WASHINGTON | Tue Feb 12, 2013 9:37pm EST

WASHINGTON (Reuters) - The Pentagon said it plans to continue using lithium-ion batteries on the new F-35 fighter jet despite problems with similar batteries that have grounded Boeing Co's new 787 airliner and are causing Airbus to rethink their use on its A350 jet.

Joe DellaVedova, spokesman for the Pentagon's $396 billion F-35 program office, said on Tuesday that the lithium-ion batteries used on the new radar-evading fighter were made by different manufacturers than those used on the 787, and the jet's battery systems had been rigorously tested.

"The bottom line is the lithium-ion batteries used on the F-35s have been through extensive tests and have redundant systems to protect the aircraft and battery compartments; they are considered safe," DellaVedova said.

DellaVedova said there had been some irregularities with the lithium-ion batteries not starting properly in cold temperatures that were being addressed, but no issues affecting flight safety had come up during years of testing.

All 50 Boeing Dreamliners in commercial service were grounded worldwide on January 16 after a series of battery-related incidents, including a fire on board a parked 787 at Boston's Logan International Airport and an in-flight problem on another airplane in Japan.

The groundings have cost airlines tens of millions of dollars, with no solution yet in sight, and have sparked growing concerns among aerospace industry executives about whether the powerful but delicate backup energy systems are technically "mature", or predictable.

The U.S. National Transportation Safety Board, which is examining the 787 fire in Boston, said it was looking at the total design of the Boeing 787 battery, built by Japan's GS Yuasa Corp on behalf of France's Thales SA, including the charging system, electrical interconnections, and their thermal isolation of different battery cells from each other.

BATTERY SAFETY

Two of the biggest lithium-ion batteries on the F-35 warplane are made by the French company Saft Groupe SA, which also makes batteries for Airbus, part of European aerospace group EADS NV. Saft last month expressed confidence that lithium-ion technology was safe.

But people familiar with the matter have said that Airbus officials are reconsidering use of the batteries on the A350, which would be the second large passenger jet to fly on lithium-ion batteries for backup electrical power after the Dreamliner, which pioneered their use in passenger transport to support an increasing array of electrical systems.

Airbus said last week it had a plan B for its battery and time to respond to any rule changes.

DellaVedova said military officials remained confident in the lithium-ion batteries used on the F-35, and there were no discussions under way to swap them out for heavier nickel-cadmium batteries.

Lockheed Chief Executive Marillyn Hewson last month underscored her confidence in the lithium-ion batteries, telling reporters that the batteries on the F-35 were made by a different company and had been tested extensively.

Lockheed spokesman Mike Rein said more than a dozen F-35 jets were wired with extensive monitoring equipment to carry out development testing and no flight safety issues had been detected with the batteries during over 6,000 hours of flight testing on the airplanes.

"We are monitoring our full battery system on a daily basis as we flight test. We have continual data updates, and we've had no indication that we are connected to the same issues that grounded the 787," Rein said.

The F-35's battery system has run into a different problem on the ground, with some airplanes failing to start during cold temperatures under 10 degrees Celsius, DellaVedova said.

He cited "minor irregularities" that had been traced back to a software issue in the jet's battery charger control unit, and a fix was in the works for new jets in production and would be retrofitted on earlier jets. The problem, he said, was not related to the batteries themselves.

In the meantime, he said, measures were being taken to warm the area near the battery on cold days prior to start.

One defense official said maintainers at Eglin Air Force Base in Florida were using space heaters in some to warm the jets, which required removing a panel of the plane's stealthy coatings. "It's not ideal when you're talking about a fighter jet that has to be ready to go at a moment's notice," said the official, who was not authorized to speak on the record.

Separately, the Pentagon's F-35 program office on Tuesday lifted a January 18 order that grounded nine F-35B developmental test aircraft after a fuel line detached just before a training flight at Eglin Air Force Base in Florida.

Vice Admiral David Dunaway, head of Naval Air Systems Command, was briefed Tuesday on the inspections of the faulty components, and could lift flight restrictions on 16 additional F-35B model jets being used for training as early as Wednesday, according to two sources familiar with the matter.

(Additional reporting by Tim Hepher in Paris; Editing by Edmund Klamann)

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Founder and chairman of Dell computers Michael Dell passes a screen projection before speaking at a news conference in Sydney August 14, 2006.

SAN FRANCISCO | Thu Feb 14, 2013 12:52pm EST

SAN FRANCISCO (Reuters) - Dell Inc Chief Executive Michael Dell, aiming to clinch a $24.4 billion deal to take the No. 3 PC maker private, agreed to value his 16 percent stake in the company at about 2 percent below the price offered to other shareholders, company filings on Thursday showed.

The founder, who informed his board in August of his intention to remove the struggling company from Wall Street's scrutiny, agreed after extensive negotiations that his equity stake would be valued at $13.36 a share, versus the $13.65 offered eventually.

Negotiations with Silver Lake kicked off in October. Dell revealed that the private equity firm raised its proposed offer price at least once during ensuing discussions.

"To facilitate a price increase by Silver Lake, Mr. Dell and related persons agreed that their shares to be rolled over in the proposed transaction would be valued only at $13.36 per share as opposed to the $13.65 price offered to the company's unaffiliated stockholders," the filing read.

The proposed leveraged buyout, the largest private-equity backed deal since the financial crisis, is being led by Michael Dell and Silver Lake, and pits Dell's board against the company's top independent investors.

Top two shareholders, Southeastern Asset Management and T. Rowe Price, have been among the most vocal opponents of the deal, which they say severely undervalues the company, despite the challenges it faces in a shrinking PC market and intense competition in enterprise software and services.

The deal is up for a shareholder vote around June or July, the company said in Thursday's filing. It will need a majority of shareholders, excluding Michael Dell, to be approved.

Dell's board, which formed a special review committee of independent directors after the CEO informed them of his intentions, is now conducting a 45-day "go-shop" period, actively soliciting higher bids.

Analysts do not expect rival bidders to step forward.

WHERE'S DELL?

Dell reports fiscal fourth-quarter results on Tuesday, when analysts get their first chance to grill management on the buyout. But, in a potential disappointment for Wall Street, Michael Dell himself will not be present though he typically participates in post-earnings release calls.

The CEO recused himself from the discussion, given his leading role in the buyout, a company spokesman said.

Dell has lost 40 percent of its value since last year's peak, and is trying to reinvent itself as a seller of higher-margin services to corporations, an internal overhaul that would be conducted away from public scrutiny if the buyout goes forward.

The PC maker, whose profits fell 47 percent last quarter, is expected to report further erosion of both revenue and income next week.

Dell's revenue in the quarter is expected to slide almost 12 percent to $14.12 billion from $16.03 billion a year earlier, according to an average forecast of analysts polled by Thomson Reuters I/B/E/S.

The company, once the world's top PC maker and a pioneer in computer supply chain management, is struggling to defend its market share against Asian rivals like Lenovo.

It was hurt also by a slide in holiday-season sales of personal computers for the first time in more than five years, despite the launch of Microsoft Corp's Windows 8 operating system. Microsoft itself is providing $2 billion in financing for Dell's buyout.

Dell's worldwide PC shipments fell nearly 21 percent to 9.48 million in the last three months of 2012, from 11.97 million in the same period a year ago.

Shares of Dell were steady at about $13.79 at midday.

(Reporting by Edwin Chan; Editing by Steve Orlofsky)

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OSLO | Sun Feb 17, 2013 5:15am EST

OSLO (Reuters) - A new United Nations plan to involve all nations in marshalling science to fix environmental problems ranging from toxic chemicals to climate change will be put to the test from Monday at talks in Nairobi.

The 40-year-old U.N. Environment Programme will open its annual governing council to all the world's almost 200 nations, up from a current group of 58, under reforms aimed at making the world economy greener at a time of weak economic growth.

"A strengthened UNEP will ... improve and enhance international cooperation on the environment," Achim Steiner, executive director of UNEP, said of the annual February 18-22 meeting in a telephone interview with Reuters.

Environment ministers or senior officials from about 150 nations are due to attend, out of almost 200 possible worldwide. Until now, UNEP's governing council has left out many smaller states, from Guyana to Albania.

The shift is meant to sharpen world focus on problems such as toxic chemicals, over-fishing and global warming. Getting more countries in the room will not necessarily make reaching agreements easier but should give UNEP decisions more authority.

Steiner said the talks would be a first chance to see how the new approach works. UNEP oversees many scientific studies guiding U.N. work, such as monitoring climate change or the pace of extinction of animals and plants.

Under an agreement last year at an Earth Summit in Rio de Janeiro, UNEP will get a bigger budget. "By (February 22) the plan is that we will have the final steps in implementing the Rio summit's decisions to reform UNEP," Steiner said.

The Rio deal fell short of calls by some nations, such as France, to create a completely new U.N. environment agency.

"The seeds of what we are seeing will be seen only 5 or 10 years down the line," Steiner said.

"One of the major issues is a new strategy for the organization and a programme of work for the next 3 years," Steiner said of the Nairobi talks that will lay guidelines for work on issues from oceans to slowing extinctions.

OZONE, MERCURY

UNEP has registered some successes, such as the 1987 Montreal Protocol for limiting emissions of gases blamed for thinning the planet's protective ozone layer, or a treaty due to be signed in Japan this October to limit toxic mercury.

Climate change has proved far tougher to solve as global emissions of greenhouse gases have continued to rise. China, the United States and the European Union are top emitters.

Governments aim to work out a deal by the end of 2015 to slow global warming and make it effective from the end of 2020. World leaders including U.S. President Barack Obama failed to nail down a treaty at a summit in Copenhagen in 2009.

"On the current trajectory of negotiations it is not easy to see how by 2015 a new framework agreement will emerge," Steiner said. But some nations have been acting on their own and extreme events, such as a melt of the Arctic sea ice, droughts, floods and powerful storms, have underscored the risks.

"It is becoming more and more clear in the minds of the public that climate change is ... a clear and present danger that will require us to act," he said.

UNEP has overall responsibility for environmental problems among U.N. agencies but talks on fixing global warming are overseen by the Bonn-based U.N. Climate Change Secretariat.

(Reporting by Alister Doyle; Editing by Mark Heinrich)

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Orbital Sciences Corporation's Antares rocket rolls out to the launch pad at NASA?s Wallops Flight Facility on Wallops Island, Virginia October 1, 2012.

WASHINGTON | Fri Feb 15, 2013 3:17pm EST

WASHINGTON (Reuters) - Orbital Sciences Corp worries that budget pressures and "old habits" may limit funding for the U.S. government's move toward smaller, less complex satellites aimed at avoiding cost overruns and delays that have often plagued space programs.

Orbital on Thursday reported record revenues and operating income for 2012, but said revenues in its advanced space segment dropped by 19 percent due to "decreased activity on national security satellite contracts.

Michael Hamel, a retired general who heads business development for the company, said he worries that tight budgets will limit even modest investments in a shift towards less complex satellites. Orbital thinks a move to a so-called "disaggregated" approach could ultimately save the government money and make its space hardware less vulnerable.

"We're caught in this vicious cycle," he told Reuters this month. "We're going to build up an inventory of these very expensive systems and that means there won't be dollars to reinvest in more resilient architectures and solutions."

Orbital, which builds both satellites and the rockets that launch them, contends that the government could save money and time by building simpler satellites that could be launched on smaller rockets.

It says that it could provide five basic satellites and rockets for the price of one big U.S. military satellite.

Many of the problems facing satellite programs date back to the 1990s, during the last downturn in defense spending, when the Air Force tried to save money by squeezing several missions onto a single big satellite. Nearly every program structured that way ran into technological challenges, massive cost overruns and long launch delays, Hamel said.

The programs also required far more expensive launchers and intensive government oversight, given their cost and importance to U.S. national security, he added, noting that some of those practices were "old habits" that were difficult to change.

Air Force officials insist that many of the older satellites programs, including the Space Based Infrared System missile warning satellites built by Lockheed Martin Corp, are in better shape now, and the government is trying to save money by buying several at a time through so-called "block buys."

Hamel argues that spending more on these big satellites means there will be less funding for newer smaller technologies, which can also be launched on smaller, commercial-style rockets that are a third less expensive to produce.

He admitted to a "certain impatience" with the pace of the government's progress toward newer programs.

"It's essential for the government to invest in new architectures and systems with new buying practices that really do leverage what we're providing the commercial marketplace and to make dollars available for that," Hamel said.

INITIAL HOSTED PAYLOAD PILOT STARTED IN 2008

Orbital in 2008 kicked off a successful pilot program called Commercial Hosted Infrared Payload, or CHIRP, in which the company integrated a missile warning sensor developed by SAIC onto a commercial satellite it was building for satellite operator SES.

The program's success sparked interest in further government use of such "hosted payloads," which would get sensors into space for far less money than separate government satellites.

Air Force General William Shelton last month said the service hoped to award a hosted payloads contract later this year, but industry executives warn that even modest new programs will be vulnerable to cuts given the current U.S. budget crisis, especially if officials try to safeguard bigger programs.

Hamel said hosted payloads could help the government increase its ability to monitor debris space by putting cameras onto satellites already due to be launched into geostationary orbit, at a cost of $20 million per satellite.

That compares to the typical cost of $1 billion to $2 billion for more sophisticated, dedicated government satellites.

Hamel said a disaggregated approach to military and intelligence satellites would also leave the U.S. government less vulnerable to cyber attacks because replacement satellites could be launched more quickly and inexpensively if needed.

A classified U.S. intelligence assessment completed last year analyzed China's increasing activities in space and cyberspace, and mapped out the growing vulnerability of the most sensitive U.S. satellites.

Hamel said space executives were increasingly concerned about cyber attacks by China and others, noting that satellite systems were particularly vulnerable because they relied on computer networks for their operations and transmissions. (Reporting By Andrea Shalal-Esa; editing by Andrew Hay)

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An Intel logo is seen at the company's offices in Petah Tikva, near Tel Aviv October 24, 2011.

TEL AVIV | Sun Feb 17, 2013 7:53am EST

TEL AVIV (Reuters) - Intel's Israeli subsidiary more than doubled its exports in 2012 to $4.6 billion and is seeking to bring manufacturing of the company's next generation of chips to Israel.

Intel's exports, which rose 109 percent from $2.2 billion in 2011, were boosted by the start of production of chips using 22 nanometer technology at its Kiryat Gat plant in southern Israel, which is now operating at full capacity.

Intel, the world's No. 1 chipmaker, will build chips over the next two to three years with features measuring just 14 nm in Ireland and the United States but the company is already thinking about where it will produce 10 nm chips. The narrower the features, the more transistors can fit on a single chip, improving performance.

Intel Israel executives said they would like to see 10 nm production in Israel.

"The average life of a technology is two to six years so we need to be busy to get the next technology, 10 nanometer," Maxine Fassberg, general manager of Intel Israel, told a news conference on Sunday. "We need to get a decision far enough in advance to be able to upgrade the plant. So for 10 nanometer, decisions will need to be made this year."

Fassberg said upgrading the existing Fab 28 plant in Israel would require a lower investment than building a new plant but would still involve several billion dollars.

Intel Israel has in the past received government grants to help with the costs of its investments and Fassberg told Reuters the company was "constantly in talks with the government".

Intel has invested $10.5 billion in Israel in the past decade, including $1.1 billion in 2012, and has received $1.3 billion in government grants.

The company accounted for 20 percent of Israel's high-tech exports last year and 10 percent of its industrial exports, excluding diamonds.

"If Intel had not increased its exports, Israel's high-tech exports would have shrunk by 10 percent," Intel Israel President Mooly Eden said.

Most of Intel Israel's exports - $3.5 billion - came from its chip manufacturing activities.

Intel is Israel's largest private employer, with 8,542 workers, up 10 percent from 2011. The company has two plants - in Jerusalem and Kiryat Gat - as well as four research and development centers.

Eden said Intel was also committed to investing in start-ups, having invested in 64 Israeli companies since 1996. In July its global investment arm Intel Capital said it would expand its operations in Israel.

(Reporting by Tova Cohen; Editing by Helen Massy-Beresford)

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Security guards and staff stand at the entrance of an Apple store during the release of iPhone 5 in Beijing's Wangfujing shopping district, December 14, 2012.

BOSTON | Thu Feb 14, 2013 7:23pm EST

BOSTON (Reuters) - Some of the biggest hedge funds that helped make Apple Inc a stock market darling lost faith and dumped their stakes in the fourth quarter, fueling the massive drop in the iPhone maker's share price.

Noted stock pickers including Leon Cooperman, Eric Mindich and Thomas Steyer unloaded billions of dollars of Apple shares between September 30 and December 31, according to disclosure documents filed on Thursday.

Shares of Apple rose to an all-time high of $705.07 on September 21 but ended 2012 down more than 24 percent from that peak as investors worried about increasing competition and declining profit margins.

The shares also may have dropped because their price rose too much, too fast.

"The stock just went up so much in early 2012 and then was coming back to earth," said Justin Walters, co-founder of Wall Street research firm Bespoke Investment Group. "Three months from now, we'll be seeing a lot of the people who sold starting to pick it up again."

The fourth-quarter sellers avoided even deeper losses. Apple's shares have lost 12 percent so far this year. The shares lost 42 cents, or 0.1 percent, to close at $466.59 on the Nasdaq on Thursday.

Cooperman's Omega Advisors fund dumped its entire stake of more than 266,000 shares during the fourth quarter, according to its required quarterly disclosure form filed with the Securities and Exchange Commission.

Mindich, named the youngest partner ever at Goldman Sachs before starting his Eton Park Capital Management fund in 2004, got out of Apple entirely in the fourth quarter after making big sales in the third quarter as well. Eton owned 600,000 shares at the beginning of 2012.

Farallon Capital, the hedge fund founded by Steyer, sold 137,000 shares. Steyer, who once worked on the Goldman Sachs risk arbitrage desk under Robert Rubin, stepped down at the end of the year from the firm, which he founded in 1986. Rubin served as U.S. Treasury secretary from 1995 to 1999.

Jana Partners, an activist fund run by Barry Rosenstein, also unloaded its entire Apple stake of more than 143,000 shares. Other notable sellers included Third Point LLC, which had owned 710,000 shares, Viking Global Investors, which dumped 1.1 million shares and Lone Pine Capital, which sold over 800,000 shares.

A much smaller line up of funds bought shares amid the stock's crash. David Tepper's Appaloosa Management nearly doubled its stake during the quarter to about 913,000 shares. George Soros more than doubled his stake to about 184,000 shares. And David Einhorn, who last week sued Apple in a bid for higher dividends, added 20 percent to his holdings to end the quarter with 1.3 million shares.

PROFITABLE TRADES

Despite the plunge in Apple's stock price, most of the managers likely exited their positions with substantial profits because they bought years earlier.

Rosenstein and Cooperman, for example, both started gathering their stakes in the middle of 2010, when Apple shares traded below $300.

At the time, the company's iPhone 4 was beset by alleged faulty reception, a problem that became known as "antennagate." Apple's then-chief executive, the late Steve Jobs, famously dismissed the issue, saying "we don't think we have a problem." But Apple offered customers a free bumper case that was supposed to minimize any issues.

Customers did not seem to care, snapping up millions of iPhones and sending Apple's share price up almost 50 percent over the next year.

Apple came under further scrutiny last week from Greenlight's Einhorn. Einhorn filed a lawsuit to block changes in Apple's policy for issuing preferred stock. Instead, Apple should issue a new class of preferred stock to share more of its $137 billion cash hoard with shareholders, Einhorn said.

Apple Chief Executive Tim Cook dismissed the moves as a "silly sideshow" on Tuesday.

SOME TRIMMED

Not all well-known hedge fund fans of Apple cut ties in the fourth quarter. Some only trimmed their holdings.

Philippe Laffont, who worked under famed hedge fund manager Julian Robertson before striking out on his own at Coatue Management, sold about 18 percent of his Apple shares. Coatue ended the year with a still sizable 643,000 shares.

Chase Coleman, another manager who worked for Robertson, reduced the Apple stake at his Tiger Global Management fund by 19 percent to just over 1 million shares.

Robertson's own Tiger Management LLC fund trimmed its Apple stake by 28 percent to about 42,000 shares.

Large hedge funds are required to disclose their U.S. stock holdings within 45 days after the end of each quarter.

But the filings may not give a complete picture of each fund's moves, since only U.S.-listed shares and options must be revealed. Bonds, foreign shares and derivatives are not included, and short positions, or bets that a stock will fall in price, are not listed.

(Reporting by Aaron Pressman; Additional reporting by Katya Wachtel, Svea Herbst, Sam Forgione and Jennifer Ablan in New York; Editing by Steve Orlofsky and David Gregorio)

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