* Genachowski offers plan for modernizing USF

* Cable group says gives phone companies unfair advantage

* Proposal set for agency vote on Oct. 27 (Adds comments from industry and analyst)

WASHINGTON, Oct 6 (Reuters) - The U.S. communications regulator unveiled on Thursday a proposal for achieving universal broadband coverage by the end of the decade.

Some 18 million Americans do not have access to broadband where they live and work despite some $4.5 billion in public money spent each year to subsidize telephone service for rural families.

Federal Communications Commission Chairman Julius Genachowski proposed a strategy for revamping that government subsidy program to help deploy high-speed Internet service to millions of Americans living in rural and costly-to-serve areas.

"The costs of this broadband gap are measured in jobs not created, existing job openings not filled and our nation's competitiveness not advanced," Genachowski said in a speech on Thursday, acknowledging that the current program is broken.

The FCC earlier in the year proposed modernizing the $8 billion universal service fund -- paid for through fees added to consumers' telephone bills -- to spur infrastructure investment while removing inefficiencies in the program.

Genachowski's proposal would gradually move the largest program within the universal service fund, the program that subsidizes telephone service, to directly support fixed and mobile broadband.

His plan would also phase out funding for duplicating services offered by several phone companies serving the same area.

Broadband buildout to unserved areas could begin in early 2012 under the plan, bringing high-speed Internet to hundreds of thousands of homes in the near-term.

"It will help cut the number of Americans bypassed by broadband by up to one half over the following five years, and it will put us on the path to universal broadband by the end of the decade," Genachowski added.

The comprehensive set of reforms will be circulated to the other commissioners on Thursday, and are set for a vote at the FCC's Oct. 27 meeting.

CABLE INDUSTRY NOT HAPPY

Genachowski outlined a new competitive bidding process for securing funds from the program, but the American Cable Association said it bent heavily to incumbent phone companies.

The proposal would quickly move to this bidding process in some areas, but others would not shift until later years.

ACA said this would give incumbent phone carriers first dibs at monies from the fund while other broadband providers, like cable, wait years for the option to competitively bid to receive support in those areas.

"The chairman's plan locks in a sole-source contract worth billions of dollars for over ten years to a handful of incumbent large telecom companies," ACA Chief Executive Matthew Polka said in a statement.

ACA represents independent companies providing broadband service to 7.6 million subscribers.

But Genachowski argued in his speech that "a flash-cut to competitive bidding in some parts of the decades-old program risks consumer disruption, build-out delays, and other unintended consequences."

In order to push reform through, certain policy and political trade-offs must be made, and that may limit cable companies' prospects for receiving federal broadband support, said Medley Global Advisors analyst Jeffrey Silva.

"The political sensitivities almost demand that in order to get any sort of consensus that's politically viable, you have to get buy-in by rural telephone companies," Silva said.

"That may be the best this chairman or any chairman is going to be able to do because it's not just about policy, it's about politics," he added. (Reporting by Jasmin Melvin, editing by Bernard Orr)

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* Sony talking to Ericsson about 50:50 joint venture-WSJ

* Sony and Ericsson decline to comment on reported talks

* Deal would be positive for both companies - analysts (Adds details in paragraphs 2, 8-11, byline)

Oct 6 (Reuters) - Sony Corp (6758.T) is nearing a deal to buy Telefon AB LM Ericsson's (ERICb.ST) stake in their 50:50 smartphone joint venture, The Wall Street Journal reported on Thursday, citing people familiar with the matter.

Sony and Ericsson have been talking for weeks about the future of the venture because the companies' 10-year-old pact is up for renewal this month, two industry sources told Reuters.

The Wall Street Journal said the talks were ongoing and could break apart at any time.

Ericsson and Sony declined to comment on the reported talks. "We have a long-term commitment to our joint ventures," said an Ericsson spokesman.

Many analysts say Japan's Sony needs to assert control over Sony Ericsson if the venture is to recoup market share in the cut-throat world of smartphones. [ID:nLDE74N0FB]

The joint venture, formed in 2001, thrived after its breakthrough with Walkman music phones and Cybershot cameraphones, both of which leveraged Sony's brands.

But it lost out to bigger rivals Nokia (NOK1V.HE) and Samsung Electronics (005930.KS) at the cheaper end of the market, and was late to react to Apple's (AAPL.O) entrance into the high-end of the market.

It has refocused its business to make smartphones using Google's (GOOG.O) Android platform, but it has dropped to No. 9 in global cellphone rankings from No. 4 just a few years ago.

It is making some progress and turned a net profit of 90 million euros last year after booking a loss of 836 million in 2009. But it reported another loss for the April-June quarter.

The venture is due to report its September quarter results on Oct 14.

DIVORCE GOOD FOR BOTH PARTNERS?

"A buyout would make a lot of sense for Ericsson as I believe their share in the joint venture is worth to them between zero and minus 1 billion euros," said Bernstein analyst Pierre Ferragu.

"Whatever price they agree on, it would be a positive for Ericsson," he said.

Shares in Sweden's Ericsson gained on the report and closed 6 percent higher at 69.20 crowns on Thursday.

A full takeover of the venture would boost Sony's overall offering, which includes content, gaming devices, consumer electronics and even tablet computers. But the company still lacks its own smartphones.

"The buyout allows Sony to move development in-house and better integrate other products like gaming into newer phones," said Steven Nathasingh from U.S. technology research firm Vaxa Inc.

Last month at the IFA trade fair in Berlin, Sony Ericsson's phones were presented inside the Sony hall, mixed with Sony's TV sets and new tablets. [ID:nN1E77U0KO] (Additional reporting by Yinka Adegoke, Anna Ringstrom, Sven Nordenstam and Liana Balinsky-Baker; Editing by Erica Billingham and John Wallace)

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* Follows 20 percent reduction in budget

* 2,000 jobs to be axed, senior manager roles to be cut

* Labour unions warn programming, journalism will suffer (Adds detail, background)

LONDON, Oct 6 (Reuters) - The BBC is set to axe over 10 percent of staff in its management, programming and news divisions after Britain's cash-strapped government imposed deep spending cuts on the world-renowned, publicly-funded broadcaster.

The corporation set out the changes on Thursday in response to a 20 percent cut to its annual 3.5 billion pound ($5.4 billion) budget imposed by the government a year ago as part of the deepest public spending cuts in decades.

Unions said the changes would damage independent journalism at a time when a phone hacking scandal has revealed embarrassingly close ties between the Prime Minister David Cameron and Rupert Murdoch's right-leaning News Corp , a long standing critic of the BBC.

The BBC budget was imposed by the government with very little negotiation. Around 600 BBC News posts will now go.

"By 2016, the BBC will be significantly smaller than it is today," it said.

With eight national TV channels, 50 radio stations and an extensive website, the BBC's size and resources had already attracted envy and criticism from rivals, led by James Murdoch at the dominant pay-TV group BSkyB .

As the recession gathered steam in 2008, that criticism intensified as advertising-funded groups such as ITV struggled to cope, cutting staff and budgets.

Under the new plans, the corporation will cut 2,000 jobs, reduce the budget for buying sports and other rights, slash the number of senior managers and share more content.

More repeats will be shown on television and property in west London will also be sold. The changes will result in savings of around 670 million pounds a year by 2016/17.

"The realities of what this country looks like in 2011 and what households up and down the country are going through, what other public institutions are going through, (means) it would be a bit odd if the national broadcaster wasn't feeling some of the same pressures," Director General Mark Thompson said.

LAST MINUTE DEAL

Last year, the BBC agreed to freeze the annual licence fee, payable by every TV-owning British household, at 145.50 pounds. It is also taking on extra costs from the government including funding the BBC World Service, which is broadcast overseas.

The agreement was hammered out in a matter of days, stripping out the months of negotiation normally involved in setting a licence fee, as the coalition government scrambled to cut spending after taking power.

The National Union of Journalists condemned the move and called again for the licence fee to be renegotiatied "especially given what has since emerged about the close relationship between the government and Rupert Murdoch at the time the deal was done."

The media and entertainment union BECTU said the cuts were a direct result of the "shocking 11th hour deal" on the licence fee which "will be the cause of regret for years to come".

The BBC towers over Britain's media landscape with a rich offering of drama, comedy and children's programming, a huge newsgathering operation and some of the UK's most popular websites.

In a lecture more than two years ago, News Corp executive and BSkyB Chairman James Murdoch lashed out at the BBC, accusing it of making a land grab for power and calling for a radical overhaul of British television regulation.

The pendulum has since swung back in favour of looser regulation more favourable to commercial rivals and lower public spending, especially since the recession and the installation of a centre-right coalition government in 2010.

Alex DeGroote, media analyst at London brokerage Panmure Gordon, said the slimming down of the BBC would help level the playing field in Britain, where commercial media companies were up against a far stronger public rival than their peers abroad.

"There's always been a BBC discount for commercial media in this country. It got particularly high in 2002-05. That's when you had a massive expansion of the BBC's inventory -- more digital radio, BBC3 and BBC4, lots of Internet sites," he said.

BSkyB should be well placed to benefit. It is increasing the budget it spends on programming and has recently signed a deal to share the broadcasting of Formula One with the BBC. It is also already very aggressive in acquiring sports rights and drama from the United States. (Editing by Will Waterman and David Cowell)

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* Case involves contract dating back to 1998

* Oracle denied engaging in fraud, but agreed to settle (Adds details of case, Oracle comment)

WASHINGTON Oct 6 (Reuters) - Oracle Corp (ORCL.O) has agreed to pay $199.5 million plus interest to settle allegations that the software giant failed to give promised discounts to the federal government, the U.S. Justice Department said on Thursday.

The world's No. 3 software company was also accused of making false statements about its sales practices and discounts and failing to meet its contract obligations to provide complete information about its sales practices.

Additionally, Oracle did not disclose higher discounts given to other customers and as a result the federal government paid more for its products than it should have, according to the Justice Department.

The settlement over false claims allegations is the largest involving the General Services Administration, which handles procurement for the federal government.

"Resolutions like this one - the largest GSA false claims settlement in history - demonstrate our commitment to ensure taxpayers are not overpaying for the products and services they receive," Tony West, head of the Justice Department's Civil Division, said in a statement.

Oracle denied any wrongdoing or that it engaged in fraud as part of the contract, which dates back to 1998, and argued that many of the witnesses were no longer available or did not remember the events.

Nevertheless, company spokeswoman Deborah Hellinger said "Oracle has therefore decided to avoid the distraction and high cost of litigating this case by settling."

The settlement represents about 11 percent of the $1.84 billion in net income Oracle had in the quarter that ended Aug. 31.

The case involved a former Oracle employee who became a whistleblower, Paul Frascella, and he will receive $40 million as his share, according to the Justice Department.

Oracle shares closed up 56 cents, or 1.9 percent, at $30.07 in regular trading on the New York Stock Exchange. (Reporting by Jeremy Pelofsky in Washington and Jim Finkle in Boston, editing by Carol Bishopric, Gary Hill)

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google project glass  VS  nokia future technologies glasses

GOOGLE PROJECT GLASS :

NOKIA  FUTURE TECHNOLOGIES GLASSES :

Usain Bolt to enter to play cricket:

There are reports that Jamaican Olympic sprinter, Yohan Blake, could be fined by the International Olympic Committee for wearing a watch which contravenes branding guidelines.

It was said that the dead student’s right leg had been injured and not the left leg:

A ghost picture of a Kandy School girl who had one leg amputated after an accident captured on cameras

A six weeks back, June 30th to be precise a hall of a famous Kandy High school had been taken as the venue to hold a passing out parade of nurses. Usually there are two or three halls of High schools in Kandy which are taken for functions of this sort. This incident of a ghost like picture of a school girl captured on digital and mobile phone cameras was never heard at any earlier functions held at these High school halls.
Before the day of the function, in the evening school girls were in the habit of coming to their school hall to make decorations before the function. Some had taken photographs from mobile cameras and some from digital cameras. Most of the photographs showed an extraordinary picture of an ugly girl standing on one foot, who resembled a ghost like figure which astonished many who saw it.
What was this picture?
There were several photographs taken from the balcony of the school hall of groups on the stage. These pictures too had contained this ghost like picture which most of them had got frightened. Some had gone to the extent of deleting this picture as it was not a picture one could view without fear. Some had felt the effects of this astonishing picture to an alarmingly high level and had not been able to even sleep. This was definitely a ghost picture and whose picture was it?
Investigations in this regard were made by various interested parties. It was learnt that a student studying in this particular High school in Kandy had met with an accident a few months back and one of her legs had to be amputated.

* Prototype NASA landing vehicle goes up in smoke

* Engineers still looking into cause of fiery accident

CAPE CANAVERAL, Fla., Aug 9 (Reuters) - A small NASA lander being tested for missions to the moon and other destinations beyond Earth crashed and burned after veering off course during a trial run at the Kennedy Space Center on Thursday, officials with the U.S. space agency said.

There were no injuries after the prototype, known as Morpheus, burst into flames near the runway formerly used by NASA's space shuttles.

The insect-like vehicle, designed and built by engineers at NASA's Johnson Space Center in Houston, had made several flights attached to a crane before Thursday's attempted free-flight.

Morpheus' engines, which burn liquid oxygen and methane, appeared to ignite as planned, lifting the 1,750-pound (794 kg) vehicle into the air. But a few seconds later, Morpheus rolled over on its side and plummeted to the ground.

NASA video showed the vehicle engulfed in flames and then rocked by a spectacular explosion, presumably due to the fuel tanks rupturing.

“"Failures such as these were anticipated prior to the test, and are part of the development process for any complex spaceflight hardware," NASA said in a statement.

An investigation is under way, the statement added.

Project Morpheus began in partnership with privately owned Armadillo Aerospace, which is developing re-usable, suborbital vehicles that take off and land vertically.

NASA, which has spent about $7 million on the project over the past 2-1/2 years, is interested in developing technologies that could be used to fly cargo to the moon and other future missions beyond Earth orbit.

Project Morpheus was an example of what the former project manager called "“Home Depot engineering" - low-budget projects that use existing resources and partner with non-traditional aerospace companies.

“"The Morpheus lander is kind of our poster child. It's one of our first attempts to do these kinds of projects," former project manager Matt Ondler said in an interview with Reuters last year.

“"Instead of building some elaborate test structure, you go to Home Depot and build something very quickly that gets you 80 percent of the answer and allows you to keep moving forward," he said.

Morpheus arrived at Florida's seaside space center in July for three months of increasingly rigorous test flights, including automated landings in a mock moonscape, complete with craters and boulders.

The lander was designed to deliver about 1,100 pounds (500 kg) of cargo to the moon, NASA said on its Project Morpheus website.

Technologies being developed include a propulsion system that uses liquid oxygen and methane -- green fuels that could be manufactured on other planetary bodies, NASA said.

The accident happened as NASA scientists were still hailing the Mars rover Curiosity's descent and landing on the Red Planet earlier this week as a "“miracle of engineering."

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* Q2 net profit ex-items $45 mln vs $28 mln

* Q2 revenue up 21 pct to $168.6 mln

* Sees Q3 revenue $152-$162 mln

JERUSALEM, Aug 9 (Reuters) - Israeli chipmaker TowerJazz forecast a weaker third quarter after posting second-quarter profit that handily beat estimates.

TowerJazz projects revenue of $152-$162 million in the July-September period that would bring revenue for the first nine months of 2012 to $489-$499 million - up 12 to 14 percent over the same period a year ago.

Boosted by improved margins following its acquisition last year of a facility in Nishiwaki, TowerJazz recorded net profit of $45 million in the second quarter excluding one-time items, compared with profit of $28 million a year earlier.

Revenue grew 21 percent to $168.6 million.

Analysts had been looking for profit of $30-$35 million.

TowerJazz cited a tough global economy for its expectation for revenue over the second quarter.

"We are seeing some fluctuations in the market with several of our largest customers down in their revenue and their revenue guidance quarter-over-quarter," said Russell Ellwanger, TowerJazz's chief executive.

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* Value not disclosed, includes up to 125 staff

* Digia to make Qt available for iOS, Android, Windows

HELSINKI Aug 9 (Reuters) - Struggling cellphone maker Nokia has agreed to sell its Qt software business to Finnish IT services firm Digia Oyj as part of its strategy to sell off non-core assets.

The companies did not disclose the value of the deal, which analysts said was a fraction of the $150 million Nokia paid for Norway's Trolltech in 2008.

The software is used by some 450,000 developers for making applications for some 70 industries.

Up to 125 employees working on developing and licensing the software will move from Nokia to Digia, the companies said on Thursday.

Nokia bought the software through its acquisition of Trolltech and it was a central part of its strategy until 2011 when it decided to swap its own smartphone software for Microsoft's Windows Phone.

Digia said it planned to make Qt available for making applications for Apple's iOS platform, Google's Android and Microsoft Windows 8.

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* Jan-June net profit $312 mln, beats consensus

* Core operating profit falls 22 pct, Europe weak

* Shares up 3 percent ahead of results

HONG KONG, Aug 9 (Reuters) - Supply chain manager Li & Fung Ltd, whose global distribution and trading centres make it a useful barometer of consumer sentiment, reported its half-year core operating profit slipped by more than a fifth due to a slower-than-expected turnaround of its LF USA unit and weak demand in Europe.

The Hong Kong-based group, which manages supply chains for major retailers such as Wal-Mart Stores Inc and Target Corp, said, however, that net profit rose by a third as it booked write-backs on two 2010 acquisitions.

Analysts had predicted that U.S. retailers would be actively re-stocking as consumer confidence improves, boosting top-line growth at Li & Fung this year, but latest data showed spending by consumers fell in June for the first time in nearly a year.

January-June net profit rose to US$312 million from a restated $235.5 million a year ago, beating an average forecast for $272.4 million from five analysts polled by Thomson Reuters. Li & Fung reports every six months in U.S. dollars. Core operating profit fell 22 percent to $221 million.

The company, valued at $16.7 billion, was founded early last century as a trader in porcelain, jade and silk. It now provides one-stop supply chain management - from product design, raw material sourcing and manufacturing to shipping and wholesale.

It is halfway through an ambitious 3-year growth plan and aims to expand its sourcing network to generate higher profits.

In a statement, the company said that while first-half core operating profit was relatively weak, the group was "very focused on taking the necessary steps to improve the second-half results and set the stage for 2013, the last year of its current three-year plan."

U.S. contributions to revenue for Li & Fung are the lowest ever at 60 percent, while Europe's is at a 5-year low at 21 percent as of end-December, Thomson Reuters data shows.

Li & Fung employs more than 28,000 staff worldwide and has a sourcing network of over 15,000 suppliers. The United States and Europe traditionally account for about 90 percent of its business.

The company said in May that its orders had not been affected by a slowing China economy, and it expected China to remain its main sourcing market over the next three years.

EARNINGS REVISED

Analysts have revised down their full-year Li & Fung earnings estimates on concern that high operating costs will keep margin growth in check. They say Li & Fung will have to rely on acquisitions to meet its targeted core operating profit of $1.5 billion in 2013.

Li & Fung's January-June core operating profit margin fell to 2.4 percent from 3.2 percent.

The company is seen as a potential bidder for Los Angeles-based J Brand, a women's apparel maker which hired Morgan Stanley to help it explore its strategic options, including a sale or an initial public offering.

Last month, analysts at Citi raised longer-term concerns over Li & Fung losing customers after U.S. clients such as children's clothing firm Carter's Inc and Gymboree Corp moved towards direct sourcing.

Eleven of the 20 analysts covering Li & Fung rate the stock a 'buy' or 'strong buy', with four recommending investors 'sell' the stock, according to Thomson Reuters data.

Li & Fung shares have risen around 17 percent since hitting a 9-month low late last month. The stock ended up 3.1 percent at a 13-week closing high of HK$15.98 ahead of the results on Thursday.

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* Plans to pay minimum 2012 dividend of 0.70 euro/shr

* Q2 adj. EBITDA flat at 4.7 bln euros

* Still sees 2012 adj. EBITDA at around 18 bln euros

* Shares up 0.85 percent in early trade

By Harro Ten Wolde

FRANKFURT, Aug 9 (Reuters) - Deutsche Telekom stuck by plans to pay a dividend of at least 0.70 euros per share for 2012 as cost-cutting in its German and U.S. markets helps it buck a trend among competitors who have been slashing their payouts to shareholders.

The company posted second-quarter operating profit on Thursday that was in line with estimates and kept its outlook for 2012 underlying earnings excluding special items to ease to around 18 billion euros from 18.7 billion last year.

Most European telecom groups saw profits fall in the first half of the year and were forced to cut dividends as a cocktail of tough price competition, regulatory changes, and lower spending by recession-weary consumer hurt revenues.

"We are keeping our word and providing a good deal of reliability to the market with very solid figures," said Chief Executive Rene Obermann.

Earnings before interest, tax, depreciation and amortisation (EBITDA), excluding special items, were flat at 4.7 billion euros ($5.8 billion) in the three months through June, at the high end of a range of forecasts in a Reuters poll.

Deutsche Telekom shares opened up 0.85 percent, ahead of a 0.3 percent rise on the German blue chip index.

"We expect these generally solid results to be taken well against a weak European peer backdrop," said analyst Simon Weeden at Citi Research.

OUTPERFORMING

The European telecom index is roughly flat so far this year, largely underperforming most other big sectors like pharma, media, and chemicals.

But Deutsche Telekom's shares have done better than those of peers because of its unchanged dividend policy, while Telefonica and France Telecom shares have fallen because of tough domestic markets.

Deutsche Telekom's shares trade at 15 times 12-month forward earnings, above France Telecom and Telefonica, which trade at multiples of 9 and 8.4 respectively.

The company said revenues and operating profits in Europe suffered from the economic crisis, while its U.S. operation T-Mobile USA improved its operating profit due to cost-cutting.

At the same time it lost 205,000 customers in the United States after adding 187,000 clients in the first quarter.

Deutsche Telekom tried to sell its U.S. business, once a strong growth engine, to AT&T for $39 billion but fierce regulatory opposition scuppered the deal, leaving the German company with a $6 billion breakup package.

Over the next two years, network investments at T-Mobile USA will increase by about $1.4 billion. Over time, T-Mobile USA will spend a total of $4 billion on upgrading its network for high-speed wireless services based on a technology known as Long Term Evolution (LTE).

In Europe smartphones such as Apple's iPhone and Samsung's Galaxy now account for 60 percent of all devices sold, fuelling mobile data revenues, which grew by 21.2 from last year, Deutsche Telekom said.

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* Shareholder equity ratio at 2.2 pct in June vs 4.6 pct in March

* Keeps full-year operating profit outlook at 50 bln yen

* Shares drop 2.2 pct ahead of results

TOKYO, Aug 9 (Reuters) - Japan's Olympus Corp suffered a further deterioration in its ability to meet financial obligations as quarterly earnings slumped, adding pressure on the scandal-hit company to enter into a capital deal.

Shareholders' equity fell to 2.2 percent of total assets in June from 4.6 percent in March, the company said on Thursday. That takes Olympus further away from the 20 percent level widely regarded by analysts as indicative of financial stability.

Olympus needs a capital injection before its business year ends in March 2013, Senior Executive Managing Officer Yasuo Takeuchi told reporters at a briefing.

The 93-year-old manufacturer of cameras and medical equipment has held talks with several Japanese companies including FujiFilm Holdings and Sony Corp on a capital tie-up as it tries to mend its severely depleted balance sheet hit by a massive accounting scandal last year.

Olympus booked a 60 percent slump in operating profit to 2.12 billion yen ($27.05 million) for April-to-June as an operating loss at its camera division and a stronger yen offset a profit gain at its medical equipment division.

The company kept its full-year operating profit forecast at 50 billion yen.

Olympus posted a net loss of 49 billion yen in the year ended March 31, after admitting in November to a decade-long scheme of falsifying financial statements and hiding investment losses.

The company has promised investors it will boost its shareholders' equity ratio to 30 percent in five years. To raise it to 10 percent, Olympus said it needs to find some 50 billion yen in fresh capital.

Sources familiar with the matter have said Olympus is in final talks with Sony to accept a cash injection in return for a stake, while medical device maker Terumo Corp said last month it is seeking to form a joint holding company with Olympus as part of a 50 billion-yen capital infusion plan.

Olympus maintained on Thursday that it is in talks with several companies on financial support.

In an unusual turn of events, Terumo slapped its potential partner with a lawsuit last week for failing to disclose its accounting fraud before signing a business and capital tie-up with the medical equipment maker seven years ago.

In a regulatory filing on Thursday, Olympus said it expects creditors to continue providing loans despite the fact that misreported financial statements in the past meant it had violated covenants on some loans.

Shares in Olympus settled 2.2 percent lower before the earnings announcement. Tokyo's benchmark Nikkei average rose 1.1 percent. ($1 = 78.3600 Japanese yen) (Reporting by Mari Saito; Editing by Ryan Woo)

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* H1 sales 3.06 bln eur, up 2.6 pct

* H1 adj EBIT up 11.6 percent to 390 mln

* Sees 2012 sales up 3 pct

* Says China to return to profit ahead of schedule

* Shares rise 5 pct, top Dax gainer

FRANKFURT, Aug 2 (Reuters) - Beiersdorf, the maker of Nivea skin care products, said it would return to profit in China a year earlier than scheduled after a haircare buy failed to deliver while announcing a slightly disappointing outlook for 2012 sales growth of 3 percent.

Like rivals Henkel and Unilever, Beiersdorf on Thursday said emerging markets had helped mitigate a 4 percent fall in second-quarter sales at its main consumer products division in western Europe.

But its new forecast for 2012 sales growth of 3 percent fell short of the average expectations for growth of 5 percent, according to a Reuters poll.

In China, Beiersdorf had fallen behind rivals' expansion and last year took a 140 million euro ($172 million) writedown and replaced management.

"We see a much improved situation in China and we are approaching breakeven in the foreseeable future," new Chief Executive Stefan Heidenreich told analysts.

Its shares were up 4.20 percent at 55.80 euros at 1027 GMT, the top gainer on the Dax index of leading German shares .

Beiersdorf shares already trade at a premium because of speculation the controlling Herz family could sell out to Procter & Gamble, and have a price to forward earnings ratio of 24.28. That compares with 19.31 for L'Oreal, 15.3 for Henkel, and 14.13 for Reckitt Benckiser.

"The specified outlook for sales growth is below consensus for both the Consumer and the Tesa (adhesives) division and may require a downward revision of consensus," said DZ Bank analyst Thomas Maul.

Heidenreich admitted Beiersdorf, which also makes Labello lip balm and La Prairie luxury skin creams, had fallen behind in terms of innovative creams and lotions and vowed to bring more new products to the market.

"The innovation did not come out in the previous year and that is why we are not growing enough," Heidenreich said. "The pipeline looks a lot better for 2013, I believe some real hits will come through."

Procter & Gamble, the world's largest household products maker, warned on profits after failing to deliver enough new products and cost cuts to make up for weak demand in Europe, the United States and China.

Beiersdorf said on Thursday that first-half sales rose 2.6 percent to 3.06 billion euros and adjusted earnings before interest and tax (EBIT) rose 11.6 percent to 390 million.

It forecast a 2012 operating margin of 12 percent, compared with a previous range of between 11 and 12 percent.

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