street on Friday that analyst estimates for its fourth quarter financial results are flawed.

The world's No.1 search engine, which reports its quarterly results on Tuesday, said most analysts have not adjusted their estimates to reflect the pending $2.35 billion sale of the Motorola Home business.

The business must be presented separately from the results of Google's continuing operations under U.S. accounting rules, Google Treasurer Brent Callinicos wrote in a post on Google's investor relations Web page on Friday.

"As of this writing, a majority of Wall Street analysts who cover Google have not reflected the Home business as discontinued operations in their estimates," Callinicos wrote.

The discrepancy means the fourth-quarter net revenue that Google reports on Tuesday could appear to be less than the $12.34 billion average that analysts polled by Thomson Reuters I/B/E/S are expecting.

Raymond James analyst Aaron Kessler says his fourth-quarter net revenue estimate includes nearly $900 million from the Motorola Home business.

"They're saying that the headline number is going to be less than what most analysts have for Q4," said Kessler.

The advisory is a rare move for Google, which does not provide financial forecasts and typically has limited interactions with analysts. The company has in the past provided accounting advisories to analysts about the Motorola Mobility business, which Google acquired for $12.5 billion in May.

Google bought Motorola Mobility primarily for its large portfolio of communications patents and its mobile phone business.

In December, Google agreed to sell the Motorola Home television set-top box business to Arris Group Inc for $2.35 billion in cash and stock.

Analysts expect Google to report adjusted earnings of $10.56 per share for the fourth quarter.

"It's a little surprising that they're doing this the Friday before the report," said Kessler. "They should have put it out a week ago if they wanted analysts to change their numbers."

(Reporting By Alexei Oreskovic. Editing by Andre Grenon)

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A Samsung Galaxy Note II phone-cum-tablet is displayed during the first day of the Consumer Electronics Show (CES) in Las Vegas January 8, 2013.

HELSINKI | Fri Jan 18, 2013 3:45pm EST

HELSINKI (Reuters) - Samsung and Apple pulled ahead in the global smartphone race last quarter, according to forecasts by analysts in a Reuters poll, while Nokia and others are expected to have fallen further behind.

Overall shipments of handsets are expected to have risen in the fourth quarter, with most of that growth dominated by Samsung. Analysts forecast the South Korean company shipped 61 million smart devices, up 71 percent from a year earlier.

Samsung forecast earlier this month that it expected to earn a quarterly profit of $8.3 billion on strong sales of its Galaxy handsets as well as solid demand for flat screens used in mobile devices. Samsung's full results are due by Jan 25.

While some are wary that Samsung's momentum may slow in coming quarters owing to market saturation, it is still expected to outpace Apple as sales of the new iPhone 5 appear slightly weaker than originally forecast.

Apple is forecast to have shipped 46 million iPhones in the quarter, up 25 percent from a year earlier, according to the poll.

Shares in Apple dipped below $500 earlier this week for the first time in almost a year after reports it was slashing orders for screens and other components as intensifying competition eroded demand for the new iPhone.

The poll showed analysts expect Apple's full-year shipments to grow to 167 million this year from 134 million in 2012, while Samsung's shipments are expected to grow to 283 million smartphones in 2013 compared to 210 million in 2012.

NOKIA, RIM AIM TO CATCH UP

Nokia, once the world's biggest handset maker, is expected to have lost more market share. It is now pinning its recovery hopes on Lumia smartphones, which use Microsoft's Windows Phone software.

Analysts forecast Nokia's fourth-quarter shipments of mobile phones fell 15 percent to 80 million units while those of smartphones, including Lumias, fell 65 percent to 7 million units.

Nokia last week said it sold around 4.4 million Lumia handsets in the fourth quarter. Full results are due on Jan 24, and analysts are anxious to hear whether Nokia is confident that Lumia sales will continue to grow in coming quarters.

BlackBerry-maker RIM, another handset maker struggling to claw back market share, is expected to report a 30 percent fall in fourth-quarter shipments to 7 million units, the poll showed.

RIM is to launch new BlackBerry 10 smartphones later this month. The poll showed, however, that analysts expect its full-year sales to fall to around 30 million in 2013 from 33 million in 2012.

(Reporting by Ritsuko Ando; Editing by Sophie Walker)

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People walk past a Sprint store in New York December 17, 2012.

NEW YORK | Fri Jan 18, 2013 4:17pm EST

NEW YORK (Reuters) - Investors holding 29 percent of the outstanding minority shares of Clearwire Corp (CLWR.O) are unhappy with Sprint's $2.2 billion bid for the wireless service provider and are pushing for a higher offer.

Sprint, the No. 3 U.S. mobile service provider, announced on December 17 an agreement to acquire the outstanding shares of Clearwire it doesn't already own for $2.97 per share. While Sprint holds a more than 50 percent stake in Clearwire, the deal requires approval from holders of just over 50 percent of Clearwire's minority shares.

Securing that approval is looking increasingly tenuous, however.

Investors collectively owning almost 211 million shares of Clearwire - roughly 29 percent of its minority shares - told Reuters they do not think Sprint's bid is high enough and that they would not be happy casting their votes for the deal.

Crest Financial, which owns about 8 percent of Clearwire's minority shares, immediately sued to block the deal, for example. Crest's argument, echoed by other investors, is that Clearwire is worth a lot more than $2.97 per share as it has valuable wireless spectrum that would be crucial for Sprint.

While the 29 percent alone would not be enough to vote down the deal, its underscores the growing disenchantment Clearwire's minority shareholders have with Sprint's offer. Reuters was not able to reach all Clearwire shareholders.

For the deal to go through, Sprint needs approval from investors holding more than 362 million shares out of the roughly 725.89 million total minority shares outstanding. Share figures are based on the latest publicly available information.

Sprint said in December that it had support from three strategic investors - Comcast Corp (CMCSA.O), Intel Corp (INTC.O), and Bright House Networks LLC - who collectively own about 125.4 million Clearwire shares.

Excluding the almost 211 million votes from the investors Reuters spoke to and the 125.4 million shares supporting the deal, investors with about 389.8 million outstanding Clearwire shares have not disclosed if they will approve the deal or force Sprint to revise its offer.

HIGHER DISH OFFER

Dish Network (DISH.O), controlled by mercurial billionaire Charlie Ergen, made a $3.30 per share counter-offer for Clearwire on January 8, putting further pressure on Sprint to raise its bid. Clearwire's board is reviewing the Dish bid but said that the proposed deal may not be permitted because of Clearwire's existing legal obligations to Sprint.

However, the Dish bid has convinced many of Clearwire's minority shareholders that enough discontent exists to potentially block Sprint's bid.

"Sprint can't get 50 percent of those shares. They've no way to get them," said Chris Gleason, a managing partner at Taran Asset Management, which owns about 3 million Clearwire shares.

Mount Kellett, an investment firm with about 7.3 percent of Clearwire's minority shares, said Dish's offer is proof Sprint's bid is "grossly inadequate." Mount Kellett also said it is likely to be voted down and accused Clearwire's board of breaching its fiduciary duties for accepting the bid.

Another investment manager whose firm's holdings include Clearwire shares said the Dish offer was a turning point.

"If somebody was on the fence about saying no to Sprint, they're not on the fence any more," said the investment manager who asked not to be named due to their firm's policy on media comments.

"Anybody who thinks $2.97 is a full and fair value has already exited," said the person, referring to the fact that Clearwire shares have traded well above Sprint's offer price since Dish announced its bid. Clearwire shares were up 6 percent above Sprint's offer price at $3.16 on Friday.

This person described the $2.97 offer as "dead on arrival."

Sprint, which has agreed to sell a 70 percent of its own shares to Japan's Softbank Corp (9984.T), has said that it believes its Clearwire bid is superior to Dish's offer.

Sprint argues that the Dish deal is not viable because it comes with conditions Clearwire could not accept.

While Sprint said in December that it had commitments from Intel, Comcast, and Bright House, it is worth noting that those companies have not updated their position since the Dish offer and declined to comment for this story.

(Reporting By Sinead Carew; Editing by Peter Lauria, Bernard Orr)

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