China Home Prices Slide Amid Speculation

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China’s home prices fell for a fourth month in December as the government prolonged a crackdown on speculation that risks deepening the slowdown in the world’s second-biggest economy.

Property values dropped 0.25 percent from November, SouFun Holdings Ltd. (SFUN), the nation’s biggest real-estate website owner, said today. Prices slid in 60 of 100 cities, and all of the 10 biggest, including Beijing and Shanghai.

Premier Wen Jiabao said business conditions may be “relatively difficult” this quarter and monetary policy will be fine-tuned as needed, in a statement released yesterday. Barclays Capital and Bank of America Merrill Lynch say lenders’ reserve requirements may be cut before a weeklong Chinese New Year holiday starts on Jan. 23.

“China’s economy is still on a downtrend and the next reserve ratio cut may come as early as this week,” said Kevin Lai, a Hong Kong-based economist at Daiwa Capital Markets. “More liquidity is needed in running up to the Chinese New Year holiday and to provide funds for companies that may face more difficulties in coming months.”

Asian stocks rallied on the first full trading day of the new year after U.S manufacturing rose at the fastest pace in six months. The MSCI Asia Pacific Index advanced 1.2 percent as of 1:05 p.m. in Tokyo. In China, the Shanghai Composite Index fell 0.2 percent as of the 11:30 a.m. local time break in trading.

Italy, Germany

Across Asia, economic reports will include Thailand’s inflation. In Hong Kong yesterday, the Retail Management Association said that while retailers reported buoyant Christmas sales, spending by visitors from China on expensive goods such as watches and jewelry has slowed.

In Europe today, a purchasing managers’ index may show services in December contracted for a seventh straight month in Italy, according to the median estimate of economists surveyed by Bloomberg.

Other reports may indicate services are expanding in Germany and France.

European inflation reports are also scheduled to be released, with region-wide consumer prices expected to show a 2.8 percent increase from a year earlier, according to the median estimate ahead of a report from Luxembourg.

Italy’s inflation in December may have slowed to 3.5 percent from a year earlier, from a 3.7 percent rate a month earlier, a survey showed. In Washington, a Commerce Department report may show orders to U.S. factories jumped 2 percent in November, ending a two-month skid, another survey showed.

Supporting Growth
In China, the ruling Communist Party is shifting focus to supporting growth rather than damping inflation as Europe’s debt crisis threatens to curb exports. A cut in banks’ reserve requirements, the proportion of deposits they are required to set aside, was the first since 2008.

“We see downside pressure on our economy and elevated inflation at the same time,” Wen said during a two-day trip to Hunan province, according to a statement on the government’s website yesterday. “We also face problems of weakening external demand and rising costs for companies.”

The government said last month at an annual economic planning meeting that it won’t back away from real-estate industry curbs this year that are damping home sales and pulling down prices. The nation’s financial center of Shanghai and some other Chinese cities have also said they will continue to impose home-purchase restrictions this year.

Property Market
“Property is likely to be the last sector that the government will relax policies this year,” said Peter Bai Hongwei, a Beijing-based property analyst at China International Capital Corp., the country’s biggest investment bank.

Average home values nationwide climbed 2.9 percent in December from the same month in 2010 to 8,809 yuan a square meter (10.76 square feet), the slowest year-on-year growth since August, SouFun said.

Evergrande Real Estate Group (3333), China’s second-biggest developer, said last month sales rose to 79.1 billion yuan ($12.6 billion) in the first 11 months, exceeding the 2011 target by 11 percent. Sales of China Vanke Co. (000002), the biggest by market value, stood above 100 billion yuan for a second year in 2011, according to the company.

“It’s actually very hard to tell whether China’s property market will succeed a soft landing,” said China International’s Bai, who expects home prices to bottom as early as in the third quarter.

The government has said it will continue to increase supplies of social housing by setting the target of starting 7 million homes this year, compared with 10 million in 2011. The completion will at least keep pace with last year’s 5 million units, People’s Daily reported today, citing Feng Jun, a housing ministry official.

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

Related News:Eastern Europe · U.S. · Technology · Media .Intel Confronts Qualcomm in Vegas Standoff

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A looming clash between Intel Corp. (INTC) and Qualcomm Inc. (QCOM) will take center stage at the Consumer Electronics Show next week in Las Vegas, with both chipmakers seeking to control the future of mobile devices.

Qualcomm Chief Executive Officer Paul Jacobs will demonstrate notebook computers based on his company’s chips on Jan. 10, highlighting a push into an area dominated by Intel. Later that day, Intel CEO Paul Otellini will take the same stage to announce phones featuring his chips, renewing a decade-long push to get into a market that Qualcomm controls.

The popularity of smartphones and tablets has put the companies on a collision course. The market for mobile-phone chips will grow 40 percent to $29.9 billion by 2015, according to the Linley Group. With more consumers using handheld devices as their primary access to the Internet, Intel can’t afford to stay only in the realm of personal computers, said Jim McGregor, chief technology strategist for research firm In-Stat.

“For Intel, it’s a ‘we have to be there,’” he said. “Never bet against a computing device that fits in your pocket. I do more on my smartphone than any other device.”

For years, Intel processors failed to win orders in the mobile-phone market, mostly because they were too energy-hungry to work in a device that consumers expect to last days between charges. Qualcomm and other mobile-phone chipmakers, meanwhile, haven’t had much impact on Intel’s dominance of laptops because their products can’t run most computer software.

ARM Technology
The success of Apple Inc.’s iPad, which runs smartphone chips based on ARM Holdings Plc (ARM) designs, proved to consumers that phone processors could deliver enough performance for computing tasks. Microsoft Corp., the top software maker, also is putting pressure on Intel to adapt. After years of working exclusively with Intel’s x86 technology, a partnership known as “Wintel,” Microsoft’s pending Windows 8 operating system will also support ARM chips.

Qualcomm and other developers of smartphone components license their technology from ARM, an English company that doesn’t make its own chips. The change to Windows will give those manufacturers a new opening into the PC industry.

“Now we have the world’s largest software company saying they’re committed to this kind of platform for their flagship operating system,” Rob Chandhok, a senior vice president at San Diego-based Qualcomm, said in an interview.

PCs shifting to ARM chips could cost Intel $2.2 billion in sales by 2015, according to Daniel Amir, an analyst at Lazard Capital Markets in San Francisco.

Same Experience
Consumers expect their laptop computers to behave the same as their phones, Qualcomm’s Chandhok said. That means they turn on instantly and are always connected to the Internet. Because Qualcomm designed its chips from the ground up for that kind of use, they have an advantage, he said.

Intel says the reverse is true. Smartphones are becoming more like personal computers, giving an edge to Intel’s technology, said Bill Calder, a spokesman for the Santa Clara, California-based company.

“We believe we have an opportunity to play there, and we’ve been working hard on multiple fronts to make that a reality,” Calder said in an interview.

Intel’s experience with previous versions of Windows and its ability to support all existing software will make systems that use its chips more attractive, particularly for companies that need a secure environment, he said. That’s because existing security software may not be compatible with computers based on non-Intel chips.

Advanced Techniques
Its role as the world’s largest chipmaker, with the most advanced production factories, also will help Intel develop high-performance chips that use less battery power, Calder said.

Jen-Hsun Huang, CEO of Nvidia Corp. (NVDA), which is expanding into ARM-based processors for mobile devices, says it won’t matter if Intel can produce more efficient chips.

Too many electronics and software companies have shifted their efforts to ARM and other mobile technology, in part because Intel’s dominance of PCs made it hard to compete in that market, he said.

“The amount of innovation around ARM has reached critical mass,” Huang said. “If you’re a cell-phone maker or even a car company, you would absolutely choose ARM.”

Neither side will have an easy time pushing into the other’s turf, said In-Stat’s McGregor.

“It’s going to be as difficult for ARM to get into computing devices as it is for x86 to get into mobile devices,” he said.

Holding Their Ground
McGregor expects Windows 8 (MSFT) devices to debut first on Intel’s chips, rather than ARM versions. While Intel could get its processors into new smartphones, those deals probably won’t translate into significant orders in 2012, he said.

Qualcomm’s Chandhok said that even though there have been more test systems — so-called development platforms — for Windows 8 produced on Intel chips, his company will be providing ARM-based versions. Microsoft plans to begin selling both versions of the operating system at the same time, he said.

Catherine Brooker, a spokeswoman for Redmond, Washington- based Microsoft, said the company hasn’t shared details about when the software will be released.

In addition to announcing new contracts with phone manufacturers, Intel’s Otellini plans to showcase the company’s Ultrabook project during his speech. The company is encouraging PC makers to make lighter laptops that start more quickly and go longer between recharges, offering an experience closer to that delivered by Apple’s iPad and MacBook Air.

More to Lose?

Intel is counting on the effort to help maintain its leadership in the notebook market, said Lazard’s Amir.

“You need to be sure that you’re not losing the notebook,” said Amir, who has a “neutral” rating (INTC) on Intel.

Of the two sides, Intel probably has more to lose and less to gain, Amir said. Grabbing 10 percent of the market for mobile-phone chips wouldn’t be enough to add significant growth to Intel’s sales. Conversely, stronger competition in PCs, where it has more than 80 percent of the market, would hurt Intel’s high average selling prices, he said.

Intel’s processors can cost more than $4,000 each, with an average selling price of about $107, according to Mercury Research in Cave Creek, Arizona. That compares with an average selling price of less than $20 for the typical applications processor in a mobile phone.

Lazard’s Amir estimates that ARM-based processors will grab as much as a third of the market for mobile computers by 2015, up from 8 percent last year. The total market will grow to 340 million units in 2015 from 275 million in 2010, he predicts.

Faster Growth
The smartphone market has even bigger growth prospects. It will reach 1.1 billion units by 2015, up from 300 million last year, Amir said. In that period, Intel will increase its share from zero to 13 percent, he estimates.

While phones and PCs are currently separate markets, new software and hardware may blur those distinctions. In the future, consumers and companies will have a wider variety of choices that don’t fit the traditional definitions, In-Stat’s McGregor said. It’s up to the chip companies to evolve.

The winners will most probably be companies that produce packages of chips that deliver Internet connections, graphics and processing, he said. For now, Qualcomm is in the lead.

“They’re definitely in pole position,” McGregor said. “Intel even admits they are playing a little catch-up in some of the areas that they need to be competitive on.”

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

U.K. Business Confidence Declines: Lloyds

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U.K. business confidence in the economic outlook plunged last month to its lowest level in three years, according to Lloyds Bank Corporate Markets, which said there was a 74 percent chance of a recession.

An index (LTSBBCNX) of British companies’ optimism about the economy compared with three months earlier dropped by 3 points from November to minus 23, the unit of Lloyds Banking Group Plc said in an e-mailed report released in London today. December’s reading was the lowest since January 2009.

“The results indicate that the economy will almost certainly begin the new year with a contraction,” Lloyds economists Hann-Ju Ho and Jonathan Thomas wrote in the report. “As this indicator leads quarterly gross domestic product (UKGRABIQ) growth by three to four months, it suggests that economic activity will progressively weaken during the first quarter and the start of the second quarter of 2012.”

While GDP expanded 0.6 percent in the third quarter, U.K. services output fell the most in six months in October, indicating the economic rebound lost momentum at the start of the fourth quarter. The Bank of England, which restarted bond purchases on Oct. 6 to support the recovery, forecast stagnation in the last three months of 2011 as Europe’s debt crisis dented confidence and curbed demand.

A measure of perceptions among companies about their trading prospects over the next 12 months plunged 14 points to 17 in December, the Lloyds unit said.

Recession Risk
The declines in the two gauges suggest U.K. GDP shrank 0.1 percent in the fourth quarter of 2011, with the contraction accelerating to 0.4 percent in the first three months of 2012, Ho and Thomas said. The probability of recession rose to 74 percent last month, compared with 44 percent in November and 25 percent the previous month, the economists said.

The Lloyds unit questioned 304 companies, all with sales of more than 1 million pounds ($1.55 million), between Nov. 28 and Dec. 15 for the report.

A separate index of new jobs published today by Reed.co.uk, Britain’s largest recruitment website, fell to 121 in December from 133 the previous month. Reed’s gauge of salaries gained 1 point to 99.

A quarterly survey of chief financial officers found that a break-up of the euro area poses the biggest single threat to U.K. companies in 2012. The CFOs see a 37 percent chance of at least one country quitting the single currency this year, according to Deloitte LLP.

The 94 CFOs, who were questioned between Dec. 7 and Dec. 19 for the study, see a 54 percent chance the U.K. will slip back into recession, Deloitte said in an e-mailed statement today.

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

Israeli, Palestinian Envoys Meet in Jordan

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Israeli and Palestinian negotiators meet in Jordan for the first time in more than a year today to determine whether there is hope of reviving the Middle East peace process.

The meeting in Amman between Israel’s Yitzhak Molcho and the longtime Palestinian representative, Saeb Erakat, was put together by members of the so-called Quartet, which comprises the U.S., Russia, the European Union and the United Nations. King Abdullah of Jordan is pushing for a breakthrough, stepping into a role played previously by Egypt’s former president Hosni Mubarak.

Working against the resumption of peace talks is a rapprochement between Palestinian Authority President Mahmoud Abbas’s Fatah party and the Islamic Hamas movement, which is considered a terrorist organization by Israel, the U.S. and the EU. Israeli Prime Minister Benjamin Netanyahu says he won’t negotiate with a Palestinian government that includes Hamas.

“There is a lot of negative baggage between the two sides so I wouldn’t be very optimistic,” said Benadetta Berti, a research fellow at Tel Aviv University’s Institute for National Security Studies.

Abbas says he won’t return to peace talks, which broke down in September 2010, unless Israel freezes all settlement construction in the West Bank and east Jerusalem, a condition Netanyahu rejects.

Hamas Opposition
Hamas condemned the Palestinian Authority’s willingness to meet with Israeli officials in Jordan.

“These meetings are a repetition of a track that has failed over the past years,” Hamas spokesman Sami Abu Zuhri said yesterday in an e-mailed statement to reporters in the Gaza Strip.

Hamas ousted forces loyal to Abbas’s Fatah faction from Gaza in 2007 to gain full control of the Palestinian enclave after winning parliamentary elections the year before. Hamas and Fatah are holding reconciliation talks in an effort to form a unity government ahead of new Palestinian elections.

Israel has said it won’t negotiate with the Palestinian Authority if it includes Hamas, unless the Islamic movement first renounces violence, recognizes Israel’s right to exist and pledges to abide by prior agreements.

Erakat told reporters in Ramallah yesterday to limit their expectations about the meeting with Molcho, saying it could not be described as a formal negotiating session.

He urged Israel to “seize this opportunity to stop all settlement construction, accept the two-state solution on the 1967 border, and release Palestinian prisoners” to provide the right environment for “meaningful and credible talks.”

Settlement Freeze
Peace talks between Israelis and Palestinians broke down more than year ago after Netanyahu declined to renew a 10-month freeze on building in West Bank settlements that Abbas says is necessary before negotiations resume.

In a bid to restart the peace talks, the Quartet has asked Israel and the Palestinians to submit proposals for security arrangements and the borders between Israel and a future Palestinian state by Jan. 26. Israel said it would present such proposals only in the context of actual negotiations, while the Palestinians have given the Quartet their answers.

Israeli Deputy Prime Minister Dan Meridor said he saw reason for optimism in the fact that the Palestinians were willing to show up today.

“This is the first time in a long time that the Palestinians are prepared to speak with us directly,” Meridor told Army Radio yesterday. “If they want to reach an agreement, now is the time.”

‘Confidence-Building’
Israeli Defense Minister Ehud Barak said that while his government wouldn’t agree to any preconditions to talks, that “did not exclude the right of each side to make demands and propose confidence-building measures.”

Such steps though should be discussed “in the negotiating room at the table,” Barak told Army Radio yesterday.

In announcing the meeting, Jordanian Foreign Ministry spokesman Muhammad Al-Kayed said Jan. 1 that King Abdullah led an “intensive effort” to bring the two sides together, including a visit to the Palestinian Authority’s West Bank headquarters in Ramallah, and a meeting at his palace with Israeli President Shimon Peres.

To contact the reporter on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

Li’s Cheung Kong Loses S&P Credit Rating

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Cheung Kong (Holdings) Ltd. (1), controlled by billionaire Li Ka-shing, had its long-term corporate credit rating withdrawn by Standard & Poor’s, which said it hasn’t been able to “accurately assess” the credit quality of the Hong Kong developer.

The ratings company withdrew the A- “unsolicited” rating, which was based on publicly available information because it had “no access to the company management for the past three years,” S&P said in a statement yesterday.

“We can’t evaluate Cheung Kong’s liquidity accurately due to recent revisions to our liquidity criteria as the company has made material acquisitions in the past 12 months and continues to be active on the acquisition trail,” analysts Christopher Lee and Bei Fu wrote in the statement.

Hong Kong’s second-biggest builder by market value has spent more than HK$22 billion ($2.83 billion) buying land in the city this year, the company’s interim report shows. It’s seeking acquisitions in China as the country’s liquidity crunch make it a “golden time” for Cheung Kong, Executive Director Justin Chiu said in November.

“Of course if you can’t get access to management for three years, you won’t be getting a very clear picture of the company,” said Lee Wee Liat, Hong Kong-based property analyst at Samsung Securities Ltd. “They have done a bit of acquisitions lately but that didn’t materially weaken their balance sheet. They still have one of the strongest balance sheets among Hong Kong developers.”

Conservative Profile
Cheung Kong had a debt-to-common-equity ratio of 11 percent at the end of June, according to data compiled by Bloomberg. That compares with 20 percent for Sun Hung Kai Properties Ltd., the biggest developer in Hong Kong, and 15 percent for Hang Lung Properties Ltd., the third largest.

Cheung Kong’s S$730 million ($561 million) of 5.125 perpetual notes, sold to investors at par in September, were little changed today, yielding 5.098 percent compared with 5.021 percent on Sept. 23, Nomura Holdings Inc. prices show. Its S$180 million of 2.585 percent, five-year bonds due July 2016 are yielding 3.122 percent today versus 3.134 percent as of yesterday’s close, DBS Group Holdings Ltd. prices on Bloomberg show.

Cheung Kong discontinued S&P’s ratings services in 2009 because its “conservative financial profile” meant it didn’t need a rating, Wendy Tong Barnes, a spokeswoman for the company, said in a statement yesterday. The company was barred by regulation from meeting with S&P to provide them with privileged information and S&P never approached Cheung Kong for such information, Barnes said.

Bilateral Loans
“Cheung Kong’s financing is predominately done through bilateral loans,” said Andrew Lawrence, Hong Kong-based head of property research at Barclays Capital Asia Ltd. “There’s less need for Standard & Poor’s ratings because they’re done directly between the developer and the banks.”

S&P also withdrew the cnAA Greater China credit scale rating on Cheung Kong. It maintained the A- rating and stable outlook on Hutchison Whampoa Ltd. (13), which is 49.9 percent owned by Cheung Kong, according to the statement. A- at S&P is the seventh-highest investment-grade rating, or four levels above junk, or speculative, grade.

‘Financial Flexibility’
The A- rating on Cheung Kong was supported by the company’s “strong financial flexibility,” according to the statement.

“At the time of the withdrawal, the stable outlook reflected our expectation that CKH will generate satisfactory cash flows and maintain conservative financial management over the next two years,” Lee and Fu wrote.

Cheung Kong has the equivalent of $1.78 billion in bonds and $771.6 million in loans outstanding, according to data compiled by Bloomberg. Of that, $939 million matures before the end of 2013, the data show. The company last sold bonds in November when it issued HK$300 million of 3.35 percent notes due 2012. Its S$730 million of 5.125 perpetual notes, sold to investors at par in September, have fallen to yield 5.098 percent and reached 5.021 percent on Sept. 23, Nomura prices show.

Shares Decline
The developer’s shares have declined 23 percent this year, compared with the 24 percent drop in the Hang Seng Property Index (HSP), which tracks the city’s seven biggest builders including Cheung Kong. The stock fell 1.7 percent to HK$91.85 at the midday break in Hong Kong today.

Home prices in Hong Kong have fallen to a near six-month low after climbing about 70 percent since the beginning of 2009, according to an index compiled by Centaline Property Agency Ltd. It’s more expensive to buy a home in the city than in London, Moscow or New York, Savills Plc said in a report in January that compared London with the other cities.

Li, 83, nicknamed “Superman” by the local media for his investing prowess, opened a plastic flower factory after World War II and began investing in Hong Kong real estate in 1967 after riots from China’s Cultural Revolution depressed prices.

Hong Kong’s richest man also was ranked the world’s 11th wealthiest by Forbes magazine in March after his net worth increased $5 billion to $26 billion. He forecast in 2007 that China’s stock-market bubble would burst and in 2009 predicted the rally in Hong Kong home prices. The Shanghai Composite Index (SHCOMP) lost 65 percent in 2008, the most among the world’s 10 biggest stock markets.

To contact the reporters on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

Your Life on Facebook, in Total Recall

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By JENNA WORTHAM

Remember those karaoke videos from three years ago that somehow wound up on Facebook? They were embarrassing for the few hours they spent at the top of your Facebook profile, and then they were buried under a cascade of new updates.

But on Thursday, Facebook started rolling out a revamped profile feature called Timeline that makes a user’s entire history of photos, links and other things shared on Facebook accessible with a single click. This may be the first moment that many of Facebook’s 800 million members realize just how many digital bread crumbs they have been leaving on the site — and on the Web in general.

For better or worse, the new format is likely to bring back a lot of old memories. But it could also make it harder to shed past identities — something people growing up with Facebook might struggle with as they move from high school to college and from there to the working world.

“There’s no act too small to record on your permanent record,” said Jonathan Zittrain, a law professor at Harvard who studies how the Internet affects society. “All of the mouse droppings that appear as we migrate around the Web will be saved.”

The old Facebook profile page shows the most recent items users have posted, along with things like photos of them posted by others. But Timeline creates a scrapbooklike montage, assembling photos, links and updates for each month and year since they signed up for Facebook.

When Mark Zuckerberg, the founder and chief executive of Facebook, introduced Timeline in September at a developer conference, he described it as a way to get a more comprehensive portrait of someone than by simply reading updates or looking at a profile picture: “We think it’s an important next step to help tell the story of your life.”

Facebook said in a blog post that users could either wait to receive a notification about Timeline on their pages or go to facebook.com/about/timeline to activate it immediately. Eventually all profiles will be switched to the new look, though the company is not saying when. And there will be no switching back.

Some adept users have been able to reach Timeline for weeks using a workaround meant for developers. They said that while the design might be attractive, it was unnerving to realize just how much information they had been feeding into Facebook.

“We’ve all been dropping status updates and photos into a void,” said Ben Werdmuller, the chief technology officer at Latakoo, a video service. “We knew we were sharing this much, of course, but it’s weird to realize they’ve been keeping this information and can serve it up for anyone to see.”

Mr. Werdmuller, who lives in Berkeley, Calif., said the experience of browsing through his social history on Facebook, complete with pictures of old flames, was emotionally evocative — not unlike unearthing an old yearbook or a shoebox filled with photographs and letters.

But while those items would probably live only on a dusty shelf in a closet, these boxes of memories are freely available online for anyone with access to your Facebook page to view.

“It’s unsettling to see the past presented as clearly as the present,” Mr. Werdmuller said. “It’s your life in context, all in one place.”

Several hundred Facebook users shared their initial reactions to Timeline on the company’s blog post. While many appeared to be the kind of denouncements that are generated by any tweak to Facebook’s site, a large percentage welcomed the changes.

“A treat for profile stalkers,” wrote a Facebook user named Mudit Goyal. Another, Joshua Bamberg, said, “If Facebook didn’t change stuff every couple months, we would still be using MySpace.”

And Tatsat Banerjee wrote: “Now our Facebook profile is almost equivalent to a personal Web site. Make no mistake, this is the best update Facebook has ever done till now.”

Analysts say Timeline is a significant evolutionary shift for Facebook. For starters, linking Facebook more closely to memories could make it harder for people to abandon the service for rivals.

To Facebook’s credit, the site lets people edit their life stories and decide which items on their Timelines to hide. And once a switch is made, a user has seven days to review what will be displayed on the page before making it public.

But Nicole B. Ellison, a professor of information studies at Michigan State University who researches how people interact online, said the average Facebook users may not understand how to edit their pages or want to be bothered with it.

“I think for someone who has been on the site for all five of its years,” she said — Facebook opened to the general public in 2006 — “that’s a big undertaking.”

Professor Ellison said the new design could make people’s relationship with Facebook more complex.

“What does it mean to not be able to reinvent yourself after high school, after college?” she said. “Or will people completely go back and edit their histories? And how will that shape the way we view ourselves and our friends?”

Analysts say this is more than just Facebook rethinking a feature or two. The site is trying to help itself to entice advertisers more easily — and to better compete with rivals like Google, said Susan Etlinger, an analyst with the Altimeter Group, a consulting firm that advises companies on how to use technology.

“There is an arms race between technology companies to know as much as possible about the people using their services,” she said.

Timeline is also set up to highlight things like which news articles people are reading, songs they are listening to and recipes they are cooking. Users can choose to have Facebook partners like The Washington Post and the music service Spotify send that information to their Facebook pages. If Facebook could advertise items like concert tickets based on that activity, those ads could be very lucrative.

One of the Facebook designers behind Timeline is Nicholas Felton, who achieved some online fame by publishing detailed annual reports examining and graphing his personal data, such as what he ate and how many miles he traveled. The reports helped him land a job at Facebook. Mr. Felton said there were benefits to seeing one’s behavior compiled in a comprehensive way.

“One year I noticed that I wasn’t going to as many concerts as I could have liked or reading that many books,” he said. “So I was able to modify my behavior around that.”

Mr. Felton said that over time, many Facebook users would come to appreciate Timeline. “Everyone is producing crazy data exhaust these days,” he said. “Showing the value of that data helps move everything forward. It’s pretty exciting and important.”

A version of this article appeared in print on December 16, 2011, on page B1 of the New York edition with the headline: Your Life on Facebook, in Total Recall.

E-Books, Shmee-Books: Readers Return to the Stores

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By JULIE BOSMAN

Facing economic gloom and competition from cheap e-readers, brick-and-mortar booksellers entered this holiday season with the humblest of expectations.

But the initial weeks of Christmas shopping, a boom time for the book business, have yielded surprisingly strong sales for many bookstores, which report that they have been lifted by an unusually vibrant selection; customers who seem undeterred by pricier titles; and new business from people who used to shop at Borders, the chain that went out of business this year.

Barnes & Noble, the nation’s largest bookstore chain, said that comparable store sales this Thanksgiving weekend increased 10.9 percent from that period last year. The American Booksellers Association, a trade group for independents, said last week that members saw a sales jump of 16 percent in the week including Thanksgiving, compared with the same period a year ago.

At the R. J. Julia bookstore in Madison, Conn., sales of adult trade books in November rose 30 percent over last year, said Roxanne J. Coady, the owner.

“Last year was just depressing,” Ms. Coady said by telephone. “It was the beginning of the e-reader, and we didn’t know what that meant. Somehow, this year, people are back to thinking of books as an appealing gift.” Considering the economy, she added, “Adult books being up right now feels crazy to me.”

Sales are up 15 percent from last year at Next Chapter Bookshop in Mequon, Wis., the store’s owner, Lanora Hurley, said, speculating that she may have been helped by the closing of a Borders store about seven miles away.

“We’re just going gangbusters and having a great time,” Ms. Hurley said, adding cautiously that she was concerned that it would not last. “I have to say, I’m worried about January. Everybody’s going to open their electronic device for Christmas.”

Analysts are predicting enormous sales for new e-readers and tablets from Barnes & Noble and Amazon in the coming weeks (despite mixed reviews of Amazon’s new color tablet), a factor that has many in the industry concerned about the future of retail stores. The closing of Borders, the second-largest book chain in the country, is also expected to hurt publishers’ overall sales numbers.

Jamie Raab, the publisher of Grand Central Publishing, said there was “no question” that holiday sales would be hurt by the loss of Borders. “That’s like 650 stores that aren’t here,” she said. “The best way to get gift ideas is by roaming around stores. I think it’s a really dramatic loss.”

Nevertheless, booksellers and publishers said they were still hoping that there would be a healthy enough interest in print books that the two formats could coexist.

They have been closely watching the performance of print books this holiday season, which so far has not produced a monster surprise hit like last year’s “Autobiography of Mark Twain,” the 500,000-word best seller from the University of California Press that was rushed back to press six times by mid-November.

But there has been a rich selection of nonfiction, some booksellers pointed out, praising publishers for the breadth of biographies, histories and quirky pop-economics titles released this fall.

Popular biographies include “Steve Jobs” by Walter Isaacson; the critically acclaimed “Catherine the Great” by the historian Robert K. Massie; and “Spencer Tracy” by James Curtis; as well as memoirs from Diane Keaton, Regis Philbin and Gabrielle Giffords, the Democratic congresswoman from Arizona who was shot in January.

Books by media pundits like Chris Matthews, Bill O’Reilly and Glenn Beck have pushed to the top five on the New York Times nonfiction hardcover best-seller list. “Killing Lincoln: The Shocking Assassination That Changed America Forever,” by Mr. O’Reilly and Martin Dugard, reached the No. 2 spot on the list for the week ending Dec. 3.

“This year so far, it’s been the year of nonfiction,” said Peter Aaron, owner of the Elliott Bay Book Company in Seattle, citing “The Beauty and the Sorrow,” a history of World War I by Peter Englund, and “Thinking, Fast and Slow” by the Nobel laureate Daniel Kahneman, an exploration of thinking and intuition. “What’s extraordinary about the books that are out there is that they’ve been so well written and such a pleasure to read. Maybe people have an appetite for nonfiction right now, just for some sort of grounding in reality.”

In fiction, titles that have emerged as popular holiday gifts are “The Dovekeepers ” by Alice Hoffman; “The Marriage Plot” by Jeffrey Eugenides; “1Q84” by Haruki Murakami; and “The Angel Esmeralda,” a story collection by Don DeLillo. Reliably bestselling authors like Michael Connelly, Stephen King, Janet Evanovich and John Grisham have all released novels in recent weeks, and Mr. King and Ms. Evanovich are second and third on the Times hardcover best-seller list for the week ending Dec. 3.

A handful of glossy, expensive hardcover books have emerged as sleeper successes. “Harry Potter Page to Screen,” a $75 book published by Harper Design, an imprint of HarperCollins, has been on best-seller lists for weeks, despite its intimidating price. Alberto Rojas, a spokesman for HarperCollins, said there were currently 140,000 copies of the book in print.

“Mountain,” an $85 photography book subtitled “Portraits of High Places,” has been a popular item at the King’s English Bookshop in Salt Lake City, said Anne Holman, the general manager, along with “The Louvre,” a dazzling art book with a picture of every painting on display from the permanent collection of that museum. The store has seen its sales rise at least 7 or 8 percent over last year’s holiday season, Ms. Holman said.

“One thing that we noticed a lot of this year is that there are a lot more big, beautiful coffee-table books,” she said. “Expensive, $50 and $75 books that we’re selling hand over fist.”

At the Tattered Cover bookstores in Denver, a surprise seller has been “The Art Museum,” a $200 survey of world art organized in “rooms” and “galleries,” said Cathy Langer, the lead buyer, who has reordered from the publisher several times.

“I’m not seeing the price resistance that usually occurs,” Ms. Langer said. “Maybe people are just tired of being afraid to spend money.”

A version of this article appeared in print on December 13, 2011, on page C1 of the New York edition with the headline: E-Books, Shmee-Books: Readers Return to the Stores.

The Facebook Resisters

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By JENNA WORTHAM

Tyson Balcomb quit Facebook after a chance encounter on an elevator. He found himself standing next to a woman he had never met — yet through Facebook he knew what her older brother looked like, that she was from a tiny island off the coast of Washington and that she had recently visited the Space Needle in Seattle.

“I knew all these things about her, but I’d never even talked to her,” said Mr. Balcomb, a pre-med student in Oregon who had some real-life friends in common with the woman. “At that point I thought, maybe this is a little unhealthy.”

As Facebook prepares for a much-anticipated public offering, the company is eager to show off its momentum by building on its huge membership: more than 800 million active users around the world, Facebook says, and roughly 200 million in the United States, or two-thirds of the population.

But the company is running into a roadblock in this country. Some people, even on the younger end of the age spectrum, just refuse to participate, including people who have given it a try.

One of Facebook’s main selling points is that it builds closer ties among friends and colleagues. But some who steer clear of the site say it can have the opposite effect of making them feel more, not less, alienated.

“I wasn’t calling my friends anymore,” said Ashleigh Elser, 24, who is in graduate school in Charlottesville, Va. “I was just seeing their pictures and updates and felt like that was really connecting to them.”

To be sure, the Facebook-free life has its disadvantages in an era when people announce all kinds of major life milestones on the Web. Ms. Elser has missed engagements and pictures of newborn babies. But none of that hurt as much as the gap she said her Facebook account had created between her and her closest friends. So she shut it down.

Many of the holdouts mention concerns about privacy. Those who study social networking say this issue boils down to trust. Amanda Lenhart, who directs research on teenagers, children and families at the Pew Internet and American Life Project, said that people who use Facebook tend to have “a general sense of trust in others and trust in institutions.” She added: “Some people make the decision not to use it because they are afraid of what might happen.”

Ms. Lenhart noted that about 16 percent of Americans don’t have cellphones. “There will always be holdouts,” she said.

Facebook executives say they don’t expect everyone in the country to sign up. Instead they are working on ways to keep current users on the site longer, which gives the company more chances to show them ads. And the company’s biggest growth is now in places like Asia and Latin America, where there might actually be people who have not yet heard of Facebook.

“Our goal is to offer people a meaningful, fun and free way to connect with their friends, and we hope that’s appealing to a broad audience,” said Jonathan Thaw, a Facebook spokesman.

But the figures on growth in this country are stark. The number of Americans who visited Facebook grew 10 percent in the year that ended in October — down from 56 percent growth over the previous year, according to comScore, which tracks Internet traffic.

Ray Valdes, an analyst at Gartner, said this slowdown was not a make-or-break issue ahead of the company’s public offering, which could come in the spring. What does matter, he said, is Facebook’s ability to keep its millions of current users entertained and coming back.

“They’re likely more worried about the novelty factor wearing off,” Mr. Valdes said. “That’s a continual problem that they’re solving, and there are no permanent solutions.”

Erika Gable, 29, who lives in Brooklyn and does public relations for restaurants, never understood the appeal of Facebook in the first place. She says the daily chatter that flows through the site — updates about bad hair days and pictures from dinner — is virtual clutter she doesn’t need in her life.

“If I want to see my fifth cousin’s second baby, I’ll call them,” she said with a laugh.

Ms. Gable is not a Luddite. She has an iPhone and sometimes uses Twitter. But when it comes to creating a profile on the world’s biggest social network, her tolerance reaches its limits.

“I remember having MySpace for a bit and always feeling so weird about seeing other people’s stuff all the time,” she said. “I’m not into it.”

Will Brennan, a 26-year-old Brooklyn resident, said he had “heard too many horror stories” about the privacy pitfalls of Facebook. But he said friends are not always sympathetic to his anti-social-media stance.

“I get asked to sign up at least twice a month,” Mr. Brennan said. “I get harangued for ruining their plans by not being on Facebook.”

And whether there is haranguing involved or not, the rebels say their no-Facebook status tends to be a hot topic of conversation — much as a decision not to own a television might have been in an earlier media era.

“People always raise an eyebrow,” said Chris Munns, 29, who works as a systems administrator in New York. “But my life has gone on just fine without it. I’m not a shut-in. I have friends and quite an enjoyable life in Manhattan, so I can’t say it makes me feel like I’m missing out on life at all.”

But the peer pressure is only going to increase. Susan Etlinger, an analyst at the Altimeter Group, said society was adopting new behaviors and expectations in response to the near-ubiquity of Facebook and other social networks.

“People may start to ask the question that, if you aren’t on social channels, why not? Are you hiding something?” she said. “The norms are shifting.”

This kind of thinking cuts both ways for the Facebook holdouts. Mr. Munns said his dating life had benefited from his lack of an online dossier: “They haven’t had a chance to dig up your entire life on Facebook before you meet.”

But Ms. Gable said such background checks were the one thing she needed Facebook for.

“If I have a crush on a guy, I’ll make my friends look him up for me,” Ms. Gable said. “But that’s as far as it goes.”

A version of this article appeared in print on December 14, 2011, on page B1 of the New York edition with the headline: The Facebook Resisters.

Intel Sees Opportunity in Shortage of Drives

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By QUENTIN HARDY
SAN FRANCISCO

Intel will not let a good crisis go to waste.

The company, the world’s largest maker of semiconductors, announced on Monday that its revenue this quarter would fall to $13.7 billion, from $14.7 billion, because floods in Thailand had sharply cut the world’s supply of disk drives. Without the drives, manufacturers will make fewer personal computers and computer servers, which means fewer semiconductors will be needed.

While clearly bad news for Intel in the short run, the shortage of both components and finished personal computers could prove an opportunity for Intel as it tries to fight the onslaught of tablet computers, particularly Apple’s iPad. It has been trying to build a business in the emerging category of ultrabook computers or ultrathins, which do not use hard drives.

Although the impact of the flooding on the hard drive industry has been known since October, PC makers have told Intel over the last two weeks that they would need fewer chips.

“This does not change our view, that demand for personal computers and servers is healthy and growing,” said Stacy J. Smith, Intel’s chief financial officer. Constraints caused by the lack of drives will continue through the first quarter of 2012, Mr. Smith said. Last week, IHS iSuppli, a technology industry research firm, said that it expected PC shipments to expand in 2012 by only 6.8 percent, down from its previous forecast of 9.5 percent.

Ultrabooks, pioneered by Apple with its MacBook Air, are laptops less than 0.8 inch thick, typically with long battery lives. They are, in a sense, like tablets with an attached keyboard.

Unlike a PC, they usually have solid-state drives that use flash memory chips, not mechanical hard drives. While ultrabooks weigh and cost slightly more than tablets, the larger screen and the familiar keyboard make them potentially attractive alternatives to tablets. Intel and others are investing in research to make touch screens, now standard on tablets, a feature of ultrabooks as well.

Solid-state drives are still readily available from Intel and others. Typically, these devices cost five to 10 times as much as disk drives. But solid-state drives consume less power and take up less space, making them desirable in both ultrabooks and tablets.

With hard drive makers hurting, “we’ll be using this as an opportunity” to increase sales of solid-state drives, Mr. Smith told analysts. He did not announce any immediate plans to increase investment or production in solid-state drives or components for ultrabooks, however.

Still, Intel and other companies are likely to benefit from the shortage of disk drives. “If Intel is given lemons, it will make lemonade. It’s a chance to have an even broader Intel platform” of both storage and processor, said Rob Enderle, an industry analyst in San Jose, Calif. “You’ll see people pushing solid state quite a bit now, Samsung, Intel and others,” he said.

So far, the best-selling ultrabook is Apple’s Air, which does not use Intel chips. Alternatives from Acer, Asus, Toshiba and Lenovo, all using Intel processors, have recently appeared, and Intel is counting on a big push into the market next year. Apple’s least expensive Air costs about $1,000, while other ultrabooks can cost $870 to $1,200.

In August, Intel announced a $300 million fund for ultrabooks, primarily to finance research to produce lower-cost chassis and touch screens. Last week, Intel sponsored a series of meetings in Taiwan between component makers and the Taiwanese manufacturers who make computers for companies like Hewlett-Packard and Dell. Around the end of this year, Intel is expected to produce a chip called Ivy Bridge specifically for ultrabooks.

Manufacturers have been complaining about the high prices Intel charges for its processors, but Intel in unlikely to give up much on pricing. On Monday, Intel said that, aside from hurting revenue, the hard disk drive shortfall would narrow its gross profit margins to 64.5 percent, from 65 percent. In the short term, Intel will probably want to recover that.

Even as increased production and more research will probably lower the relative cost of solid-state drives, the way people use computers is changing the need for hard drives. For a long time, people wanted lots of storage for keeping things like music and pictures. Digital cameras and digital music increased demand.

Increasingly these things are stored in the cloud — in remote data centers — and reached over the Internet through machines that consumers want to be lightweight, portable and with long battery lives. External hard drives are also available, and if needed, they can be hooked up to ultrabooks for more memory.

“Lots of people buy tablets, find they can’t do as much, and switch over to a MacBook Air,” Mr. Enderle said. More ultrabook producers will increase the alternatives to tablets, he said, as will the absence of hard disk drive producers for regular laptops. “It helps if the lower-priced product isn’t around,” he said.

A version of this article appeared in print on December 13, 2011, on page B1 of the New York edition with the headline: Intel Sees Opportunity In Shortage Of Drives.

KPMG Warned Olympus, Then Got ‘Careless’

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KPMG LLP’s Tokyo affiliate signed off on Olympus Corp.’s 2009 results five days after the auditor confronted its camera-making client over accounting irregularities, according to the findings of a month-long probe.

KPMG Azsa LLC auditors challenged President Tsuyoshi Kikukawa and other executives over more than $600 million in takeover advisory fees and payments on other acquisitions, according to the report of an independent investigation into Olympus’s accounts. KPMG approved the company’s financial statement after an outside experts’ report Olympus commissioned justified the takeover costs.

The failure to uncover the $1.7 billion fraud that took place over more than a decade has damaged Japan’s credibility and highlighted a corporate culture of “yes men,” investigators led by a former judge reported this week. KPMG and Ernst & Young ShinNihon LLC, which took over as auditors, face questions from regulators over their roles in the scandal.

“At the end of the day, it’s the company that pays the fees to auditors,” said Yuuki Sakurai, president at Fukoku Capital Management in Tokyo. “Your business would soon run into trouble if you got a reputation as a firm that goes running to regulators without solid evidence.”

On May 21, just over a week after KPMG Azsa had approved the accounts, Olympus’s Kikukawa visited the firm and told the auditors their contract would not be renewed. KPMG Azsa and Ernst & Young ShinNihon LLC failed to conduct an adequate handover, the panel said.

E&Y Committee
Ernst & Young ShinNihon LLC set up a committee to probe its auditing of Olympus, according to a statement on the accounting firm’s website yesterday. ShinNihon said it plans to release the findings as soon as the group reports.

The independent investigation into Olympus concluded there wasn’t any problem with ShinNihon’s auditing, the accounting firm said yesterday. “There were parts where our explanation fell short and we plan to follow up.”

Japan’s Financial Services Agency is looking into any role the auditors may have played in the Olympus cover-up, Minister Shozaburo Jimi said. “I’d like to see appropriate action carried out on this case,” he said today. KPMG and Ernst & Young combined audit nine of Japan’s 15 biggest companies, including NTT Docomo Inc. (9437) and Honda Motor Co.

“We will fully cooperate with regulators investigating this incident and make efforts to carry on with our business so that we can help develop Japan’s capital market,” KPMG Azsa said in a faxed statement on Dec. 7.

Don’t Publish
KPMG Azsa had told Olympus as early as April 2009 not to publish its May 12 earnings unless the two could agree on the accounting for fees awarded to Axes America LLC in the form of preference shares for the $2.1 billion takeover of Gyrus Group Plc, a U.K. medical equipment company, the independent panel’s report said. The panel vindicated Michael Woodford, who was fired as Olympus’s first foreign president and chief executive officer on Oct. 14 after he confronted the board over the fees, paid to a now-defunct Cayman Islands fund, Axam Investment Ltd.

“The auditing firm did point out that a part of the transaction was unreasonable, thus the checks-and-balances function could have possibly worked,” the report said. However, the auditor “carelessly relied on the outside experts’ report.”

Accounting Change
KPMG Audit Plc in Cardiff, Wales, questioned the preference shares in Gyrus’s 2009 accounts filed to Companies House in the U.K. in March 2010. The firm ceased being an auditor in part because of its client’s accounting for the securities, it said in a letter to directors that was filed to Companies House the following month.

By the time Ernst & Young signed off on Gyrus’s 2010 financial statement at year later, the U.K. company had revised earnings for 2009 because it “incorrectly recorded” the preference shares at nominal value. Gyrus booked the securities in its year-end accounts at $620 million, the same amount it paid to Axam.

Both KPMG and Ernst & Young’s U.K. arms said they weren’t given sufficient information about the identities of Axes or Axam to know whether the payments were to a related party.

The investigators’ report this week traced a web of offshore companies set up by Olympus and a network of mostly Japanese financial advisers that were used to hide 118 billion yen ($1.5 billion) of losses dating back to the 1990s. Olympus last month admitted the fees and more than $700 million written off the value of three other deals were part of its loss-hiding scheme.

Commerzbank, SocGen (GLE), LGT

In a meeting on May 7, 2009, KPMG Azsa told the Olympus executives, including Hideo Yamada and Hisashi Mori, that unless they gave a better explanation of the fees and payments made to offshore funds KPMG Azsa may be forced to resign as auditor, the report said. Yamada and Mori both quit from Olympus’s board last week.

The 185-page report on the investigation also said KPMG Azsa failed to verify whether Olympus’s overseas deposits at Frankfurt-based Commerzbank AG and Paris-based Societe Generale SA in Singapore, and LGT Bank AG in Liechtenstein were genuine. The three banks didn’t respond to KPMG Azsa’s requests for collateral information on the accounts, the report said.

Olympus used the deposits as collateral to extend loans to offshore vehicles that were then used to buy impaired financial assets. The outflow of money was hidden as Olympus accountants instructed the banks not to respond to the auditor’s inquiries on collateral obligations, the report said.

Full Compliance
“We have been fully cooperating with the third-party committee, said Christof Buri, a spokesman for LGT Group in Vaduz, Liechtenstein. “We contacted them in November on our own initiative.” He said the bank had no further comment on the report.

“At all times Commerzbank (CBK) was in full compliance with all relevant laws and obligations and will assist with any possible enquiries by the regulator,” said Margarita Thiel, a Singapore- based spokeswoman. SocGen’s Singapore-based spokeswoman Kate Henley declined to comment.

In 1999, auditors Asahi & Co., which became KPMG Azsa in 2004, discovered Olympus had removed a loss from its books in a practice known as “tobashi” or “to make fly away,” the report said. Olympus unwound that transaction at the auditors’ request, according to the report.

The use of at least 17 Cayman Islands and British Virgin Islands entities and the collusion of a “rotten” core of senior managers helped keep the auditors from the facts, the report said.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Ben Richardson at brichardson8@bloomberg.net