S&P tops 1,500 in biggest rally since 2004

NEW YORK (Reuters) - The Standard & Poor's 500 index closed above 1,500 for the first time in more than five years on Friday as strong earnings reports, including Procter & Gamble's, helped the benchmark extend its rally to eight days.

The winning streak is the longest in eight years and left the S&P 500 about 4.1 percent away from its all-time closing high of 1,565.15 on October 9, 2007.

The equity market's strong start this year has been attributed to solid corporate results, an agreement in Washington to extend the government's borrowing power, encouraging signs from the global economy and seasonal inflows into stocks.

Procter & Gamble shares led the Dow and S&P higher with a 4 percent gain to $73.25 after the world's top household products maker's quarterly profit soared past expectations. The company also raised its sales and earnings outlook for the fiscal year.

Sales of new U.S. single-family homes fell in December but rose in 2012 to the highest level since 2009, a sign the U.S. housing market turned a corner last year.

"Economic data in the U.S. has been trending higher, albeit modestly. Things are incrementally better," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

The Dow Jones industrial average rose 70.65 points or 0.51 percent, to close at 13,895.98. The S&P 500 gained 8.14 points or 0.54 percent, to 1,502.96. The Nasdaq Composite added 19.33 points or 0.62 percent, to end at 3,149.71.

The S&P 500 closed at its highest since December 10, 2007, and the Dow ended at its highest since October 31, 2007.

Apple shares dropped 2.4 percent to $439.88, and the iPhone maker lost its coveted title as the largest U.S. company by market capitalization to Exxon Mobil Corp .

Apple's market cap fell to $413 billion, down roughly $250 billion from its September peak. Apple's fall is about equal to the entire value of Google Inc .

"The market was able to move forward despite deterioration in Apple and that's also a positive," Prudential Financial's Krosby said.

There was heavy volume in Apple shares as it hit its session low shortly before the closing bell. The stock dropped by as much as $7, to $435 from $442, within the span of one second during the last minute of trading.

More than 50 orders were executed on NYSE Arca at $435 a share, according to Thomson Reuters time-and-sales data, in blocks as small as 100 shares and as large as 10,494 shares.

Adding to the overall bullish tone in the market, German business morale improved for a third consecutive month in January to its highest in more than six months. In addition, European banks said they will repay the European Central Bank much more than expected of the loans the bank gave them during the crisis.

"Good news in credit markets helps set the stage for (more investment in) riskier assets," Krosby said.

For the week, the Dow rose 1.8 percent, the S&P 500 gained 1.1 percent and the Nasdaq added 0.5 percent. It was the fourth straight week of gains for all three indexes.

Helping to lift the Nasdaq on Friday, Starbucks rose 4.1 percent to $56.81 after the coffee retailer reported stronger-than-expected sales in the United States and Asia. {ID:nL1N0ATH04]

Netflix added 15.5 percent to $169.56, following its massive 42.2 percent jump on Thursday after the company announced a surprising jump in subscribers to its video streaming service.

Thomson Reuters data through Friday showed that of the 147 S&P 500 companies that have reported earnings so far, 68 percent exceeded expectations. Since 1994, 62 percent of companies have topped expectations, while the average over the past four quarters stands at 65 percent.

Halliburton Co shares jumped 5.1 percent to $39.72 after the world's second-largest oilfield services company reported higher-than-expected earnings and sales for the fourth quarter.

About 6.4 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average during January 2012 of about 6.93 billion shares.

On the NYSE, more than three issues rose for every two that fell. On the Nasdaq, five stocks advanced for every four that declined.

(Reporting by Rodrigo Campos; Editing by Kenneth Barry and Jan Paschal)

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Blanket of snow to follow today's dusting

Frigid winds blowing off Lake Michigan brought a dusting of fluffy snow to portions of the lakefront today, but some real snow is expected by morning.

Lake-effect snow was heavy in northern Indiana and parts of lower Michigan, and the winds brought a bit of the white stuff to some areas of Chicago's lakefront -- enough to cause some slick streets.

But late Thursday and into Friday morning, clouds are forecast to overfill the entire Chicago area and produce as much as a couple inches of snow, according to Tribune/WGN meteorologist Tom Skilling.

If we get more than 1 inch of snow at the official reporting station, it will end a couple of records.

It will be the latest in the season that the area gets its first more-than-1-inch snowfall -- the last time we went this long was Jan. 17, 1899 -- and it will end a record stretch of not showing a 1 inch snow cover on the ground, according to the National Weather Service.

In early January this year we set the no-snow-cover record, and depending on when we get that inch it will be about 333 or 334 days since we last had that much snow on the ground.

If we get the snow it probably won't be around too long. While Monday is forecast to be clear and cold, with highs of about 24, by Sunday night temperatures will start rising with a bit more snow turning into sleet and then rain, Skilling says.

Monday and Tuesday could see highs in the 40s with rain sticking around.

For the latest radar, conditions and forecasts go to The Chicago Weather Center.

chicagobreaking@tribune.com
Twitter: @ChicagoBreaking

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Samsung puts lid on capex for first time since financial crisis

SEOUL (Reuters) – Samsung Electronics Co turned cautious on spending for the first time since the global financial crisis, keeping its annual investment plan unchanged at 2012 levels, as demand for computer chips wanes and the smartphone market slows.

Samsung, one of the industry’s most aggressive spenders, has ramped up capital expenditure every year since 2004 except 2009 to meet soaring demand for its array of consumer electronics and mobile devices. It sold a record 700,000 smartphones a day in the last quarter.

But with the personal computer market shrinking for the first time in 11 years, the global smartphone market growing more slowly, and Apple Inc moving to buy fewer of Samsung‘s microprocessors used in the iPhone and iPad, the South Korean IT giant is now forced to keep a lid on spending.

“Overall its earnings momentum remains intact, and smartphone shipments will continue to grow even in the traditionally weak first quarter, as Samsung’s got a broader product line-up and Apple appears to be struggling in pushing iPhone volumes aggressively,” said Lee Se-chul, a Seoul-based analyst at Meritz Securities.

Samsung, which reported a record quarterly and annual profit on Friday, said it would keep 2013 capital expenditure unchanged from 2012.

“The key word for us in investment in 2013 is flexibility. We’ll decide as the market demand dictates,” Robert Yi, head of Samsung’s investor relations, told analysts.

Data from the company shows Samsung started to slow down planned investment in the last quarter.

Samsung said it spent 4.4 trillion won in October-December, pushing its 2012 investment to a record 23 trillion won ($ 21.5 billion). But the company said in October that it was on course to spend 25 trillion won in 2012.

Analysts had expected a 4-20 percent cut in Samsung’s 2013 capital spending.

By contrast, Taiwanese rival TSMC is planning to raise its capital expenditure to $ 9 billion this year, aimed in part at winning Apple orders away from Samsung.

Shares in Samsung fell 2.1 percent as of 0250 GMT, lagging a 1.1 percent decline in the wider market.

RECORD EARNINGS

Samsung had poured money into factories to boost production of chips and panels used in Apple products and its Galaxy range devices, pushing its operating profit to 8.84 trillion won in the last quarter. The 89 percent increase from a year earlier was in line with its earlier estimate.

Profit at its mobile devices division, which makes phones, tablets and cameras, more than doubled to 5.44 trillion won in the quarter from a year earlier, lifted by a broader offering of smartphones – from the very cheap to the very expensive.

The division accounted for 62 percent of Samsung’s overall fourth-quarter profit, up from 55 percent a year earlier.

Samsung is also seeing strong sales of its Note phablet, which analysts expect to help Samsung get through any seasonal weakness better than rivals.

Samsung, which doesn’t provide a breakdown of smartphone sales, is estimated to have sold around 63 million smartphones in the last quarter, including 15 million Galaxy S IIIs and 7 million Note IIs.

The company also said 2012 operating profit rose 86 percent to an all-time high of 29 trillion won.

SAMSUNG VS APPLE

Samsung sold 213 million smartphones last year and enlarged its share of the global market to 30.4 percent from around 20 percent in 2011, a report by market research firm Strategy Analytics showed on Friday. The sharp increase reflects Samsung’s aggressive marketing of its wide product range.

Apple’s share of the market shrank slightly to 19.4 percent from 19.0 percent in 2011, according to the report.

Globally, sales of smartphones surged 42.7 percent last year to 700 million, Strategy Analytics said.

Samsung said on Friday it expects the global smartphone segment to shrink in January-March from the seasonally strong fourth quarter, and that growth of the overall handset market will slow to the mid single-digits this year.

The forecast is in line with industry estimates, with signs of a slowdown having already emerged.

Apple shipped 47.8 million iPhones in the three months ended December, a record that nonetheless disappointed many analysts accustomed to years of outperformance. The Cupertino, California-based company also missed Wall Street’s revenue forecast for a third straight quarter as iPhone sales lagged expectations.

Apple shares have dropped by more than a third since mid-September as investors fret that its days of hyper growth are over and its devices are no longer as ‘must-have’ as they were.

By contrast, shares in Samsung have risen 12 percent in the same period as the company once seen as quick to copy the ideas of others now sets the pace in innovation.

At the world’s biggest electronics show in Las Vegas this month, Samsung unveiled a prototype phone with a flexible display that can be folded almost like paper, and a microchip with eight processing cores, creating a buzz that these may be used in the next Galaxy range.

“It’s very probable to us that the Exynos 5 Octa (processor) will find its way into the Galaxy S4,” UBS analyst Nicolas Gaudois wrote in a recent note.

“It also looked as if the curved display is close enough to finished product. We came away even more convinced that displays will provide significant differentiation to Samsung devices, and application processors will materially grow over time,” Gaudois said. ($ 1 = 1066.2000 Korean won)

(Reporting by Miyoung Kim; Editing by Ryan Woo)

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CBS orders pilots for “Bad Teacher,” Bruno Heller drama

LOS ANGELES (TheWrap.com) – A pilot based on the 2011 Cameron Diaz film “Bad Teacher” and a drama from “The Mentalist’ creator Bruno Heller have been ordered by CBS, an individual with knowledge of the orders told TheWrap on Wednesday.

“Bad Teacher” will be written and executive-produced by “My Name Is Earl” and “Community” veteran Hilary Winston, with Lee Eisenberg and Gene Stupnitsky, who were behind the film, executive-producing as well. Sam Hansen and Jimmy Miller will also executive-produce the pilot, which comes from Sony Pictures Television in association with the Mosaic Media Group, and follows a sexy, foul-mouthed divorcee who becomes a teacher to find her next husband.

“The Advocates,” written and executive-produced by Heller, revolves around a female lawyer and a male ex-con who team up as “victim advocates,” going to the very edge of the law to right wrongs and fight for the underdog. Warner Bros. is producing.

The new pilot orders follow on the heels of CBS ordering pilots for a small-screen adaptation of the Eddie Murphy film “Beverly Hills Cop” – which is being executive-produced by “The Shield” creator Shawn Ryan, and Murphy will appear in – as well as the sitcom “Friends With Better Lives” and the detective drama “Backstrom.”

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The New Old Age Blog: Grief Over New Depression Diagnosis

When the American Psychiatric Association unveils a proposed new version of its Diagnostic and Statistical Manual of Mental Disorders, the bible of psychiatric diagnoses, it expects controversy. Illnesses get added or deleted, acquire new definitions or lists of symptoms. Everyone from advocacy groups to insurance companies to litigators — all have an interest in what’s defined as mental illness — pays close attention. Invariably, complaints ensue.

“We asked for commentary,” said David Kupfer, the University of Pittsburgh psychiatrist who has spent six years as chairman of the task force that is updating the handbook. He sounded unruffled. “We asked for it and we got it. This was not going to be done in a dark room somewhere.”

But the D.S.M. 5, to be published in May, has generated an unusual amount of heat. Two changes, in particular, could have considerable impact on older people and their families.

First, the new volume revises some of the criteria for major depressive disorder. The D.S.M. IV (among other changes, the new manual swaps Roman numerals for Arabic ones) set out a list of symptoms that over a two-week period would trigger a diagnosis of major depression: either feelings of sadness or emptiness, or a loss of interest or pleasure in most daily activities, plus sleep disturbances, weight loss, fatigue, distraction or other problems, to the extent that they impair someone’s functioning.

Traditionally, depression has been underdiagnosed in older adults. When people’s health suffers and they lose friends and loved ones, the sentiment went, why wouldn’t they be depressed? A few decades back, Dr. Kupfer said, “what was striking to me was the lack of anyone getting a depression diagnosis, because that was ‘normal aging.’” We don’t find depression in old age normal any longer.

But critics of the D.S.M. 5 now argue that depression may become overdiagnosed, because this version removes the so-called “bereavement exclusion.” That was a paragraph that cautioned against diagnosing depression in someone for at least two months after loss of a loved one, unless that patient had severe symptoms like suicidal thoughts.

Without that exception, you could be diagnosed with this disorder if you are feeling empty, listless or distracted, a month after your parent or spouse dies.

“D.S.M. 5 is medicalizing the expected and probably necessary process of mourning that people go through,” said Allen Frances, a professor emeritus at Duke who chaired the D.S.M. IV task force and has denounced several of the changes in the new edition. “Most people get better with time and natural healing and resilience.”

If they are diagnosed with major depression before that can happen, he fears, they will be given antidepressants they may not need. “It gives the drug companies the right to peddle pills for grief,” he said.

An advisory committee to the Association for Death Education and Counseling also argued that bereaved people “will receive antidepressant medication because it is cheaper and ‘easier’ to medicate than to be involved therapeutically,” and noted that antidepressants, like all medications, have side effects.

“I can’t help but see this as a broad overreach by the APA,” Eric Widera, a geriatrician at the University of California, San Francisco, wrote on the GeriPal blog. “Grief is not a disorder and should be considered normal even if it is accompanied by some of the same symptoms seen in depression.”

But Dr. Kupfer said the panel worried that with the exclusion, too many cases of depression could be overlooked and go untreated. “If these things go on and get worse over time and begin to impair someone’s day to day function, we don’t want to use the excuse, ‘It’s bereavement — they’ll get over it,’” he said.

The new entry for major depressive disorder will include a note — the wording isn’t final — pointing out that while grief may be “understandable or appropriate” after a loss, professionals should also consider the possibility of a major depressive episode. Making that distinction, Dr. Kupfer said, will require “good solid clinical judgment.”

Initial field trials testing the reliability of D.S.M. 5 diagnoses, recently published in The American Journal of Psychiatry, don’t bolster confidence, however. An editorial remarked that “the end results are mixed, with both positive and disappointing findings.” Major depressive disorder, for instance, showed “questionable reliability.”

In an upcoming post, I’ll talk more about how patients might respond to the D.S.M. 5, and to a new diagnosis that might also affect a lot of older people — mild neurocognitive disorder.

Paula Span is the author of “When the Time Comes: Families With Aging Parents Share Their Struggles and Solutions.”

---

This post has been revised to reflect the following correction:

Correction: January 24, 2013

An earlier version of this post misspelled the surname of a professor emeritus at Duke who chaired the D.S.M. IV task force. He is Allen Frances, not Francis.

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NTSB: Dreamliner grounding indefinite

Boeing 787 Dreamliners will remain flightless birds for some time, it appears.

Federal investigators said Thursday they are still early in their probe of a Dreamliner battery fire in Boston Jan. 7. That fire, along with a subsequent 787 battery problem in Japan, led to groundings of Boeing's breakthrough plane model in the U.S. and elsewhere.

The revelation at a news conference Thursday afternoon that investigators still have not found a cause may suggest grounded Dreamliners, including six owned by Chicago-based United Airlines, won't be airborne anytime soon.

"We are early in our investigation. We have a lot of activity to undertake," said National Transportation Safety Board Chairman Deborah A.P. Hersman, pointing to one upcoming forensic test that alone takes a week. "There is a lot more work to be done before we can identify what caused this event."

The NTSB is the lead investigator of the battery fire in Boston aboard a Japan Airlines 787 aircraft.

Despite many aviation experts calling the 787's numerous mechanical glitches "teething pains" that all new airplane models go through, Hersman emphasized the gravity of fires on planes.

"This is an unprecedented event. We are very concerned. ... We do not expect to see fire events on board aircraft," she said. "This is a very serious air safety concern."

Nobody was hurt in the fire on the 787 in Boston or in an emergency landing in Japan after battery-related smoke and fumes on a different 787 were discovered.

The NTSB investigation will try to explain why multiple backup protections in the battery and the electronics systems aimed at preventing a fire failed, Hersman said.

"These events should not happen," she said. "As far as the design of the aircraft, there are multiple systems to protect against a battery event like this. Those systems did not work as intended. We need to understand why."

Besides fire, NTSB investigators found evidence of short circuits in the charred eight-cell, 63-pound battery and "thermal runaway," essentially uncontrolled spreading of heat. But those were symptoms, not necessarily causes, Hersman said. The batteries were made in Japan by Kyoto-based GS Yuasa Corp.

News that the NTSB investigation may be protracted -- longer than the few days some had predicted -- is bad news for Chicago-based Boeing.

Boeing last week halted deliveries of new 787s, until the FAA lifts the flight ban. However, Dreamliner production continues. Boeing is working to double monthly output in 2013 to help shrink a backlog of about 800 orders that swelled during multiple delays to the jet's debut, which came in late 2011.

Deliveries are important because that's when planemakers get large bulk payments on the purchase price of a jet. The 787's list price starts at about $207 million, but airlines typically buy at discount.

In a statement Thursday, Boeing said it is assisting in multiple investigations in the U.S. and Japan.

"The company has formed teams consisting of hundreds of engineering and technical experts who are working around the clock with the sole focus of resolving the issue and returning the 787 fleet to flight status," Boeing said.

Earlier Thursday, Boeing received a vote of confidence from United Airlines, the only U.S. airline  to own the new jet, during an earnings call with United Continental Holdings CEO Jeff Smisek. "History teaches us that all new aircraft types have issues, and the 787 is no different," Smisek said. "We continue to have confidence in the aircraft and in Boeing's ability to fix the issues, just as they have done on every other new aircraft model they've produced."

United had been using a Dreamliners on a route between Chicago and Houston. After the grounding, the route has been flown with a different aircraft.

Dreamliners in the U.S., Japan, Europe and elsewhere have been grounded since Jan. 16, after a 787 operated by All Nippon Airways made an emergency landing in Japan because battery-related smoke and fumes. That followed the fire in Boston that the NTSB is investigating.

The Dreamliner grounding was the first since the McDonnell Douglas DC-10 had its airworthiness certificate suspended following a deadly crash in Chicago in 1979.

Boeing has sold about 850 of its new aircraft, with 50 delivered to date. The plane is half made of a composite material, leading some to call it a "plastic plane." It makes greater use of electronics, powered by batteries, rather than heavy hydraulics. That makes the plane lighter and helps improve fuel efficiency, which is a big deal for airlines.

Boeing has said in statements that it is confident the 787 is safe, and it stands by the plane's integrity. It is cooperating with investigations in the U.S. and abroad.

Because of the groundings, LOT Polish Airlines scrapped its inaugural flight from O'Hare International Airport to Warsaw Jan. 16, just hours after the FAA grounded the plane. LOT officials said they would seek compensation from Boeing for having its two Dreamliners grounded. It will take delivery of the three more due in March only if the problems are resolved, the airline said.

After Thursday, it's clear nobody knows just when that might be.

"There is a tremendous amount of work going on all around the world," Hersman said. "We actually have two shifts of employees both here and in Japan who really are working around the clock to try to solve this."

gkarp@tribune.com

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Bulls rally to beat Pistons 85-82

For three quarters Wednesday night at the United Center, the Bulls looked about as interested as Dwight Howard.

Then the diminutive dynamo that is Nate Robinson happened. And Joakim Noah started jumping into photographers and cheerleaders to save basketballs. And Jimmy Butler did another Luol Deng impersonation.

It all added up to a stirring 85-82 comeback over the Pistons, the Bulls' 17th straight victory in this series. It also marked the second time in just more than a month the Bulls erased a 17-point deficit to prevail.

With the game tied and the seconds ticking down, Noah somehow saved a loose ball that was sailing out of bounds off Marco Belinelli's missed jumper, feeding Belinelli as Noah landed among photographers and cheerleaders. Belinelli took Noah's pass and scored with 7.5 seconds left, converting the three-point play after Rodney Stuckey fouled him.

"I scored, but the credit goes to Jo," said Belinelli, who scored his second game-winner in four games.

"Quite frankly, I don't know he got to it," coach Tom Thibodeau said. "It was an incredible play."

The Bulls then watched tying 3-point attempts from Tayshuan Prince and Stuckey rim out as time expired. Reaching the season's halfway point at 25-16, the Bulls are on pace for 50 victories.

Robinson's boundless energy can delve into extracurricular emotion, but there's no denying he jump-started the comeback. Robinson keyed a 12-2 run to open the fourth with nine straight points and a dish for a fast-break dunk from Butler, who tied his career-highs with 18 points and nine rebounds. Butler, starting again for the injured Luol Deng, played all but 91 seconds and also had four assists.

"Jimmy just kept working the game," Thibodeau said. "He never got down. He kept battling and battling."

Robinson finished with 11 points. Noah played 45 minutes with 10 points and 18 rebounds.

"That's Nate. He made a lot of big-time plays for us," Thibodeau said. "He's not afraid. I respect that about him.

"The group that started the fourth quarter played with energy, got some stops and got us going.

The Bulls took their first lead since 2-0 on Taj Gibson's tip-in midway through the fourth. But the Pistons battled back, leading 80-79 on Stuckey's jumper with just more than two minutes remaining. Butler hit a huge 3-pointer — the Bulls missed their first 10 and made just 3-of-14 — for an 82-80 lead, but Jason Maxiell tied the game with 29.4 seconds left off a defensive breakdown.

"We didn't play our best but we found a way to win in the end," Thibodeau said. "That's the type of stuff you have to do. I think we showed some perseverance. They had a lot to do with the way we played. In the end, we had a lot of guys step up and make big plays for us."

The Bulls trailed 12-2 before Thibodeau even had started screaming himself hoarse. They missed their final eight shots of the first quarter and committed five turnovers.

The wheels came off to open the third. Kyle Singler scored and got fouled, missing the free throw. But Greg Monroe rebounded the miss and scored while being fouled for a four-point possession, which could have been more if Monroe hadn't also missed his free throw.

Then came a Richard Hamilton turnover and Brandon Knight driving coast-to-coast for a layup with no resistance that produced a 17-point lead and angry timeout from Thibodeau.

kcjohnson@tribune.com

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Apple’s iPhone disappointment fans doubt on growth

SAN FRANCISCO (Reuters) – Apple Inc missed Wall Street’s revenue forecast for the third straight quarter after iPhone sales came in below expectations, fanning fears that its dominance of the mobile industry was slipping.

Shares of the world’s largest tech company fell 10 percent to $ 463 in after-hours trade, wiping out some $ 50 billion of its market value – nearly equivalent to that of Hewlett-Packard and Dell, combined.

On Wednesday, Apple said it shipped a record 47.8 million iPhones in the December quarter, up 29 percent from the year-ago period. But that lagged the 50 million that analysts on average had projected.

Expectations heading into the results had been subdued by news of possible production cutbacks by some component suppliers in Asia, triggering fears that demand for the iPhone, which accounts for half of Apple‘s revenue, and the iPad could be slowing.

But many investors clung to hopes for a repeat of years of historical outperformance, analysts said.

“It’s going to call into question Apple‘s dominance in the space. It’s still one of the strong players, the others being Samsung and Google. It’s still a two-horse race, but Android continues to grow rapidly,” said Sterne Agee analyst Shaw Wu.

“If you step back a bit, it’s clear they shipped a lot of phones. But the problem is the high expectations that investors have. Apple‘s conservative guidance highlights the concerns over production cuts coming out of Asia recently.”

Apple projected revenue of $ 41 billion to $ 43 billion in the current, second fiscal quarter, lagging the average Wall Street forecast of more than $ 45 billion.

Fiscal first quarter revenue rose 18 percent to $ 54.5 billion, below the average analyst estimate of $ 54.73 billion, though earnings per share of $ 13.81 beat the Street forecast of $ 13.47, according to Thomson Reuters I/B/E/S.

Apple also undershot revenue targets in the previous two quarters, and these results will prompt more questions on what Apple has in its product pipeline, and what it can do to attract new sales and maintain its growth trajectory, analysts said.

Net income of $ 13.07 billion was virtually flat with $ 13.06 billion a year earlier on higher manufacturing costs. The year-ago quarter also had an extra week compared to this year.

Gross margins consequently slid to 38.6 percent, from 44.7 percent previously.

“You can’t just keep rolling out iPhones and iPads and think that everybody needs a new one,” said Jeffrey Gundlach, who runs DoubleLine Capital LP, the $ 53 billion bond firm. “The mini? What is that all about? It is a slightly smaller iPad — so what? So that is our new definition of innovation?”

“There are plenty of competitors like Samsung and other legitimate competitors like them,” added Gundlach, one of the highest-profile Apple bears. He maintains a $ 425 price target.

Shares of several of Apple‘s suppliers crumbled. Chip suppliers Skyworks and Cirrus Logic both fell more than 6 percent. Qualcomm Inc slipped 1.8 percent.

CHINA IS NEXT BIG GROWTH DRIVER

Apple shares are down nearly 30 percent from a record high in September, in part on worries that its days of hyper growth are over and its mobile devices are no longer as popular.

Intense competition from Samsung‘s cheaper phones – powered by Google’s Android software – and signs that the premium smartphone market may be close to saturation in developed markets have also caused a lot of investor anxiety.

Meanwhile, sales of the iPad came in at 22.9 million in the fiscal first quarter, roughly in line with forecasts.

On the brighter side, Chief Financial Officer Peter Oppenheimer told Reuters that iPhone sales more than doubled in greater China – a region that Apple Chief Executive Tim Cook has vowed to focus on as its next big growth driver.

The company will begin detailing results from that country going forward. Revenue from the region totaled $ 7.3 billion, up 60 percent from the year-ago December quarter.

“These results were OK, but they definitely raised a few questions,” said Shannon Cross, analyst with Cross Research. “Gross margin trajectory looks fine so that’s a positive and cash continues to grow. But I think investors are going to want to know what Apple plans to do with growing cash balance.”

“And other questions are going to be around innovation and where the next products are coming from and what does Tim Cook see in the next 12 to 18 months.”

ADDRESSING PRODUCTION RUMORS

In an unusual move for Apple, which typically does not respond to speculation, Cook addressed the production cutback rumors at length on the conference call and questioned the accuracy of rumors about its plans.

Media reports earlier this month said the company is slashing orders for iPhone 5 and iPad screens and other components from its Asian suppliers.

“Even if a particular data point were factual, it would be impossible to accurately interpret the data point as to what it meant for our overall business, because the supply chain is very complex,” he said, adding that Apple has multiple sources for components.

“Yields might vary. Supplier performance can vary. The beginning inventory positions can vary. There’s just an inordinately long list of things that would make any single data point not a great proxy for what’s going on,” he said.

Apple‘s initial iPhone and iPad mini sales were hurt by supply constraints, but Cook expects supply to balance demand for the iPad mini this quarter. He also acknowledged that iPad was cannibalizing its high-margin Macintosh computers, but said it was a huge opportunity for the company.

“On iPad in particular, we have the mother of all opportunities here, because the Windows market is much, much larger than the Mac market is,” he said. And I think it is clear that it’s already cannibalizing some.”

In another departure from tradition, Apple intends to tweak the way it both reports results and publishes forecasts.

Apart from breaking out results from China, the company also will no longer provide a single revenue or gross margin outlook. From Wednesday, it began providing the range it expects to hit, rather than the often-ludicrously conservative estimates that Apple was once notorious for.

The new policy took many by surprise.

“Before people could always ignore the guidance,” said Dan Niles, Chief Investment Officer of AlphaOne Capital Partners, LLC. “Apple is telling investors that they need to pay attention to the guidance and you can’t ignore it, which is basically what we all did in the past.”

(Additional reporting by Alistair Barr and Alexei Oreskovic in San Francisco and Jennifer Ablan in New York; Editing by Bernard Orr and Edwin Chan)

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“Thrift Shop” bests Timberlake’s “Suit & Tie” on Billboard chart

LOS ANGELES (Reuters) – Justin Timberlake’s first single in five years – “Suit & Tie” – fell short of sales expectations for its first week and was kept from the top spot on the Billboard digital songs chart by a novelty rap act.

“Suit & Tie,” which features rapper Jay-Z, sold 314,000 downloads, according to figures released on Wednesday by Nielsen SoundScan.

Industry experts had expected about 350,000 downloads for Timberlake’s widely publicized single, which precedes a new album later in 2013 – his first since 2006.

But Timberlake, 31, who has been focused on building a Hollywood acting career, was dressed down on the digital chart by Macklemore and Ryan Lewis’ “Thrift Shop” featuring rapper Wanz, which sold some 341,000 downloads in the week ending on January 20.

It was the second consecutive week atop the digital songs chart for the novelty rap song about eschewing designer clothes for a second-hand look.

Timberlake will perform his first concert in five years during a private Super Bowl-related event in New Orleans on February 2, DirectTV announced on Wednesday. The invitation-only concert will not be shown on TV, the satellite providers said.

On the Billboard 200 album chart, rapper A$ AP Rocky’s debut album “Long.Live.A$ AP” entered at the top spot, selling about 139,000 units last week.

The New York rapper outpaced the child-focused compilation “Kidz Bop 23,” also in its first week, that features children performing recent pop hits.

“Kidz Bop 23″ sold 78,000 units last week and the series of albums have sold some 13.3 million albums since its 2001 debut.

TOMLIN TUMBLES

The soundtrack to musical-film “Pitch Perfect” landed at the No. 3 spot on the Billboard 200 and was followed by country-pop starlet Taylor Swift’s “Red” and singer Bruno Mars’ “Unorthodox Jukebox” in the top five.

The soundtrack to the stage-to-screen adaptation of musical “Les Miserables” fell to sixth from third, failing to capitalize on three big wins at the Golden Globe Awards, Hollywood’s second-biggest prize to the Oscars, on January 13.

Last week’s top album, “Burning Lights” by Christian singer-songwriter Chris Tomlin, tumbled to No. 22 on the chart. The album’s sharp fall was expected as opening week sales were largely boosted by pre-orders through churches and a national Christian convention, Billboard said.

Album sales for the past week totaled 4.97 million, down 2 percent from the same week last year, but year-to-date album sales were up 2 percent from 2012, totaling 16.32 million so far in 2013.

Some 27.82 million songs were downloaded last week, which was flat compared with the same week last year. A total of 91.17 million songs have been downloaded in 2013, a rise of 2 percent.

(Reporting by Eric Kelsey; Editing by Jill Serjeant and Mohammad Zargham)

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Well: Long Term Effects on Life Expectancy From Smoking

It is often said that smoking takes years off your life, and now a new study shows just how many: Longtime smokers can expect to lose about 10 years of life expectancy.

But amid those grim findings was some good news for former smokers. Those who quit before they turn 35 can gain most if not all of that decade back, and even those who wait until middle age to kick the habit can add about five years back to their life expectancies.

“There’s the old saw that everyone knows smoking is bad for you,” said Dr. Tim McAfee of the Centers for Disease Control and Prevention. “But this paints a much more dramatic picture of the horror of smoking. These are real people that are getting 10 years of life expectancy hacked off — and that’s just on average.”

The findings were part of research, published on Wednesday in The New England Journal of Medicine, that looked at government data on more than 200,000 Americans who were followed starting in 1997. Similar studies that were done in the 1980s and the decades prior had allowed scientists to predict the impact of smoking on mortality. But since then many population trends have changed, and it was unclear whether smokers today fared differently from smokers decades ago.

Since the 1960s, the prevalence of smoking over all has declined, falling from about 40 percent to 20 percent. Today more than half of people that ever smoked have quit, allowing researchers to compare the effects of stopping at various ages.

Modern cigarettes contain less tar and medical advances have cut the rates of death from vascular disease drastically. But have smokers benefited from these advances?

Women in the 1960s, ’70s and ’80s had lower rates of mortality from smoking than men. But it was largely unknown whether this was a biological difference or merely a matter of different habits: earlier generations of women smoked fewer cigarettes and tended to take up smoking at a later age than men.

Now that smoking habits among women today are similar to those of men, would mortality rates be the same as well?

“There was a big gap in our knowledge,” said Dr. McAfee, an author of the study and the director of the C.D.C.’s Office on Smoking and Public Health.

The new research showed that in fact women are no more protected from the consequences of smoking than men. The female smokers in the study represented the first generation of American women that generally began smoking early in life and continued the habit for decades, and the impact on life span was clear. The risk of death from smoking for these women was 50 percent higher than the risk reported for women in similar studies carried out in the 1980s.

“This sort of puts the nail in the coffin around the idea that women might somehow be different or that they suffer fewer effects of smoking,” Dr. McAfee said.

It also showed that differences between smokers and the population in general are becoming more and more stark. Over the last 20 years, advances in medicine and public health have improved life expectancy for the general public, but smokers have not benefited in the same way.

“If anything, this is accentuating the difference between being a smoker and a nonsmoker,” Dr. McAfee said.

The researchers had information about the participants’ smoking histories and other details about their health and backgrounds, including diet, alcohol consumption, education levels and weight and body fat. Using records from the National Death Index, they calculated their mortality rates over time.

People who had smoked fewer than 100 cigarettes in their lifetimes were not classified as smokers. Those who had smoked at least 100 cigarettes but had not had one within five years of the time the data was collected were classified as former smokers.

Not surprisingly, the study showed that the earlier a person quit smoking, the greater the impact. People who quit between 25 and 34 years of age gained about 10 years of life compared to those who continued to smoke. But there were benefits at many ages. People who quit between 35 and 44 gained about nine years, and those who stopped between 45 and 59 gained about four to six years of life expectancy.

From a public health perspective, those numbers are striking, particularly when juxtaposed with preventive measures like blood pressure screenings, colorectal screenings and mammography, the effects of which on life expectancy are more often viewed in terms of days or months, Dr. McAfee said.

“These things are very important, but the size of the benefit pales in comparison to what you can get from stopping smoking,” he said. “The notion that you could add 10 years to your life by something as straightforward as quitting smoking is just mind boggling.”

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