(Reuters) – Manufacturing this month expanded at its slowest pace since late 2010, hobbled by weak overseas demand for American goods, though a rise in domestic orders helped cushion the blow.

Financial information firm Markit said on Tuesday its U.S. “flash” manufacturing Purchasing Managers Index for July fell to 51.8 from 52.5 in June. July marked the fourth consecutive month of slower growth and the sector’s weakest showing since December, 2010.

The index remained above 50, indicating factory activity continued to expand, only less rapidly.

New orders for exports fell outright for the second straight month, the first back-to-back decline in nearly three years, Markit said, as recession in Europe dented demand.

“The U.S. manufacturing sector is clearly struggling under the pressure from falling exports,” said Chris Williamson, chief economist at Markit. “Reassuringly, domestic demand appears to be showing ongoing signs of resilience, encouraging firms to take on more staff.”

When including domestic demand, new orders grew, though the reading of 51.9 showed the pace of growth slowed. June’s tally was 53.7. The employment index rose to 52.9 in July from 52.8.

Even so, economists worry that the broader U.S. economy, which grew at a 1.9 percent rate in the first quarter, has since lost momentum. A poll of 74 economists polled by Reuters expects April-to-June growth to have slowed to 1.5 percent.

Last year, manufacturing had been something of a bright spot in an atmosphere of otherwise sluggish growth, but it too has showed signs of slowing over the last few months.

The Labor Department said employers added fewer than 100,000 new jobs in June for the third consecutive month.

Williamson said there are more clouds on the horizon.

“Overall, the third quarter is so far shaping up to be worse than the second quarter in terms of growth, which is a growing concern for policymakers,” he said.

Wall Street is bracing for another round of monetary easing from the Federal Reserve before the year ends. The median forecast in a July poll of 16 primary dealers showed a 70 percent chance of more action.

The “flash,” or preliminary reading, is based on replies from about 85 percent of the U.S. manufacturers surveyed. Markit’s final reading will be released on the first business day of the following month.

(Reuters) – Apple Inc said Samsung Electronics Co Ltd is demanding from the iPhone maker a far higher patent royalty than it pays to other licensers, at a rate the South Korean company has never sought from any other licensee.

Samsung is demanding a 2.4 percent rate on the “entire selling price” of Apple’s mobile products, the Palo Alto, California-based company said in a U.S. court filing on Wednesday. The information was contained in freshly unsealed portions of a legal brief in a high profile patent lawsuit between the two companies.

“Samsung’s royalty demands are multiple times more than Apple has paid any other patentees for licenses to their declared-essential patent portfolios,” Apple said in the documents.

However, Samsung said in a separate filing on Wednesday that its offer “is consistent with the royalty rates other companies charge” and that Apple never made a counter offer.

“Instead, it simply rejected Samsung’s opening offer, refused to negotiate further and to this day has not paid Samsung a dime for Apple‘s use of Samsung’s standards-essential technology,” Samsung said.

The legal filings do not disclose the rate Apple pays to other companies for standard essential patents. These are patents which Samsung has agreed to license to competitors on fair and reasonable terms, in exchange for having the technology be adopted as an industry standard.

In a court filing on Tuesday, Apple had said it should pay one-half of 1 cent per unit for each infringed standard essential patent.

Apple and Samsung, the world’s largest consumer electronics corporations, are waging legal war around the world, accusing each other of patent violations as they vie for supremacy in a fast-growing market for mobile devices.

One of the key issues in dispute between the companies is how to value Samsung’s standard essential patents, which some judges are reluctant to issue injunctions over.

A trial in San Jose, California, federal court is scheduled to start July 30.

* Newport sells 12 stations for $1 bln

* Nexstar buys 12, Sinclair buys 6 and Cox Media buys 4

* Sinclair expects deal to be immediately accretive

* Nexstar says it has secured committed financing for deal

July 19 (Reuters) – Nexstar Broadcasting Group, Sinclair Broadcast Group Inc and Cox Media Group entered into separate deals to buy 22 television stations from privately held Newport Television for about $1 billion.

A robust advertising market, the growing importance of retransmission fees and improved access for funding have set a stage for TV station mergers.

Reuters reported in March that Newport Television, owned by Providence Equity Partners, had retained Moelis & Co to explore strategic alternatives, including a possible sale of the company.

Nexstar bought 12 stations, Sinclair Broadcast six and Cox Media four, Newport said in a statement.

Nexstar, which said it had secured commitments for a new $645 million credit facility, paid $285.5 million for 12 stations in Utah, Arkansas, Tennessee and New York. It said the stations would immediately add to earnings.

Sinclair Broadcast said it bought the six Newport stations for $412.5 million. It also said it would buy a station from Bay Television Inc, which owns WTTA-TV in Florida, for $40 million.

Sinclair said it expects the stations to add between $55 million and $60 million to pro forma TV operating cash flow for 2012 and 2013.

Newport said it was continuing to pursue the sale of its five remaining stations in California, Oregon and New York.

Shares of Baltimore-based Sinclair were down 2 percent at $9.62 in early afternoon trade on the Nasdaq on Thursday, while Nexstar shares were up 8 percent at $6.65.

(Reuters) – EBay Inc (EBAY.O) posted stronger-than-expected quarterly revenue and earnings as more consumers shopped on its online marketplaces and used its PayPal payment service, and it stuck to its full-year forecasts, having avoided a major hit from Europe’s economic woes.

EBay said on Wednesday second-quarter revenue jumped 23 percent to $3.4 billion, while profit climbed 16 percent to $730 million, or 56 cents per share. That topped Wall Street estimates.

EBay’s third-quarter revenue and profit forecasts were slightly below analyst expectations. But the e-commerce giant stuck with its full-year guidance from earlier this year.

“We are increasingly confident in our outlook for 2012,” Chief Financial Officer Bob Swan said during a conference call with analysts.

EBay shares have slipped in recent weeks on concern a weak European economy might dent buying and selling on the company’s online marketplace – and lucrative cross-border transactions in particular.

However, eBay said its Marketplaces business generated its strongest organic growth since 2006 – and highlighted strong growth in Europe and the Asia-Pacific region.

“The results were very good,” said Gil Luria, an analyst at Wedbush Securities. “I don’t think anybody in their wildest dreams thought Marketplaces would be growing this fast.”

Shares of eBay rose 5.1 percent to $42.53 in extended trading after the results.

MARKETPLACES TURNAROUND

EBay shares have gained more than 30 percent so far this year, outpacing those of rival Amazon.com (AMZN.O), on optimism that growth has resumed at the Marketplaces business and on an expansion of PayPal from its online roots into physical stores.

EBay’s online marketplaces, the largest in the world, have lagged the growth of e-commerce and Amazon.com for several years. But under Chief Executive John Donahoe, eBay has invested a lot to improve the buying experience on the sites, partly by prodding sellers to provide more services such as free shipping and easier returns.

Earlier this year, Donahoe said Marketplaces had turned the corner.

On Wednesday, eBay said second-quarter gross merchandise volume, or GMV, on its U.S. marketplace was $6.24 billion, excluding vehicle sales. That was up 14 percent from a year earlier. Mark Mahaney, an analyst at Citi Research, had expected $6.04 billion.

International Marketplaces GMV rose 8 percent to $9.93 billion in the second quarter, driven by strong growth in Europe and Asia-Pacific.

“Some of the initiatives in the last couple of years have definitely helped,” said Aaron Kessler, an analyst at Raymond James. “International was fairly strong – they actually saw an acceleration in International GMV for Marketplaces.”

Wedbush’s Luria said European consumers may be turning to eBay to save money as the region’s economy weakens.

“When consumers are in a pinch they often accelerate the shift of spending online,” the analyst added. “They don’t go out shopping and stay home and look for the best deals online. eBay is a way to get a deal – the same item at a lower price.”

MOBILE ‘KEROSENE’

EBay executives said the company is seeing an increase in purchases by existing customers and growth in new users.

EBay active users totaled 104.8 million at the end of the second quarter, up 8 percent from a year earlier. The number of active registered PayPal accounts rose 13 percent to 113.2 million in the same period, the company reported.

CEO Donahoe said the company’s mobile tools and services drove much of this growth. EBay and PayPal’s mobile businesses will each handle $10 billion worth of transactions this year, more than double a year earlier, he noted.

“Three or four years ago, you could only access eBay with a desktop or laptop,” Donahoe said. “Now you can access eBay anytime with a smartphone.”

In the second quarter, about 600,000 shoppers made their first purchase on eBay with a mobile device, the CEO noted.

“Mobile is a movement that consumers want and we’ve invested heavily in that,” Donahoe said. “We want to pour kerosene on that fire to keep it going.”

(Reuters) – Stocks rose on Thursday, with the S&P 500 at fresh 2-1/2 month highs as technology-sector outlooks and earnings overshadowed weak economic data.

A raised full-year outlook from IBM (IBM.N), forecast-beating earnings from eBay (EBAY.O) and Qualcomm’s (QCOM.O) expectations for a “strong December quarter” boosted technology shares.

The market briefly pared gains in early trading after data showed manufacturing in the U.S. mid-Atlantic region shrank for a third month and home resales were lower than forecast. Separate data showed more Americans applied for unemployment insurance than expected in the latest week.

“It is baked into stock prices that growth is going to be slow for a little while,” said Giri Cherukuri, head trader at OakBrook Investments in Lisle, Illinois.

“People are focusing on individual stocks after earnings and trying to figure out (through) outlooks how weak the economy really is,” he said.

Record high prices in Treasuries have kept yield-seekers focused on stocks despite a softening economy.

A vigilant Federal Reserve is also credited for helping equities hold amid poor economic data, as previous Fed actions to bolster the economy have triggered rallies in equity and commodity markets.

The Dow Jones industrial average .DJI rose 45.94 points, or 0.36 percent, to 12,954.64. The S&P 500 Index .SPX gained 5.90 points, or 0.43 percent, to 1,378.68. The Nasdaq Composite .IXIC added 30.27 points, or 1.03 percent, to 2,972.87.

IBM shares jumped 3.8 percent to $195.35, making it the largest boost to the Dow industrials a day after it raised its full-year profit forecast.

Qualcomm cut its revenue and earnings forecast for the current quarter but investors took heart as it said sales would improve for a strong last quarter of 2012, sending its shares up 4.1 percent to $58.35.

EBay shares jumped 9.2 percent to $44.20 after it posted stronger-than-expected quarterly revenue and earnings as more consumers shopped on its online marketplaces and used its PayPal payment service.

U.S.-traded shares of Mellanox Technologies (MLNX.O) touched their life high after the chipmaker’s profit beat analysts’ expectations. Mellanox, up about 40 percent at $92.61, was the biggest boost to the PHLX semiconductor index .SOX.

Outside the tech sector, Textron (TXT.N) shares rallied 10.8 percent to $26.32 after the world’s largest maker of corporate jets, which also makes EZ-Go golf carts and industrial components, handily beat Wall Street forecasts.

Walgreen (WAG.N) shares soared 10.7 percent to $34.28 and Express Scripts Holding (ESRX.O) added 2.7 percent to $59.23 after the companies said they struck a pharmacy network agreement that settles a long-running dispute.

Walgreen competitor CVS Caremark (CVS.N) fell 5.1 percent to $45.97.

Morgan Stanley (MS.N) fell 4.9 percent to $13.30 as quarterly revenue declined due to a slowdown in trading and dealmaking volumes.

Johnson Controls (JCI.N) shares tumbled 6 percent to $26.63 after it posted a lower-than-expected quarterly profit and cut its outlook for the current period.

Google (GOOG.O) shares rose 2.9 percent to $597.63. The company reports its earnings after the closing bell.

(Reuters) – Wells Fargo & Co has agreed to pay $175 million to resolve allegations it discriminated against qualified African-American and Hispanic borrowers in its mortgage lending, the U.S. Justice Department said on Thursday.

In the second-largest settlement of its kind, the biggest U.S. mortgage lender will pay $125 million to borrowers who were allegedly steered into higher-priced subprime loans or who paid higher fees and rates than white borrowers.

Wells Fargo will also contribute $50 million to homebuyer assistance programs in eight metropolitan areas around the country. The government identified those areas needing the most help in recovering from the housing crisis.

The settlement, which needs approval from a judge, would end the investigation into whether the fourth-largest U.S. bank between 2004 and 2009 knowingly targeted minorities for risky mortgages that came with higher costs, according to documents filed in the U.S. District Court for the District of Columbia.

“This a case about real people, African-American and Latino, who suffered real harm as a result of Wells Fargo’s discriminatory lending practices,” Thomas Perez, U.S. assistant attorney general for civil rights, said at a news conference in Washington.

“People with similar qualifications should be treated similarly. They should be judged by the content of their credit worthiness and not the color of their skin.”

The government investigation found that loans submitted to Wells Fargo by mortgage brokers had varied interest rates, fees, and costs based only on race and not correlated to the borrowers’ creditworthiness, according to the court document.

The Obama administration has mounted a campaign to closely monitor banks in order to ensure loan discrimination practices that were a part of the housing bust and led to record defaults are eliminated. Bank of America Corp’s Countrywide Financial unit agreed in December to pay a record $335 million to settle similar charges.

Wells Fargo said it was settling the matter “solely for the purpose of avoiding contested litigation” with the U.S. Justice Department. In the consent order with the government, Wells asserted it treated all its customers fairly and without regard to race and national origin.

“We believe it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight, and to instead devote our resources to continuing to contribute to the country’s housing recovery,” Mike Heid, president of Wells Fargo Home Mortgage, said in a statement.

WELLS TO END LOANS THROUGH BROKERS

The bank signaled in a securities filing in May that it could face civil charges from the U.S. Justice Department. The bank said the settlement also resolves pending litigation filed in 2009 by the State of Illinois on behalf of borrowers, and resolves an investigative complaint filed in 2010 by the Pennsylvania Human Relations Commission.

Wells Fargo, which makes more than one-third of U.S. mortgage loans, declined to say whether it has already set aside reserves for the settlement. The bank reports second-quarter earnings on Friday.

The government alleged that Wells Fargo discriminated by steering about 4,000 African-American and Hispanic borrowers into subprime mortgages when white borrowers with similar credit profiles received prime loans. Officials also alleged that Wells charged about 30,000 African-American and Hispanic borrowers higher rates and fees than white borrowers because of their race or national origin rather than their credit worthiness.

The loans were largely made through independent mortgage brokers, rather than directly by Wells Fargo loan officers. Starting Friday, the bank said it has voluntarily decided to stop making loans through brokers.

These mortgages accounted for about 5 percent of its home loan volume. Rivals such as Bank of America have already made similar moves.

“These loans are being originated under our name,” Wells spokesman Oscar Suris said. “If we can’t control the customer experience, we are going to get out of it.”

The bank will continue to buy loans that are originated and funded by smaller banks and mortgage companies, a practice known as correspondent lending, Suris said.

Wells on Thursday also resolved a lawsuit filed by the city of Baltimore in 2008 alleging the bank engaged in “reverse redlining,” or intentionally targeting minority communities for predatory mortgage loans, leading to high foreclosures in minority neighborhoods.

Wells will spend $4.5 million of the $50 million earmarked for eight metro areas in Baltimore. It will also pay an additional $3 million for local housing and foreclosure initiatives and set a five-year lending goal for the city. In return, Baltimore will drop its suit.

Wells reached a similar agreement in May with the city of Memphis, which had also filed a reverse redlining lawsuit.

‘DISCRIMINATION WITH A SMILE’

The Wells Fargo case was initially referred to the Justice Department in 2009 by the Office of the Comptroller of the Currency, overseeing the nation’s largest banks, and was taken to the U.S. Justice Department’s civil rights division.

The victims of the discrimination will be compensated, according to the Justice Department. Wells Fargo will be required to conduct new monitoring programs to ensure fair lending standards are in place in the future.

Perez, the U.S. assistant attorney general, gave examples of how the alleged discrimination played out. In one instance, an African-American customer in the Chicago area in 2007 seeking a $300,000 loan paid on average $2,937 more in fees than a similarly qualified white applicant. In another example, a Latino borrower in the Miami area in 2007 seeking a $300,000 loan paid on average $2,538 more in fees than a similarly qualified white applicant.

“All too frequently, Wells Fargo’s African-American and Latino borrowers had no idea whatsoever that they could have gotten a better deal, no idea that white borrowers with similar credit would pay less,” he said. “That is discrimination with a smile.”

In the next step in the case, Wells has agreed to conduct a review of loans it made directly to customers and will compensate African-American and Hispanic borrowers who were placed into subprime loans when similarly qualified borrowers received prime loans. Perez said he expected 3,000 to 4,000 more victims will be found in this review.

Wells Fargo shares were down .69 percent at $33.04 in afternoon trading.

(Reuters) – Barclays’ embattled former chief executive Bob Diamond is being represented by top white-collar defense lawyer Andrew Levander in a widening scandal over the manipulation of benchmark interest rates, people familiar with the matter said.

More than a dozen current and former employees of several large banks under investigation have hired defense lawyers over the past year, but Levander’s role is one of the most high-profile.

Levander, a partner at the law firm Dechert LLP, is one of the biggest names in the defense bar in the United States. He is currently also representing former New Jersey governor Jon Corzine in investigations into the collapse of the failed commodities brokerage he ran, MF Global.

Levander, who is known for his trademark bow ties, had a prime seat by Corzine when the former CEO was grilled multiple times at congressional hearings in Washington late last year.

He has also represented outside directors of Lehman Brothers Holdings Inc, former Merrill Lynch CEO John Thain and hedge-fund manager and philanthropist Ezra Merkin, who was sued over money lost in the Ponzi scheme run by Bernard Madoff.

A person representing Diamond declined to comment. A spokesman for Barclays Plc declined to comment. A spokeswoman for Dechert declined to comment.

It is unclear when Diamond hired Levander and Dechert.

Barclays last month agreed to pay $453 million to settle charges that it manipulated Libor — the London interbank offered rate, which is compiled from estimates by large international banks of how much they believe they have to pay to borrow from each other.

No individuals have yet been charged in the sprawling Libor probe, which involves several global banks and enforcement authorities.

Diamond resigned as Barclays chief executive less than a week after the settlement, which unleashed a furor in the UK.

British lawmakers on Tuesday accused him of misleading a parliamentary inquiry into the Libor scandal, an allegation that Diamond denied.

Diamond had been CEO since the start of 2011, and been at Barclays for 16 years.

Libor is used for $550 trillion of interest rate derivatives contracts, as well as influencing rates on mortgages, student loans and credit cards.

(Reuters) – When Cisco Systems Inc decided years ago to drop a network-security project known internally as “Apollo,” little did it know it had paved the way for a startup to blossom into a formidable competitor.

That company, Palo Alto Networks, is one of the leaders today in the multibillion-dollar market for corporate Internet firewalls. Founded in 2005, Palo Alto Networks debuts next week in an initial public offering that could value the firm at more than $2 billion.

Cisco and other deep-pocketed vendors may have misjudged how Internet use would balloon with the takeoff of social media, and with it, the need for sophisticated tools to safeguard private data and monitor suspicious activity, analysts say.

Enter self-taught programmer and Palo Alto Networks founder Nir Zuk, whose penchant for pursuing new technologies culminates in 2012’s most anticipated market debut since Facebook Inc’s IPO in May.

“We anticipate this will be one of the hottest tech IPOs of the year,” said ISI group analyst Brian Marshall.

The company coined the term “next generation firewall” (NGFW) to describe its products, which among other things, lets companies tightly control access to Internet applications for specific users. An employee could connect with Facebook, for example, but not play games.

Essentially, NGFW converges multiple security functions such as firewall, intrusion prevention systems and secure Web gateways on a single platform, Lazard Capital Markets said in a note earlier this week.

“Overall, customers get for the first time, a view of the applications and data entering and leaving their networks, such as attachments and zip files,” Lazard said.

Palo Alto Networks grew in direct proportion to social networking sites like Facebook, web-based tools like Google Inc’s Gmail and the use of Skype for communications.

Its technology made it easier to monitor and secure traffic from social networking platforms than with traditional firewalls offered by Cisco, Check Point Software Technologies and Juniper Networks.

“Juniper is rarely considered by customers looking for an NGFW,” research outfit Gartner, which refers to Palo Alto as a “disruptive influence,” said in a report.

DROPPED BALL

Palo Alto Networks’ success story illustrates how Cisco and Juniper dropped the ball, allowing an upstart to succeed on their turf.

Cisco opted to scrap “Apollo” – which a former employee who worked on the project said would have been a “Palo Alto killer” – in favor of other traditional security features. Network security is now considered among its chief weaknesses, Gartner said.

Around that time, Juniper executives were turning deaf ears to the entreaties of then-chief security technologist Nir Zuk.

Zuk, who taught himself to write computer programs when he was 16, founded Palo Alto Networks after being frustrated by what he called a lack of innovation at Juniper Networks.

He wanted to build a new type of firewall at Juniper but quit his job there in 2005 and persuaded venture capital firms Greylock Partners and Sequoia Capital to provide seed capital for his plans instead.

The Israeli native has a history of forgoing the comforts of working for an established company. Recruited by his country’s military as a programmer and then by Check Point, Zuk helped develop the first commercial firewalls at the company.

However, showing the entrepreneurial spirit and a distaste for corporate life that would influence his later decisions, Zuk left Check Point when it became too bureaucratic and co-founded security firm One Secure.

“They (Check Point) were focusing on fixing bugs instead of developing new technologies, and I like to develop new technologies,” Zuk, now Palo Alto Networks’ Chief Technology Officer, told IT World in 2010.

Zuk’s company was then acquired by NetScreen, a firewall vendor that was in turn bought by Juniper. With that transaction, innovation withered, according to Zuk.

“When you start with a small company, everything is great and you can build a product, but then you get acquired by a bigger company, and it becomes too big, and you can’t do anything any more,” he told IT World.

MARKET LEADER

Now, his company leads the enterprise network firewall market, along with former employer Check Point.

Zuk has said publicly he delights in “kicking Checkpoint’s butt” and “kicking Juniper’s butt.”

Indeed, Zuk’s license plate for a while read CHKPKLR – “Check Point Killer.” That plate now sits in his office.

“The product is fundamentally revolutionary,” said security expert, John Kindervag, at Forrester Research. “All of the big (security) vendors are afraid of Palo Alto. They built it from scratch and they did it in four years.”

Rivals like Cisco, Check Point or Juniper Networks would beg to differ, arguing they offer similar products.

“We will give them credit for exploiting a feature gap but I don’t lie awake at night worrying about them. We’ve nailed that now,” an executive at a larger rival firm said.

Firewall and virtual private networks (VPN) are the biggest segments in enterprise security, with 31 percent of the total 2011 market of $18.2 billion, Lazard said, adding that the NGFW segment was growing significantly faster than the overall market growth of 9 percent.

According to Gartner the firewall market, including NGFW, was worth $6.3 billion last year, compared with $5.9 billion in 2010 and $5.4 billion in 2009.

“Palo Alto Networks is well positioned to gain share in the network security market and its business model lends itself to significant operating leverage as revenues continue to grow rapidly,” Morningstar said in a note.

For the nine months ended April, the company reported net income for the first time of $5.3 million on revenue of $179.5 million, against a loss of $6.5 million on revenue of $78.4 million a year earlier.

The successful public debut of IT software company ServiceNow on June 29 bodes well for investor interest in Palo Alto Networks’ road show, which kicked off this week.

Despite Palo Alto Networks’ lofty valuation, expected to be as much as $2.4 billion, there are concerns, the most pertinent of which is how long it can sustain its technological edge.

“PA’s technological uniqueness is unlikely to last for long, although sticky (or loyal) customers will enable the company to generate recurring revenues for a long time,” Morningstar said.

A secondary concern relates to a patent lawsuit filed by Juniper that could potentially force Palo Alto Networks to pay damages for past sales and royalties for ongoing sales.

In a December 2011 lawsuit, Juniper accused Palo Alto Networks – and in particular, Zuk – of infringing upon six patents, a claim Zuk’s company has said was “without merit.”

A hearing is scheduled for November 11, 2013 and a trial date for February 24, 2014, according to SEC filings.

“That lawsuit is a shadow hanging over them,” said IT-Harvest’s chief analyst Richard Stiennon.

(Reuters) – General Electric Co (GE.N) plans to grow its nascent industrial-battery business to generate $1 billion in annual revenue by the end of the decade, the head of the world’s largest maker of electric turbines said.

The largest U.S. conglomerate said on Tuesday it was investing $170 million in its first factory to make the batteries, up from an initial $100 million targeted when it decided to make the move in 2009. The larger investment will double the plant’s planned capacity, GE said.

That reflects Chief Executive Jeff Immelt’s goals of turning industrial batteries — used in everything from hybrid railroad locomotives to backups for industrial systems — into a $500 million annual revenue business by 2015 or 2016 and to reach the $1 billion revenue mark by the end of the decade.

“This is a massive market where that kind of scale is important,” Immelt told reporters at the sprawling factory, built in a complex that once made steam turbines. “It also is a scale-based industry where you need to have your eyes set on manufacturing size to get down the learning curve and be cost-competitive. You don’t need a lot of customers to get a billion dollars in revenue.”

The Schenectady, New York, site will employ about 450 people at full capacity. It was chosen in part because it is minutes away from the company’s main corporate lab in Niskayuna, New York, which developed the technology.

ENERGY EXPANSION

Immelt has stepped up GE’s focus on energy over the past two years, including an $11 billion wave of takeovers in late 2010 and early 2011 funded by some of the proceeds of its sale of a majority stake in the NBC Universal media operation.

The company said it had received its first order for the batteries from South African engineering company Megatron Federal, which wants 6,000 to be used as backup power supplies at telecommunications sites.

“This is definitely the future of telecos and most grid-connected industries,” said Brandon Harcus, divisional manager at Megatron, who said the order was worth some $60 million.

GE received $15 million in funding from New York State authorities and $5 million from local officials for the plant.

GE’s energy division, which also makes equipment used in oil and gas production, last year generated about 30 percent of the group’s $147.3 billion in revenue and was also its most profitable segment.

GE’s rivals in the energy sector include Germany’s Siemens AG (SIEGn.DE) and France’s Alstom SA (ALSO.PA).

The new factory is not GE’s only investment in battery technology. It also holds a stake in A123 Systems Inc (AONE.O), a maker of lithium-ion batteries used in electric and hybrid cars. The company has seen its shares lose three-quarters of their value over the past year as it has begun to run short of cash.

GE also this month paused its rollout of another energy-related technology, temporarily halting construction on a solar-panel plant it is building in Colorado. Immelt said that move reflected a need to reassess how expensive it would be to build the panels, but said GE remained committed to the technology.

“We looked at where the industry is going and said, ‘We’ve got to be sure we are cost-competitive when we launch,'” Immelt said. “I think being in solar is a big part of GE’s future, I think we need to get there at the right cost point.”

(Reporting by Scott Malone; Editing by David Holmes, Matthew Lewis and Sofina Mirza-Reid)

(Reuters) – Duke Energy Corp’s (DUK.N) board of directors lost confidence in Progress Energy CEO Bill Johnson in part because of his company’s financial performance and the management of its nuclear power business, Duke Chief Executive Jim Rogers told North Carolina regulators on Tuesday.

Rogers was testifying at a hearing called by the North Carolina Utilities Commission to look into Johnson’s ouster following Duke’s $18 billion takeover of Progress, which was completed last week.

He said that the board’s concerns also extended to Johnson’s management methods, noting they “felt his style was autocratic” and “discouraged different points of view.”

Rogers said the company’s lead director approached him in late June with her concerns about Johnson’s abilities to lead a combined company. She asked him then whether he would be willing to remain as CEO if the board decided to remove Johnson.

Rogers’ appearance at the hearing drew an overflow audience. The utilities commission hearing room, which seats 106, was packed, requiring the commission to open an adjacent room for others to hear.

Duke directors replaced Johnson with Rogers as head of the merged company just hours after the deal closed, despite telling regulators while the deal was under review that Rogers would be executive chairman and Johnson would be CEO.

With the Progress takeover, Duke became the largest U.S. power company, with 57,000 megawatts of generating capacity and 7.1 million customers in North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio. Duke also is now the second largest U.S. operator of nuclear power plants. (Reporting by Wade Rawlins in North Carolina and Ernest Scheyder and Michael Erman in New York; editing by Gerald E. McCormick and Andre Grenon)