Mystery News

Boeing Closer to Answer on 787s, but Not to Getting Them Back in Air

Label: Business

Issei Kato/Reuters

Safety inspectors looked over a 787 on Friday in Japan. The plane made an emergency landing after receiving a smoke alarm.

With 787 Dreamliners grounded around the world, Boeing is scrambling to devise a technical fix that would allow the planes to fly again soon, even as investigators in the United States and Japan are trying to figure out what caused the plane’s lithium-ion batteries to overheat.

Ray LaHood, the transportation secretary, made it clear on Friday that a rapid outcome was unlikely, saying that 787s would not be allowed to fly until the authorities were “1,000 percent sure” they were safe.

“Those planes aren’t flying now until we have a chance to examine the batteries,” Mr. LaHood told reporters. “That seems to be where the problem is.”

The Federal Aviation Administration on Wednesday took the rare step of grounding Boeing’s technologically advanced 787s after a plane in Japan made an emergency landing when one of its two lithium-ion batteries set off a smoke alarm in the cockpit. Last week at Boston’s Logan Airport, a battery ignited in a parked 787.

The last time the government grounded an entire fleet of airplanes was in 1979, after the crash of a McDonnell Douglas DC-10.

The grounding comes as the United States is going through a record stretch of safe commercial jet flying: It has been nearly four years since a fatal airline crash, with nearly three billion passengers flying in that period. The last airliner crash, near Buffalo, N.Y., came after a quiet period of two and a half years, which suggests a declining crash rate.

Investigators in Japan said Friday that a possible explanation for the problems with the 787’s batteries was that they were overcharged — a hazard that has long been a concern for lithium-ion batteries. But how that could have happened to a plane that Boeing says has multiple systems to prevent such an event is still unclear.

Given the uncertainty, it will be hard for federal regulators to approve any corrective measures proposed by Boeing. To lift the grounding order, Boeing must demonstrate that any fix it puts in place would prevent similar episodes from happening.

The government’s approach, while prudent, worries industry officials who fear it does not provide a rapid exit for Boeing.

The F.A.A. typically sets a course of corrective action for airlines when it issues a safety directive. But in the case of the 787, the government’s order, called an emergency airworthiness directive, required that Boeing demonstrate that the batteries were safe but did not specify how.

While the government and the plane maker are cooperating, there are few precedents for the situation.

“Everyone wants the airplane back in the air quickly and safely,” said Mark V. Rosenker, a former chairman of the National Transportation Safety Board. “But I don’t believe there will be a corner cut to accomplish that. It will happen when all are confident they have a good solution that will contain a fire or a leak.”

Boeing engineers, Mr. Rosenker said, are working around the clock. “I bet they have cots and food for the engineers who are working on this,” he said. “They have produced a reliable and safe aircraft and as advanced as it is, they don’t want to put airplanes in the air with the problems we have seen.”

The government approved Boeing’s use of lithium-ion batteries to power some of the plane’s systems in 2007, but special conditions were imposed on the plane maker to ensure the batteries would not overheat or ignite. Government inspectors also approved Boeing’s testing plans for the batteries and were present when they were performed.

Even so, after the episode in Boston, the federal agency said it would review the 787’s design and manufacturing with a focus on the electrical systems and batteries. The agency also said it would review the certification process.

The 787 has more electrical systems than previous generations of airplanes. These systems operate hydraulic pumps, de-ice the wings, pressurize the cabin and handle other tasks. The plane also has electric brakes instead of hydraulic ones. To run these systems, the 787 has six generators with a capacity equivalent to the power needed by 400 homes.

Nicola Clark and Christopher Drew contributed reporting.

This article has been revised to reflect the following correction:

Correction: January 19, 2013

An earlier version of this article misstated how regulators responded to small cracks found in the wings of the Airbus A380, and when those cracks were found. Regulators required inspections, followed by fixes, last year, not two years ago; the plane was not grounded.

Business Briefing | Medicine: F.D.A. Clears Botox to Help Bladder Control

Label: Health

Botox, the wrinkle treatment made by Allergan, has been approved to treat adults with overactive bladders who cannot tolerate or were not helped by other drugs, the Food and Drug Administration said on Friday. Botox injected into the bladder muscle causes the bladder to relax, increasing its storage capacity. “Clinical studies have demonstrated Botox’s ability to significantly reduce the frequency of urinary incontinence,” Dr. Hylton V. Joffe, director of the F.D.A.’s reproductive and urologic products division, said in a statement. “Today’s approval provides an important additional treatment option for patients with overactive bladder, a condition that affects an estimated 33 million men and women in the United States.”

Business Briefing | Medicine: F.D.A. Clears Botox to Help Bladder Control

Label: Lifestyle

Boeing Closer to Answer on 787s, but Not to Getting Them Back in Air

Label: World

Issei Kato/Reuters

Safety inspectors looked over a 787 on Friday in Japan. The plane made an emergency landing after receiving a smoke alarm.

“Those planes aren’t flying now until we have a chance to examine the batteries,” Mr. LaHood told reporters. “That seems to be where the problem is.”

The last time the government grounded an entire fleet of airplanes was in 1979, after the crash of a McDonnell Douglas DC-10.

The government’s approach, while prudent, worries industry officials who fear it does not provide a rapid exit for Boeing.

While the government and the plane maker are cooperating, there are few precedents for the situation.

Nicola Clark and Christopher Drew contributed reporting.

This article has been revised to reflect the following correction:

Correction: January 19, 2013

Fed Transcripts Open a Window on 2007 Crisis

Label: Business

WASHINGTON — Federal Reserve officials in August 2007 remained skeptical that housing foreclosures could cause a financial crisis, just days before the Fed was jolted into action, according to transcripts that the central bank published Friday.

Worries about the health of financial markets dominated a meeting of the Fed’s policy-making committee on Aug. 7, but officials decided there was not yet sufficient evidence that the problems were affecting the growth of the broader economy.

Just three days later, the Fed’s chairman, Ben S. Bernanke, convened an early-morning conference call to inform them that the central bank had been forced to start pumping money into a financial system that was suddenly seizing up. More than five years later, the system remains heavily dependent on those pumps.

“The market is not operating in a normal way,” Mr. Bernanke said on that August call, in a moment of historic understatement. “It’s a question of market functioning, not a question of bailing anybody out. That’s really where we are right now.”

August 2007 was the month that the Fed began its long transformation from somnolence to activism. Mr. Bernanke and his colleagues would continue to wrestle with misgivings about the extent of the Fed’s powers, and about the limits of appropriate action. At times they would hesitate or move slowly. At times they even would reverse course, most importantly in standing by as Lehman Brothers collapsed the following year. But it is now widely accepted that their efforts helped to arrest the economic chaos unleashed by the financial crisis.

Some of what followed might have been predicted by close readers of Mr. Bernanke’s work as an academic. He had long argued that the great lesson of the Great Depression was that a central bank should never allow its financial system to run short of money. Even more than its efforts to reduce borrowing costs, the Fed’s policy over the coming years would be defined by its determination to provide the funding private investors were withholding.

But in the face of an unprecedented crisis, Mr. Bernanke also would set aside his own work. He had long argued that the Fed should strive to respond to economic circumstances as transparently and predictably as possible, a break from the intuitive and unpredictable style of his predecessor, Alan Greenspan.

By the end of 2007, even as the available economic data remained fairly strong, Mr. Bernanke and his colleagues instead concluded that they could see the future, that they did not like what they saw, and that it was time to act.

“Intuition suggests that stronger action by the central bank may be warranted to prevent particularly costly outcomes,” Mr. Bernanke said in an October 2007 speech that marked the beginning of his public embrace of the need for pre-emptive action.

The Fed’s most dramatic steps did not begin until December 2007, when it created the Term Auction Facility, the first in a series of new programs intended to pump money into the financial system, and arranged to pump dollars into the European financial system in partnership with the European Central Bank.

And by January 2008, the Fed’s response to the crisis was in full swing.

The Fed began 2007 still deeply immersed in complacent disregard for problems in the housing market. Fed officials knew that people were losing their homes. They knew that subprime lenders were blinking out of business with every passing week. But they did not understand the implications for the broader economy.

”The impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained,” Mr. Bernanke said in March.

The mortgage industry was imploding by the time the Fed’s policy-making committee met on Aug. 7. American Home Mortgage, a leading subprime lender, had filed for bankruptcy the previous day. One week earlier, the investment bank Bear Stearns had liquidated a pair of mortgage-focused hedge funds. But officials did not cut interest rates. The economy, they said, “seems likely to continue to expand.” The statement did not even mention the housing market.

The transcripts show that many Fed officials at the August meeting remained deeply skeptical about the likely economic impact of those problems.

“My own bet is the financial market upset is not going to change fundamentally what’s going on in the real economy,” William Poole, president of the Federal Reserve Bank of St. Louis, told the committee on Aug. 7.

That was a Tuesday. The image of calm would last exactly two more days. By Thursday morning, the European Central Bank was offering emergency loans to continental banks and the Fed was following suit. And Mr. Poole and his board voted that day to ask for the Fed to reduce the interest rate on such loans, becoming the first official arm of the central bank to push for stronger action.

Two weeks later, at 6 p.m. on a Thursday, Fed officials dialed in to an emergency conference call where they agreed to adopt the St. Louis Fed’s proposal.

The central bank began to make it easier for cash-strapped financial companies to borrow money, an effort that would expand dramatically over the coming years as the crisis intensified and private investors withdrew funding.

The Neediest Cases: Medical Bills Crush Brooklyn Man’s Hope of Retiring

Label: Health

Andrea Mohin/The New York Times

John Concepcion and his wife, Maria, in their home in Sheepshead Bay, Brooklyn. They are awaiting even more medical bills.

Retirement was just about a year away, or so John Concepcion thought, when a sudden health crisis put his plans in doubt.

For the past 100 years, The New York Times Neediest Cases Fund has provided direct assistance to children, families and the elderly in New York. To celebrate the 101st campaign, an article will appear daily through Jan. 25. Each profile will illustrate the difference that even a modest amount of money can make in easing the struggles of the poor.

Last year donors contributed $7,003,854, which was distributed to those in need through seven New York charities.

2012-13 Campaign

Previously recorded:

$6,865,501

Recorded Wed.:

16,711

*Total:

$6,882,212

Last year to date:

$6,118,740

*Includes $1,511,814 contributed to the Hurricane Sandy relief efforts.

“I get paralyzed, I can’t breathe,” he said of the muscle spasms he now has regularly. “It feels like something’s going to bust out of me.”

Severe abdominal pain is not the only, or even the worst, reminder of the major surgery Mr. Concepcion, 62, of Sheepshead Bay, Brooklyn, underwent in June. He and his wife of 36 years, Maria, are now faced with medical bills that are so high, Ms. Concepcion said she felt faint when she saw them.

Mr. Concepcion, who is superintendent of the apartment building where he lives, began having back pain last January that doctors first believed was the result of gallstones. In March, an endoscopy showed that tumors had grown throughout his digestive system. The tumors were not malignant, but an operation was required to remove them, and surgeons had to essentially reroute Mr. Concepcion’s entire digestive tract. They removed his gall bladder, as well as parts of his pancreas, bile ducts, intestines and stomach, he said.

The operation was a success, but then came the bills.

“I told my friend: are you aware that if you have a major operation, you’re going to lose your house?” Ms. Concepcion said.

The couple has since received doctors’ bills of more than $250,000, which does not include the cost of his seven-day stay at Beth Israel Medical Center in Manhattan. Mr. Concepcion has worked in the apartment building since 1993 and has been insured through his union.

The couple are in an anxious holding pattern as they wait to find out just what, depending on their policy’s limits, will be covered. Even with financial assistance from Beth Israel, which approved a 70 percent discount for the Concepcions on the hospital charges, the couple has no idea how the doctors’ and surgical fees will be covered.

“My son said, boy he saved your life, Dad, but look at the bill he sent to you,” Ms. Concepcion said in reference to the surgeon’s statements. “You’ll be dead before you pay it off.”

When the Concepcions first acquired their insurance, they were in good health, but now both have serious medical issues — Ms. Concepcion, 54, has emphysema and chronic obstructive pulmonary disease, and Mr. Concepcion has diabetes. They now spend close to $800 a month on prescriptions.

Mr. Concepcion, the family’s primary wage earner, makes $866 a week at his job. The couple had planned for Mr. Concepcion to retire sometime this year, begin collecting a pension and, after getting their finances in order, leave the superintendent’s apartment, as required by the landlord, and try to find a new home. “That’s all out of the question now,” Ms. Concepcion said. Mr. Concepcion said he now planned to continue working indefinitely.

Ms. Concepcion has organized every bill and medical statement into bulging folders, and said she had spent hours on the phone trying to negotiate with providers. She is still awaiting the rest of the bills.

On one of those bills, Ms. Concepcion said, she spotted a telephone number for people seeking help with medical costs. The number was for Community Health Advocates, a health insurance consumer assistance program and a unit of Community Service Society, one of the organizations supported by The New York Times Neediest Cases Fund. The society drew $2,120 from the fund so the Concepcions could pay some of their medical bills, and the health advocates helped them obtain the discount from the hospital.

Neither one knows what the next step will be, however, and the stress has been eating at them.

“How do we get out of this?” Mr. Concepcion asked. “There is no way out. Here I am trying to save to retire. They’re going to put me in the street.”

The Neediest Cases: Medical Bills Crush Brooklyn Man’s Hope of Retiring

Label: Lifestyle

Andrea Mohin/The New York Times

John Concepcion and his wife, Maria, in their home in Sheepshead Bay, Brooklyn. They are awaiting even more medical bills.

Retirement was just about a year away, or so John Concepcion thought, when a sudden health crisis put his plans in doubt.

Last year donors contributed $7,003,854, which was distributed to those in need through seven New York charities.

2012-13 Campaign

Previously recorded:

$6,865,501

Recorded Wed.:

16,711

*Total:

$6,882,212

Last year to date:

$6,118,740

*Includes $1,511,814 contributed to the Hurricane Sandy relief efforts.

“I get paralyzed, I can’t breathe,” he said of the muscle spasms he now has regularly. “It feels like something’s going to bust out of me.”

The operation was a success, but then came the bills.

“I told my friend: are you aware that if you have a major operation, you’re going to lose your house?” Ms. Concepcion said.

“My son said, boy he saved your life, Dad, but look at the bill he sent to you,” Ms. Concepcion said in reference to the surgeon’s statements. “You’ll be dead before you pay it off.”

Neither one knows what the next step will be, however, and the stress has been eating at them.

“How do we get out of this?” Mr. Concepcion asked. “There is no way out. Here I am trying to save to retire. They’re going to put me in the street.”

DealBook: Michael Dell’s Empire in a Buyout Spotlight

Label: Technology

The computer empire of Michael S. Dell spreads across a campus of low-slung buildings in Round Rock, Tex.

But his financial empire — estimated at $16 billion — occupies the 21st floor of a dark glass skyscraper on Fifth Avenue in Manhattan.

It is there that MSD Capital, started by Mr. Dell 15 years ago to manage his fortune, has quietly built a reputation as one of the smartest investors on Wall Street. By amassing a prodigious portfolio of stocks, companies, real estate and timberland, Mr. Dell has reduced his exposure to the volatile technology sector and branched out into businesses as diverse as dentistry and landscaping.

Now, Mr. Dell is on the verge of making one of the biggest investments of his life. The 47-year-old billionaire and his private equity backers are locked in talks to acquire Dell, the company he started with $1,000 as a teenager three decades ago, in a leveraged buyout worth more than $20 billion. MSD could play a role in the Dell takeover, according to people briefed on the deal.

The private equity firm Silver Lake has been in negotiations to join with Mr. Dell on a transaction, along with other potential partners like wealthy Asian investors or foreign funds. Mr. Dell would be expected to roll his nearly 16 percent ownership of the company into the buyout, a stake valued at about $3.5 billion. He could also contribute additional personal money as part of the buyout.

That money is managed by MSD, among the more prominent so-called family offices that are set up to handle the personal investments of the wealthy. Others with large family offices include Bill Gates, whose Microsoft wealth financed the firm Cascade Investment, and New York’s mayor, Michael R. Bloomberg, who set up his firm, Willett Advisors, in 2010 to manage his personal and philanthropic assets.

“Some of these family offices are among the world’s most sophisticated investors and have the capital and talent to compete with the largest private equity firms and hedge funds,” said John P. Rompon, managing partner of McNally Capital, which helps structure private equity deals for family offices.

A spokesman for MSD declined to comment for this article. The buyout talks could still fall apart.

In 1998, Mr. Dell, then just 33 years old — and his company’s stock worth three times what it is today — decided to diversify his wealth and set up MSD. He staked the firm with $400 million of his own money, effectively starting his own personal money-management business.

To head the operation, Mr. Dell hired Glenn R. Fuhrman, a managing director at Goldman Sachs, and John C. Phelan, a principal at ESL Investments, the hedge fund run by Edward S. Lampert. He knew both men from his previous dealings with Wall Street. Mr. Fuhrman led a group at Goldman that marketed specialized investments like private equity and real estate to wealthy families like the Dells. And Mr. Dell was an early investor in Mr. Lampert’s fund.

Mr. Fuhrman and Mr. Phelan still run MSD and preside over a staff of more than 100 overseeing Mr. Dell’s billions and the assets in his family foundation. MSD investments include a stock portfolio, with positions in the apparel company PVH, owner of the Calvin Klein and Tommy Hilfiger brands, and DineEquity, the parent of IHOP and Applebee’s.

Among its real estate holdings are the Four Seasons Resort Maui in Hawaii and a stake in the New York-based developer Related Companies.

MSD also has investments in several private businesses, including ValleyCrest, which bills itself as the country’s largest landscape design company, and DentalOne Partners, a collection of dental practices.

Perhaps MSD’s most prominent deal came in 2008, in the middle of the financial crisis, when it joined a consortium that acquired the assets of the collapsed mortgage lender IndyMac Bank from the federal government for about $13.9 billion and renamed it OneWest Bank.

The OneWest purchase has been wildly successful. Steven Mnuchin, a former Goldman executive who led the OneWest deal, has said that the bank is expected to consider an initial public offering this year. An I.P.O. would generate big profits for Mr. Dell and his co-investors, according to people briefed on the deal.

Another arm of MSD makes select investments in outside hedge funds. Mr. Dell invested in the first fund raised by Silver Lake, the technology-focused private equity firm that might now become his partner in taking Dell private.
MSD’s principals have already made tidy fortunes. In 2009, Mr. Fuhrman, 47, paid $26 million for the Park Avenue apartment of the former Lehman Brothers chief executive Richard S. Fuld. Mr. Phelan, 48, and his wife, Amy, a former Dallas Cowboys cheerleader, also live in a Park Avenue co-op and built a home in Aspen, Colo.

Both are influential players on the contemporary art scene, with ARTNews magazine last year naming each of them among the world’s top 200 collectors. MSD, too, has dabbled in the visual arts. In 2010, MSD bought an archive of vintage photos from Magnum, including portraits of Marilyn Monroe and Mahatma Gandhi, and has put the collection on display at the University of Texas, Mr. Dell’s alma mater.

Just as the investment firms Rockefeller & Company (the Rockefellers, diversifying their oil fortune) and Bessemer Trust (the Phippses, using the name of the steelmaking process that formed the basis of their wealth) started out as investment vehicles for a single family, MSD has recently shown signs of morphing into a traditional money management business with clients beside Mr. Dell.

Last year, for the fourth time, an MSD affiliate raised money from outside investors when it collected about $1 billion for a stock-focused hedge fund, MSD Torchlight Partners. A 2010 fund investing in distressed European assets also manages about $1 billion. The Dell family is the anchor investor in each of the funds, according to people briefed on the investments.

MSD has largely remained below the radar, though its name emerged a decade ago in the criminal trial of the technology banker Frank Quattrone on obstruction of justice charges. Prosecutors introduced an e-mail that Mr. Fuhrman sent to Mr. Quattrone during the peak of the dot-com boom in which he pleaded for a large allotment of a popular Internet initial public offering.

“We know this is a tough one, but we wanted to ask for a little help with our Corvis allocation,” Mr. Fuhrman wrote. “We are looking forward to making you our ‘go to’ banker.”

The e-mail, which was not illegal, was meant to show the quid pro quo deals that were believed to have been struck between Mr. Quattrone and corporate chieftains like Mr. Dell — the bankers would give executives hot I.P.O.’s and the executives, in exchange, would hold out the possibility of giving business to the bankers. (Mr. Quattrone’s conviction was reversed on appeal.)

The MSD team has also shown itself to be loyal to its patron in other ways.

On the MSD Web site, in the frequently asked questions section, the firm asks and answers queries like “how many employees do you have” and “what kind of investments do you make.”

In the last question on the list, MSD asks itself, “Do you use Dell computer equipment?” The answer: “Exclusively!”

Michael J. de la Merced contributed reporting.

This post has been revised to reflect the following correction:

Correction: January 18, 2013

An earlier version of this article misstated when an MSD affiliate raised money from outside investors for a hedge fund. It was last year, not earlier this year. The article also misstated which hedge fund and its focus. It was MSD Torchlight Partners, a stock-focused hedge fund, not MSD Energy Partners, an energy-focused hedge fund.

A version of this article appeared in print on 01/18/2013, on page B1 of the NewYork edition with the headline: Michael Dell’s Empire In a Buyout Spotlight.

As Rescue Operation Continues in Algeria, Fate of Hostages Remains Unclear

Label: World

British Petroleum, via European Pressphoto Agency

The remote In Amenas natural gas field in Algeria, the site of a terrorist attack and the taking of hostages on Wednesday.

BAMAKO, Mali — Dozens of hostages may still be held by militants at a remote gas field facility in the Algerian desert on Friday, according to Algeria’s state-run news agency, a day after the nation’s military launched an intense assault that freed captives, killed kidnappers but also left some hostages dead.

The agency said that the country’s special forces were seeking to reach a “peaceful solution” with a “terrorist group” that was still holding hostages at the gas field. It also gave a new sense of how many people may have been at the facility when the militants seized it on Wednesday, asserting that nearly 650 had managed to leave the site since then, including 573 Algerians and most of the 132 foreigners it said had been abducted.

But that still left many people unaccounted for, adding to the global concern about the fate of the hostages, who come from as many as 10 different nations. Estimates of the foreign casualties have ranged from 4 to 35, though the Algerian government has still not released any official tallies, leaving governments around the world scrambling for information.

Intensifying the uncertainties, a spokesman for the militants, who belong to a group called Al Mulathameen, said Friday that they planned further attacks in Algeria, according to a report by the Mauritanian news agency ANI, which maintains frequent contact with militant groups in the region. The spokesman called upon Algerians to “keep away from the installations of foreign companies, because we will suddenly attack where no one would expect it,” ANI reported.

A United States Africa Command spokesman, Ben Benson, said an Air Force aircraft had landed at an airstrip near the facility and was evacuating Americans and people from other countries involved in the hostage event. He said they would be flown to an American facility in Europe.

The Algerian military operation began on Thursday without consultation with the foreign governments whose citizens worked at the plant. It has been marked by a fog of conflicting reports, compounded by the remoteness of the gas plant, near a town called In Amenas hundreds of miles across the desert from the Algerian capital, Algiers, and close to the Libyan border.

Algeria’s state radio, citing an official source, reported on Friday that 18 militants had been killed, the first precise death count offered by state media. The state news agency also suggested that hundreds of civilians “had been freed,” though many of the employees inside the sprawling facility may have simply been on site at the time of the militant assault and were not necessarily being held by the kidnappers.

Speaking in Parliament, Prime Minister David Cameron of Britain said the number of Britons at risk was estimated late Thursday at “less than 30.” That number has now been “quite significantly reduced,” he said, adding that he could not give details because the crisis is continuing.

Offering a broad account of Algeria’s handling of the operation, he told lawmakers: “We were not informed of this in advance. I was told by the Algerian prime minister while it was taking place. He said that the terrorists had tried to flee, that they judged there to be an immediate threat to the lives of the hostages and had felt obliged to respond.”

He added: “This is a large and complex site and they are still pursuing terrorists and possibly some of the hostages in other areas of the site. The Algerian prime minister has just told me this morning that they are now looking at all possible routes to resolving this crisis.”

BP, the British-based energy giant that jointly controls the gas installation in Algeria, said in a statement on Friday that there was a “small number of BP employees” at the facility “whose current location and situation remain uncertain.” The company said it flew out 11 of its staff members along with hundreds of employees of other oil companies on Thursday.

The Japanese government said on Friday that three of its citizens had escaped but that 14 were still unaccounted for. On Friday, Defense Secretary Leon E. Panetta met with Mr. Cameron in London as Pentagon officials were continuing to try to learn details about the raid.

“We are working around the clock to ensure the safe return of our citizens and we will continue to be in close consultation with the Algerian government,” Mr. Panetta said in a speech in London before meeting with Mr. Cameron.

Adam Nossiter reported from Bamako and Alan Cowell and Scott Sayare from Paris. Reporting was contributed by Rick Gladstone from New York; Elisabeth Bumiller, Julia Werdigier and John F. Burns from London; Eric Schmitt and David E. Sanger from Washington; Martin Fackler and Hiroko Tabuchi from Tokyo; and Mayy El Sheikh from Cairo.

DealBook: Facing Legal Costs, Citigroup Disappoints in 4th Quarter

Label: Business

Citigroup, which has been working to cut costs and unload troubled assets, continues to struggle under the weight of its mortgage woes.

The bank reported fourth-quarter profit of $1.2 billion, or 38 cents a share, significantly below analysts’ estimates. Excluding one-time items, earnings amounted to 69 cents a share.

Ahead of the bank’s quarterly earnings, analysts estimated earnings at 96 cents a share, according to a survey by Thomson Reuters. In the period a year earlier, the bank posted profit of $956 million, or 31 cents a share.

The disappointing quarter relates to continuing legal problems, as the bank works to clean up the mortgage mess stemming from the financial crisis. In the fourth quarter, Citigroup had $1.3 billion of legal costs and related expenses.

Citigroup has also faced increasing pressure from shareholders to buoy its returns. As part of that effort, the bank has been working through a glut of soured loans and unloading less-profitable business lines while systematically reducing costs. In December, the bank announced that it would eliminate 11,000 jobs worldwide, part of a much larger contraction.

“Our bottom line earnings reflect an environment that remains challenging,” Michael L. Corbat, the bank’s chief executive, said in a statement. “It will take some time to work through the challenges of the current environment but realizing our core earnings potential, as well as improving our returns on assets and tangible equity, are critical goals going forward.”

Beneath the headline numbers, Citigroup did experience gains in some of its businesses.

The bank has been focusing on developing countries, where there are comparatively more growth opportunities than in the United States. Within the global consumer banking group, revenue increased 4 percent, to $4.9 billion, in the fourth quarter. Revenue in North America rose 3 percent, to $5.3 billion.

Citigroup’s securities and banking group also improved, on the strength of investment banking, equities and fixed income. The unit reported net income of $629 million for the quarter, compared with a $158 million loss in the period a year earlier.

Emphasizing improvements in the bank, John C. Gerspach, the bank’s chief financial officer, said on a conference call on Thursday that the bank had gained “client wallet share” in its investment banking business.

The fourth-quarter earnings are the first under Mr. Corbat’s leadership.

In October, the bank’s powerful chairman, Michael E. O’Neill, abruptly ousted Vikram S. Pandit as chief executive. Since taking the reins of the bank, Mr. Corbat has vowed to continue to revamp the bank, focusing on its core businesses and exiting less profitable areas.

Such efforts have weighed on the bank’s bottom line in the short term. In the fourth quarter, Citigroup’s operating expenses rose 5 percent, to $13.8 billion.

Along with its strategic moves, Citigroup also paid for its legal problems. Like rivals, the bank faces claims that it used shoddy documents in foreclosure proceedings that might have led to wrongful evictions.

Citigroup, along with nine other banks, agreed this month to sign on to an $8.5 billion settlement with the Federal Reserve and the Office of the Comptroller of the Currency. The settlement will allow Citigroup to move beyond an expensive review of loans mandated by regulators in 2011.

On the earnings call, Mr. Gerspach hinted that the banking industry’s legal woes were not over. “I think that the entire industry is still looking at some additional settlements that are still yet to appear,” he said.

The New Old Age Blog: Officials Say Checks Won't Be in the Mail

Label: Health

The jig is up.

Two years ago, the Treasury Department initiated its Go Direct campaign to persuade people still receiving paper checks for their Social Security, Veterans Affairs, S.S.I. and other federal benefits to switch to direct deposit.

“At that point, we were issuing approximately 11 million checks each month,” or about 15 percent of the total, Walt Henderson, director of the campaign, told me.

After putting notices in every monthly check envelope, circulating public service announcements and putting the word out through banks, senior centers, the Red Cross, AARP and other organizations, the Treasury Department has since shrunk that number to five million monthly checks.

That means 93 percent of those getting federal benefits are using direct deposit or, if they prefer or lack a bank account, a Direct Express debit card that gets refilled each month and can be used anywhere that accepts MasterCard.

“So people have been getting the word and making the switch,” Mr. Henderson said. Now, federal officials are pushing the last holdouts to convert to direct deposit by March 1.

Although officials say the change is not optional, the jig isn’t entirely up. If you or your older relative does not respond to their pleading, “we’re not going to interrupt their payments,” Mr. Henderson said. But the department will start sending letters urging people to switch.

The major motive is financial: shifting the last paper checks to direct deposit or a debit card (only 2 percent of recipients go that route) will save $1 billion over the next decade, the department estimates.

But safety enters the picture, too. One reason some beneficiaries resist direct deposit, Mr. Henderson said, is that they fear their electronic deposits can be hacked or diverted. Having grown up in a predigital age, perhaps they feel safer with a check in their hands.

But they probably aren’t. In 2011, the Treasury Department received 440,000 reports of lost or stolen benefits checks. With direct deposit, “there’s no check lingering unattended in a mailbox,” Mr. Henderson noted.

The greater reason for sticking with paper is probably simple inertia. “It’s human nature to procrastinate,” he said.

But unless you or your relatives want a series of letters from the Treasury Department, it is probably time for the last fence-sitters to get with the program.

They don’t need to use a computer. People can switch to direct deposit, or get the debit card, at their banks or the local Social Security office. More simply, they can call a toll-free number, (800) 333-1795, and have agents walk them through the change. Or they can sign up online at www.GoDirect.org.

They will need:

Their Social Security number.
The 12-digit federal benefit number found on their checks.
The amount of the most recent check.
And, for direct deposit, a bank or credit union routing number, usually found on the front of a check. They can have direct deposit to a savings account, too.

A caution for New Old Age readers: If you think your relative has not switched because he or she is cognitively impaired and can no longer handle his finances, you can be designated a representative payee and receive monthly Social Security or S.S.I. payments on your relative’s behalf. This generally requires a visit to your local Social Security office, documentation in hand.

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

The New Old Age Blog: Officials Say Checks Won't Be in the Mail

Label: Lifestyle

The jig is up.

“At that point, we were issuing approximately 11 million checks each month,” or about 15 percent of the total, Walt Henderson, director of the campaign, told me.

“So people have been getting the word and making the switch,” Mr. Henderson said. Now, federal officials are pushing the last holdouts to convert to direct deposit by March 1.

The greater reason for sticking with paper is probably simple inertia. “It’s human nature to procrastinate,” he said.

But unless you or your relatives want a series of letters from the Treasury Department, it is probably time for the last fence-sitters to get with the program.

They will need:

Their Social Security number.
The 12-digit federal benefit number found on their checks.
The amount of the most recent check.
And, for direct deposit, a bank or credit union routing number, usually found on the front of a check. They can have direct deposit to a savings account, too.

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

DealBook: H.P. Said to Have Suitors for Two Units

Label: Technology

Hewlett-Packard has received a number of inquiries from would-be buyers for its Autonomy and Electronic Data Systems units in recent weeks, though the technology company is not interested in selling at the moment, a person briefed on the matter said on Wednesday.

The calls from potential suitors and bankers picked up after H.P. filed its annual report with regulators on Dec. 28, said the person, who did not want to be identified because management deliberations were confidential.

In the securities filing, the company said, “We also continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives.”

That is standard legal boilerplate. But H.P. has been struggling with poor performance at both Autonomy and E.D.S., having significantly written down the value of those acquisitions.

The company has also claimed to have found accounting and disclosure issues at Autonomy, and has forwarded findings from an internal inquiry to securities regulators in the United States and the division’s home in Britain.

Shares of H.P. rose 4 percent on Wednesday after The Wall Street Journal reported news of the expressions of interest. Over the last 12 months, the shares have fallen 35 percent.

But H.P.’s management team, led by Meg Whitman, is not interested in selling what it considers to be core businesses. Instead, the company intends to focus on developing its enterprise operations, the person said.

The inquiries may also have been stoked by the sudden flurry of news coverage surrounding a potential leveraged buyout of Dell. That company still appears to be closing in on a potential deal to sell itself to a consortium that includes its founder, Michael S. Dell, and the investment firm Silver Lake, in the biggest leveraged buyout in more than five years.

Advisers to Dell and Silver Lake are still negotiating a number of elements in what is proving to be a complicated deal, though they have made advancements, according to a person briefed on the matter who did not want to be identified because the talks were private. A potential takeover may be priced around $14 a share, valuing the company at more than $24 billion.

Mr. Dell is expected to contribute his roughly 16 percent stake to a leveraged buyout. And Silver Lake has been in talks with potential partners, including sovereign wealth funds like Temasek of Singapore, about contributing additional capital, this person said.

Banks are also working on lining up the financing necessary for a deal, which could reach $15 billion. While an enormous amount of money, bankers are betting that debt investors will clamor for the financing package, hoping to reap yields that are higher than those for Treasury bonds.

Still, this person cautioned that the discussions could fall apart.

Confronting H.P. and Dell is the grinding pressure on both companies’ personal computer businesses, where profit margins have declined in the last few years as competition toughened.

The two tech companies are trying to decrease their dependence on making PCs.

That move had prompted H.P. to buy both E.D.S. and Autonomy, paying more than $20 billion for the pair.

A version of this article appeared in print on 01/17/2013, on page B4 of the NewYork edition with the headline: Two Units Of Hewlett Reportedly Draw Suitors.

Standoff After Militants Seize Americans and Other Hostages in Algeria

Label: World

BAMAKO, Mali — The Algerian military launched an operation on Thursday against armed Islamist extremists holding dozens of hostages including Americans and other foreigners at a remote gas field on Thursday, and a top Algerian official said at least four hostages were freed. There were unconfirmed reports of multiple casualties.

Kjetil Alsvik/Statoil, via Agence France-Presse — Getty Images

An undated photo of the In Amenas gas field in Algeria, where Islamist militants took dozens of foreign hostages on Wednesday.

The military operation, confirmed by an Algerian official and the governments of Japan and Britain, which said they had been informed by Algerian authorities, came more than 24 hours after the armed extremists seized the hostages at the internationally managed gas field near the Libyan border in retaliation for the French military intervention in Mali last week.

“There was an assault, yes,” said the Algerian official, who spoke on condition of anonymity because of the sensitivity of the operation. “There are burned-out vehicles. Four hostages have been saved.”

The official said reports that Algerian army helicopters had strafed the gas field and had killed 35 hostages and 15 kidnappers were “exaggerated.” He said that some kidnappers had been killed but he would not say whether any hostages had been killed.

“We are waiting for official confirmation,” he said.

News agencies in Algeria and neighboring Mauritania said the helicopters may have attacked when the kidnappers sought to move their hostages from one part of the installation to another.

British officials in London said Algerian authorities had informed them that an “operation” was under way at the remote location in the desert, but gave no further details. “It remains an ongoing situation,” one official said, speaking in return for anonymity under departmental rules. Japanese authorities were still trying to ascertain if any Japanese hostages had escaped, the top Japanese government spokesman, Chief Cabinet Secretary Yoshihide Suga, told a news conference.

The situation is “very confused,” President François Hollande of France said at a news conference in Paris and was “evolving hour by hour.” Mr. Hollande confirmed for the first time officially that French citizens were among the captives.

The kidnapping in Algeria was a retaliation for the continuing French military assault on Islamist extremists in Mali that has escalated into a much broader conflict spilling beyond Mali and North Africa to the United States and other countries with citizens held hostage. Reuters said the survivors of the Algerian assault included hostages from the United States, Belgium, Japan and Britain. The full extent of the casualties was not immediately clear.

Before reports of an assault began to emerge, many hostages — both Algerian and foreign — were reported to have escaped as the kidnappers sought and failed to persuade Algerian authorities to give them safe passage with their captives.

The Algerian news Web site TSA, quoted a local official, Sidi Knaoui, as saying 10 foreign hostages and 40 Algerians had escaped Thursday after the kidnappers had made several aborted attempts to flee with their captives. Mr. Knaoui said he had been scheduled to meet with the hostage takers in an attempt at negotiations. He could not be reached for confirmation.

The Irish government confirmed that an Irish national had escaped or been released. The man had contacted his family and was "understood to be safe and well and no longer a hostage," Ireland’s Department of Foreign Affairs and Trade said in a statement.

Other Algerian news reports said that 30 Algerian hostages and 15 foreigners escaped, but there was no immediate independent confirmation of that account. The Associated Press, quoting an unidentified Algerian official, said 20 foreigners, including some Americans, had escaped.

Earlier, a French television station, France 24, quoted an unidentified hostage as saying the attackers “were heavily armed and forced several hostages to wear explosives belts. They threatened to blow up the gas field if Algerian forces attempted to enter the site,” the station reported.

Adam Nossiter reported from Bamako, and Alan Cowell and Scott Sayare from Paris. Reporting was contributed by Clifford Krauss from Houston, Rick Gladstone from New York, Elisabeth Bumiller from Rome, and Steven Erlanger from Paris.

DealBook: Goldman Sachs Earnings Soar

Label: Business

9:46 a.m. | Updated

Goldman Sachs on Wednesday reported a fourth-quarter profit of $2.89 billion, or $5.60 a share, a significant jump from the period a year earlier.

The per-share figure is after the company paid preferred dividends, and comes in well ahead of analysts’ expectations of $3.78 a share, according to Thomson Reuters.

Analysts had been anticipating a fairly decent quarter for Goldman, and its results were buoyed by strong trading and investment banking results and lower compensation costs. In the fourth quarter of 2011, the bank earned $1.01 billion, or $1.84 a share.

The bank’s most recent results reflect a continued focus on cutting expenses as well as a number of investing gains, including $485 million from debt and security loans, the company said.

“While economic conditions remained challenging for much of last year, the strengths of our business model and client franchise, coupled with our focus on disciplined management, delivered solid performance for our shareholders,” Goldman’s chairman and chief executive, Lloyd C. Blankfein, said in a news release.

The results had an immediate effect on the firm’s stock, sending it up 2.7 percent in early morning trading.

Over all, the firm produced $9.24 billion in revenue in the quarter ended Dec. 31, up 53 percent from the same quarter in 2011. That also beat analysts’ estimates of quarterly revenue of $7.91 billion.

Goldman also revealed how much it had set aside for compensation, paying out $12.9 billion in 2012, an average of $399,506 to each of its 32,400 employees. This represented 37.9 percent of Goldman’s revenue for the year.

Over the last year, Goldman has reduced its payroll by 900 people. In 2011, the bank set aside $12.22 billion, or 42.4 percent, of its 2011 net revenue to pay compensation and benefits for its employees.

Goldman partners, a small group of top managers at the firm, will learn their 2012 compensation packages on Wednesday. The vast majority of employees, however, will be told what their bonuses will be on Thursday in what is known at Goldman as compensation communication day. These bonuses are on top of annual salaries, which can range from roughly $100,000 to $2 million for executives like Mr. Blankfein.

Bonuses on Wall Street — both the size of them and how they are paid — always draw scrutiny. Goldman Sachs decided this week not to delay the payment of bonuses to its staff members in Britain, a move that would have helped investment bankers and other highly paid employees benefit from a lower income tax rate.

Goldman Sachs was already drawing attention in the United States after it distributed $65 million in stock to 10 senior executives in December instead of January, when the firm typically makes such awards. That move helped the executives avoid the higher tax rates that will now be imposed on income of $450,000 or more.

The firm’s annual return on equity was 10.7 percent, up from 2011, when it was 5.8 percent. While this is far below its performance in boom years like 2006, when its return on equity was 41.5 percent, it is an achievement that it has broken above 10 percent.

Banks continue to fight difficult economic conditions at home and abroad, and Goldman’s results are still well below what it was producing before the financial crisis. Those outsize profits, however, were fueled by borrowing on credit and selling mortgage-linked products, and they have dwindled. New regulations aimed at reining in risk-taking have also reduced the profitability of certain businesses.

Revenue from investment banking came in at $1.41 billion, up 64 percent from the year-ago period.

Net revenue in Goldman’s powerful division that trades bonds, currencies and commodities was $2.04 billion, up 50 percent from levels in the quarter a year earlier. The firm said those results reflected an increase in mortgage revenues, which were “significantly higher” when compared with 2011.

The firm’s investing and lending division also had a stronger-than-expected quarter, posting revenue of $1.97 billion, up 126 percent from year-ago levels. The firm said this unit benefited from an increase in equity prices in Asia and Europe and a number of one-time gains. For instance, it logged a gain of $334 million from its investment in the Industrial and Commercial Bank of China, a strategic investment the firm made in 2006. It also had gains from the debt securities and loans it holds.

Goldman is one of a number of banks releasing earnings this week. JPMorgan Chase also Wednesday weighed in with its results, reporting a strong profit of $5.7 billion for the fourth quarter, up 53 percent from the previous year.

These positive results put pressure on Morgan Stanley to post good results when it releases its fourth quarter numbers on Friday. Analysts polled by Thomson Reuters are expecting Morgan Stanley to report earnings of 27 cents a share, up from a loss of 14 cents in the year-ago period.

Phys Ed: Exercise Can Boost Flu Shot's Potency

Label: Health

Phys Ed

Gretchen Reynolds on the science of fitness.

As this year’s influenza season continues to take its toll, those procrastinators now hurrying to get a flu shot might wish to know that exercise may amplify the flu vaccine’s effect. And for maximal potency, the exercise should be undertaken at the right time and involve the right dosage of sweat, according to several recent reports.

Flu shots are one of the best ways to lessen the risk of catching the disease. But they are not foolproof. By most estimates, the yearly flu vaccine blocks infection 50 to 70 percent of the time, meaning that some of those being inoculated gain little protection. The more antibodies someone develops, the better their protection against the flu, generally speaking. But for some reason, some people’s immune systems produce fewer antibodies to the influenza virus than others’ do.

Being physically fit has been found in many studies to improve immunity in general and vaccine response in particular. In one notable 2009 experiment, sedentary, elderly adults, a group whose immune systems typically respond weakly to the flu vaccine, began programs of either brisk walking or a balance and stretching routine. After 10 months, the walkers had significantly improved their aerobic fitness and, after receiving flu shots, displayed higher average influenza antibody counts 20 weeks after a flu vaccine than the group who had stretched.

But that experiment involved almost a year of dedicated exercise training, a prospect that is daunting to some people and, in practical terms, not helpful for those who have entered this flu season unfit.

So scientists have begun to wonder whether a single, well-calibrated bout of exercise might similarly strengthen the vaccine’s potency.

To find out, researchers at Iowa State University in Ames recently had young, healthy volunteers, most of them college students, head out for a moderately paced 90-minute jog or bike ride 15 minutes after receiving their flu shot. Other volunteers sat quietly for 90 minutes after their shot. Then the researchers checked for blood levels of influenza antibodies a month later.

Those volunteers who had exercised after being inoculated, it turned out, exhibited “nearly double the antibody response” of the sedentary group, said Marian Kohut, a professor of kinesiology at Iowa State who oversaw the study, which is being prepared for publication. They also had higher blood levels of certain immune system cells that help the body fight off infection.

To test how much exercise really is required, Dr. Kohut and Justus Hallam, a graduate student in her lab, subsequently repeated the study with lab mice. Some of the mice exercised for 90 minutes on a running wheel, while others ran for either half as much time (45 minutes) or twice as much (3 hours) after receiving a flu shot.

Four weeks later, those animals that, like the students, had exercised moderately for 90 minutes displayed the most robust antibody response. The animals that had run for three hours had fewer antibodies; presumably, exercising for too long can dampen the immune response. Interestingly, those that had run for 45 minutes also had a less robust response. “The 90-minute time point appears to be optimal,” Dr. Kohut says.

Unless, that is, you work out before you are inoculated, another set of studies intimates, and use a dumbbell. In those studies, undertaken at the University of Birmingham in England, healthy, adult volunteers lifted weights for 20 minutes several hours before they were scheduled to receive a flu shot, focusing on the arm that would be injected. Specifically, they completed multiple sets of biceps curls and side arm raises, employing a weight that was 85 percent of the maximum they could lift once. Another group did not exercise before their shot.

After four weeks, the researchers checked for influenza antibodies. They found that those who had exercised before the shot generally displayed higher antibody levels, although the effect was muted among the men, who, as a group, had responded to that year’s flu vaccine more robustly than the women had.

Over all, “we think that exercise can help vaccine response by activating parts of the immune system,” said Kate Edwards, now a lecturer at the University of Sydney, and co-author of the weight-training study.

With the biceps curls, she continued, the exercises probably induced inflammation in the arm muscles, which may have primed the immune response there.

As for 90 minutes of jogging or cycling after the shot, it probably sped blood circulation and pumped the vaccine away from the injection site and to other parts of the body, Dr. Kohut said. The exercise probably also goosed the body’s overall immune system, she said, which, in turn, helped exaggerate the vaccine’s effect.

But, she cautions, data about exercise and flu vaccines is incomplete. It is not clear, for instance, whether there is any advantage to exercising before the shot instead of afterward, or vice versa; or whether doing both might provoke the greatest response – or, alternatively, be too much and weaken response.

So for now, she says, the best course of action is to get a flu shot, since any degree of protection is better than none, and, if you can, also schedule a visit to the gym that same day. If nothing else, spending 90 minutes on a stationary bike will make any small twinges in your arm from the shot itself seem pretty insignificant.

Phys Ed: Exercise Can Boost Flu Shot's Potency

Label: Lifestyle

Phys Ed

Gretchen Reynolds on the science of fitness.

So scientists have begun to wonder whether a single, well-calibrated bout of exercise might similarly strengthen the vaccine’s potency.

With the biceps curls, she continued, the exercises probably induced inflammation in the arm muscles, which may have primed the immune response there.

News Analysis: Momentum Seems to Build for Gargantuan Buyout of Dell

Label: Technology

Dell is advancing toward a goal many thought was all but unattainable since the financial crisis: a leveraged buyout worth more than $20 billion.

The company is in talks with investment firms and its founder, Michael S. Dell, over a deal that would take the technology company off the public markets, people briefed on the matter said on Tuesday.

One potential transaction that appears to be gaining steam is one that would be led by Silver Lake, a private equity firm that focuses on technology deals, one of these people said. The investment shop has already tasked a number of banks — Bank of America Merrill Lynch, Barclays, Credit Suisse and Royal Bank of Canada — with lining up the enormous amount of financing that would be needed, perhaps as much as $16 billion.

Silver Lake is also sounding out potential partners that could help contribute equity financing for the deal, a group that may include wealthy Asian investors, this person said.

Dell is contemplating using some of its enormous store of cash, totaling about $11.3 billion as of Nov. 2, to help defray the deal’s cost. It may do so even though more than 80 percent of its cash is held overseas, and bringing it home could generate a big tax penalty.

Mr. Dell is expected to contribute his roughly 16 percent stake in the company to the deal, helping to lower the ultimate price tag. His shares as of Tuesday’s market close were worth about $3.6 billion. It is unclear whether he would invest additional money as part of a buyout.

Nonetheless, the deal talks appear to have momentum, although one of the people briefed on the matter cautioned that they could still fall apart.

Representatives for Dell, Silver Lake and the banks declined to comment.

Should a deal come together, it would be the most radical step yet to revive a company once so profitable that it gave rise to a class of “Dellionaires” during the Internet boom.

Mr. Dell, who founded the computer maker in his dorm room in 1984, has long cast about for a solution to a world where revenue from personal computer sales has consistently fallen in recent years.

Behind any move to take Dell private is the hope that, freed from the tough scrutiny of public shareholders, the company can continue moving into the more lucrative and stable market of providing hardware and software services for corporations.

The company’s stock had fallen nearly 48 percent in the five years through last Friday, the day before Bloomberg News reported Dell’s talks with private equity firms. Since then, the stock price has climbed 21 percent.

A leveraged buyout of Dell would be one of the biggest private equity transactions since the Blackstone Group acquired Hilton Hotels for $25 billion more than five years ago. To date, no leveraged buyout announced since the financial crisis has surpassed the $7.2 billion that Kohlberg Kravis Roberts and others paid for the Samson Investment Company, an oil and gas driller, in fall 2011.

In part, that has been a matter of logistics. Leveraged buyouts require private equity firms to put money down, much as borrowers do for a mortgage. On average, that amount has been around 30 percent of the overall deal price, meaning that the equity required for a Dell takeover could be significant.

That is why Silver Lake is seeking to bring in at least one partner to help buoy a bid, one of the people briefed on the matter said.

But private equity firms have also taken pains to avoid club deals, in which two or more of them partner together to buy a company. Investors in these firms have complained that the practice essentially multiplies their exposure to a particular transaction.

Private equity firms aren’t fond of them because they essentially erase the distinctions between competitors, potentially making it harder to raise money for new funds.

Any deal would also require a seemingly daunting amount of debt financing, raised from bank loans and junk-bond sales. Several deal makers have expressed confidence in their ability to raise that money, given a hunger among investors for bonds that yield even a few percentage points more than Treasury bonds.

The co-head of JPMorgan Chase‘s global debt capital markets, Jim Casey, told CNBC in October that his firm could raise $15 billion to $25 billion in noninvestment-grade debt for a single transaction.

Some of the other obstacles to a Dell takeover lie specifically with the company. It already bears $4.9 billion in long-term debt — and that is before it assumes the enormous amount that would come from a private equity deal.

While Dell still reports a healthy amount of cash from operations, totaling $3.7 billion for the year ended Nov. 2, much of that could be consumed with paying down debt. A. M. Sacconaghi, an analyst with Sanford C. Bernstein, estimated on Tuesday that the company could pay about $820 million in interest payments each year.

Analysts have questioned whether a private Dell would have the capital to pay for acquisitions, which has been an important vehicle for expanding into new markets. Last year alone, the company struck 10 deals, including the $2.4 billion purchase of Quest Software.

“With a large debt load, we believe Dell would have a more difficult time acquiring smaller enterprise companies — making it harder to diversify away from PCs,” analysts with Barclays wrote in a research note on Tuesday.

“We would be quite surprised if a transaction would take place.”

Ben Protess contributed reporting.

A version of this article appeared in print on 01/16/2013, on page B7 of the NewYork edition with the headline: Signs of Gathering Momentum for a Hefty Buyout of Dell.

Berlusconi Stirs Up Elections in Italy

Label: World

ROME — The dark, double-breasted suits have long been a mainstay, but now former Prime Minister Silvio Berlusconi has taken to wearing the occasional fedora. It lends him a rakish, retro air as he embarks on what many Italians, foreign investors and no doubt Chancellor Angela Merkel of Germany hoped would never happen: another election campaign.

In recent weeks, Mr. Berlusconi, a center-right candidate, has blitzed the airwaves with a theatrical blend of anti-establishment populism, this from someone who governed Italy for the better part of the last decade. His prime targets are Prime Minister Mario Monti, a well-behaved technocrat now vying to retain his post, and Ms. Merkel, cast as the taskmaster of the austerity that is suffocating southern Europe.

With every hour that he appears on television, the medium he knows best and that made him rich, Mr. Berlusconi rises in opinion polls. His People of Liberty party is now in second place, after the center-left Democratic Party and before Mr. Monti’s nascent and still incoherent centrist bloc. They are trailed by the grass-roots Five Star Movement of Beppe Grillo, a comedian, which has tapped into a groundswell of antipolitical sentiment.

Analysts widely agree that there is little chance Mr. Berlusconi will govern Italy again after elections scheduled for February. But they say he is likely to win enough seats in Parliament to achieve his goals: protecting his interests on issues like justice reform, digital television rights and wiretap laws — and weakening the center-left Democratic Party and Mr. Monti, whose popularity has dropped since the economist became a candidate.

“It’s a very confusing time,” said Giuliano Ferrara, the editor of the conservative daily Il Foglio and a sometime Berlusconi adviser. “People don’t want the insider,” he said of Mr. Berlusconi, “and they don’t want the outsider,” he added of Mr. Monti.

Mr. Berlusconi, a skilled campaigner, has cast himself as an outsider while making an “insider” of Mr. Monti, who was lionized when he first took office in November 2011 precisely because he was seen as apolitical.

Despite his many legal tangles and the dire performance of Italy’s economy under his leadership, Mr. Berlusconi maintains a residual popularity through charm, mastery of the media and a lack of strong competing parties.

Last week, Mr. Berlusconi appeared for two hours on a television program hosted by one of his old enemies. Questioned about the number of politicians with criminal records elected on his party’s slate over the years, Mr. Berlusconi said he had not sought them out. “You take 100 priests and you don’t find 100 saints,” he said.

“This country is ungovernable!” he said with glee at one point, only to be reminded that his governments had the largest majority in postwar Italian history. At another moment, Mr. Berlusconi stood up in outrage, threatened to leave but eventually calmed down, deftly taking out a white handkerchief to brush off his chair before sitting back down.

The show drew nine million viewers, a quarter of the Italian audience share.

“He’s an ex-prime minister who is doing showmen’s gags on television,” said Marco Damilano, a political correspondent for L’Espresso, a left-wing weekly magazine, whom Mr. Berlusconi cheerfully pretended to hit on the head with a poster on a television program on Tuesday.

Always a savvy populist, Mr. Berlusconi now rails against the fiscal consolidation policies advocated by Germany, sounding not unlike the leftist Syriza party in Greece, which leads in opinion polls there. He has also taken to quoting the New York Times columnist Paul Krugman, a critic of austerity.

His message has struck a nerve in Italy and has helped put Mr. Monti, the darling of Europe and the United States, who calmed financial speculation and put Italy back on the world stage, on the defensive on television, a medium that Mr. Berlusconi dominates the way Fred Astaire did the dance floor.

Appearing on Italy’s most widely watched interview program on Monday evening, Mr. Monti, who routinely treats his predecessor with understated irony, compared Mr. Berlusconi to “the Pied Piper” who entranced Italy but ultimately led it to its death.

Gaia Pianigiani contributed reporting.

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DealBook: Michael Dell’s Empire in a Buyout Spotlight

A version of this article appeared in print on 01/18/2013, on page B1 of the NewYork edition with the headline: Michael Dell’s Empire In a Buyout Spotlight.

As Rescue Operation Continues in Algeria, Fate of Hostages Remains Unclear

DealBook: Facing Legal Costs, Citigroup Disappoints in 4th Quarter

The New Old Age Blog: Officials Say Checks Won't Be in the Mail

The New Old Age Blog: Officials Say Checks Won't Be in the Mail

DealBook: H.P. Said to Have Suitors for Two Units

A version of this article appeared in print on 01/17/2013, on page B4 of the NewYork edition with the headline: Two Units Of Hewlett Reportedly Draw Suitors.

Standoff After Militants Seize Americans and Other Hostages in Algeria

Kjetil Alsvik/Statoil, via Agence France-Presse — Getty Images

DealBook: Goldman Sachs Earnings Soar

Phys Ed: Exercise Can Boost Flu Shot's Potency

Phys Ed

Phys Ed: Exercise Can Boost Flu Shot's Potency

Phys Ed

News Analysis: Momentum Seems to Build for Gargantuan Buyout of Dell

A version of this article appeared in print on 01/16/2013, on page B7 of the NewYork edition with the headline: Signs of Gathering Momentum for a Hefty Buyout of Dell.

Berlusconi Stirs Up Elections in Italy

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