Strategies: At Dell, a Gamble on a Legacy

IN 1984 — the year Mark Zuckerberg, the Facebook creator, was born — Michael S. Dell started a tech company in his dorm room, dropped out of college and changed the world.

By making personal computers that were powerful, reliable and inexpensive, and by selling directly to buyers who customized their PC features, Mr. Dell revolutionized his industry.

“The original PC industry was long on people with great technical ideas but short on people who were able to turn those ideas into opportunities — into products that people really wanted,” said Timothy Bresnahan, a Stanford economist. Along with Steve Jobs and Bill Gates, as well as Scott Cook of Intuit, Mr. Dell was one of those few great innovators, he said. “These people are very rare.”

Mr. Dell’s early achievements were formidable, but unless his latest effort to turn around his company is successful, the Dell legacy today is very much in doubt. Last week, along with Silver Lake Partners, a private equity firm, he made a $24.4 billion buyout offer for his company — an apparent bet that, without the scrutiny of public shareholders, he can get Dell back on track.

Dell, the company, has been losing ground for years as the industry it once dominated has undergone upheavals that its founder failed to foresee. “The very nature of technology is that it changes a lot,” said Toni Sacconaghi, an analyst at Sanford C. Bernstein. “And Michael has conceded publicly that he has missed some big changes — he failed to foresee smartphones or tablets — and both of these shifts have been highly detrimental to the PC world.”

He has lagged in a crucial area of corporate strategy as well, said Shaw Wu, an analyst at Sterne Agee in San Francisco. While Mr. Dell has always been attuned to the needs of corporate clients, he is 20 years behind I.B.M. in embracing a strategic shift to enterprise software and services, Mr. Wu said: “That’s a higher-margin business that Dell would like to go after, but I.B.M. and others have got tremendous leads. It will be very difficult for him to catch up.”

If Dell shareholders accept an offer price of $13.65 a share, Mr. Dell, who is contributing his stake of more than 14 percent in the company plus hundreds of millions more, would end up with more than 50 percent of the new company’s equity, Mr. Sacconaghi estimated. Mr. Dell, who declined to comment for this article, would control the company without being subject to the day-to-day pressures of the stock market, which has pummeled Dell shares because its earnings have weakened.

While Dell reports that 50 percent of its revenue is directly related to PCs, Mr. Wu says the figure is 70 to 80 percent when indirect revenue, like that for computer monitors, printers and services, is included. “The company has made big investments in other areas, but it’s still mainly a PC company,” he said.

That’s a big problem for several reasons. Once considered the low-cost provider in the field, Dell now faces lean Asian competitors like Lenovo, Asus and Acer that make PCs more cheaply and accept lower profit margins. Yet these companies, particularly Lenovo, have also garnered praise for making excellent computers, not merely well-priced ones. At the same time, Dell’s vaunted reputation for quality and service has waned.

Lenovo, which makes the ThinkPad line of notebook computers formerly sold by I.B.M., “has been picking up corporate customers from Dell,” Mr. Wu said.

THEN there is a deeper issue: the entire PC industry is stagnant at best. Worldwide PC shipments declined 4.9 percent in the fourth quarter, versus the year-earlier period, according to Gartner, a market research firm. Consumer preferences are shifting. With the ubiquity of smartphones and tablets — segments where Dell is absent or very weak — consumers aren’t replacing PCs as often.

“We don’t expect people to abandon PCs, but they won’t rely on them as much in the future,” said Mikako Kitagawa, a Gartner analyst. Dell’s share of this no-growth market has been shrinking, to 10.2 percent worldwide in the fourth quarter of 2012, from 12.2 percent the previous year, Gartner said.

Facing such headwinds, Mr. Sacconaghi said, Dell hopes to “hold PC profits flat or, worst case, down 5 percent a year, while they grow the rest of the business to more than offset that.” But the market is skeptical. Dell’s shares fell 30 percent in the 12 months before Jan. 14, when reports of an imminent buyout appeared.

The leveraged buyout will layer $15 billion of new debt on the company. Microsoft, with which Dell has had close ties, is providing $2 billion. Because interest rates are extraordinarily low, servicing all that debt should be manageable, assuming that Dell maintains its current cash flow, Mr. Sacconaghi said.

It’s not clear how much the debt load will constrain Dell’s investments in research and development. Josh Lerner, a Harvard Business School professor, said a study for which he was a co-author found that after leveraged buyouts, most companies maintained their ability to innovate, largely by focusing research in “their core competencies.”

In other words, he said, “Dell might be able to prosper after a buyout; it would depend on how Michael Dell manages the company.”

Is the price being offered for the company fair? It’s often unwise to bet against company insiders, especially founders like Mr. Dell, who may be presumed to know their companies’ value better than outside investors.

Consider John W. Kluge, who took Metromedia private in 1984 in a $1.1 billion leveraged buyout. Mr. Kluge, Metromedia’s founder, promptly liquidated it, selling television stations (to Rupert Murdoch) and sundry assets like the Harlem Globetrotters and the Ice Capades. In the end, Mr. Kluge tripled his take — to the chagrin of many former shareholders.

Mr. Kluge, who died in 2010, wasn’t interested in preserving his company or revolutionizing an industry, however. He merely wanted to make money. “When we buy an asset, we look at it as a return on the investment,” he said in 1980.

For Mr. Dell, whose name is on the door, other factors may be in play. “Another chapter is still to be written,” Mr. Bresnahan said. Money will be part of it. So will the Dell legacy.

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In Nigeria, Polio Vaccine Workers Are Killed by Gunmen

At least nine polio immunization workers were shot to death in northern Nigeria on Friday by gunmen who attacked two clinics, officials said.

The killings, with eerie echoes of attacks that killed nine female polio workers in Pakistan in December, represented another serious setback for the global effort to eradicate polio.

Most of the victims were women and were shot in the back of the head, local reports said.

A four-day vaccination drive had just ended in Kano State, where the killings took place, and the vaccinators were in a “mop-up” phase, looking for children who had been missed, said Sarah Crowe, a spokeswoman for the United Nations Children’s Fund, one of the agencies running the eradication campaign.

Dr. Mohammad Ali Pate, Nigeria’s minister of state for health, said in a telephone interview that it was not entirely clear whether the gunmen were specifically targeting polio workers or just attacking the health centers where vaccinators happened to be gathering early in the morning. “Health workers are soft targets,” he said.

No one immediately took responsibility, but suspicion fell on Boko Haram, a militant Islamist group that has attacked police stations, government offices and even a religious leader’s convoy.

Polio, which once paralyzed millions of children, is now down to fewer than 1,000 known cases around the world, and is endemic in only three countries: Nigeria, Pakistan and Afghanistan.

Since September — when a new polio operations center was opened in the capital and Nigeria’s president, Goodluck Jonathan, appointed a special adviser for polio — the country had been improving, said Dr. Bruce Aylward, chief of polio eradication for the World Health Organization. There have been no new cases since Dec. 3.

While vaccinators have not previously been killed in the country, there is a long history of Nigerian Muslims shunning the vaccine.

Ten years ago, immunization was suspended for 11 months as local governors waited for local scientists to investigate rumors that it caused AIDS or was a Western plot to sterilize Muslim girls. That hiatus let cases spread across Africa. The Nigerian strain of the virus even reached Saudi Arabia when a Nigerian child living in hills outside Mecca was paralyzed.

Heidi Larson, an anthropologist at the London School of Hygiene and Tropical Medicine who tracks vaccine issues, said the newest killings “are kind of mimicking what’s going on in Pakistan, and I feel it’s very much prompted by that.”

In a roundabout way, the C.I.A. has been blamed for the Pakistan killings. In its effort to track Osama bin Laden, the agency paid a Pakistani doctor to seek entry to Bin Laden’s compound on the pretext of vaccinating the children — presumably to get DNA samples as evidence that it was the right family. That enraged some Taliban factions in Pakistan, which outlawed vaccination in their areas and threatened vaccinators.

Nigerian police officials said the first shootings were of eight workers early in the morning at a clinic in the Tarauni neighborhood of Kano, the state capital; two or three died. A survivor said the two gunmen then set fire to a curtain, locked the doors and left.

“We summoned our courage and broke the door because we realized they wanted to burn us alive,” the survivor said from her bed at Aminu Kano Teaching Hospital.

About an hour later, six men on three-wheeled motorcycles stormed a clinic in the Haye neighborhood, a few miles away. They killed seven women waiting to collect vaccine.

Ten years ago, Dr. Larson said, she joined a door-to-door vaccination drive in northern Nigeria as a Unicef communications officer, “and even then we were trying to calm rumors that the C.I.A. was involved,” she said. The Iraq and Afghanistan wars had convinced poor Muslims in many countries that Americans hated them, and some believed the American-made vaccine was a plot by Western drug companies and intelligence agencies.

Since the vaccine ruse in Pakistan, she said, “Frankly, now, I can’t go to them and say, ‘The C.I.A. isn’t involved.’ ”

Dr. Pate said the attack would not stop the newly reinvigorated eradication drive, adding, “This isn’t going to deter us from getting everyone vaccinated to save the lives of our children.”

Aminu Abubakar contributed reported from Kano, Nigeria.

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John E. Karlin, 1918-2013: John E. Karlin, Who Led the Way to All-Digit Dialing, Dies at 94

Courtesy of Alcatel-Lucent USA

John E. Karlin, a researcher at Bell Labs, studied ways to make the telephone easier to use.

A generation ago, when the poetry of PEnnsylvania and BUtterfield was about to give way to telephone numbers in unpoetic strings, a critical question arose: Would people be able to remember all seven digits long enough to dial them?

And when, not long afterward, the dial gave way to push buttons, new questions arose: round buttons, or square? How big should they be? Most crucially, how should they be arrayed? In a circle? A rectangle? An arc?

For decades after World War II, these questions were studied by a group of social scientists and engineers in New Jersey led by one man, a Bell Labs industrial psychologist named John E. Karlin.

By all accounts a modest man despite his variegated accomplishments (he had a doctorate in mathematical psychology, was trained in electrical engineering and had been a professional violinist), Mr. Karlin, who died on Jan. 28, at 94, was virtually unknown to the general public.

But his research, along with that of his subordinates, quietly yet emphatically defined the experience of using the telephone in the mid-20th century and afterward, from ushering in all-digit dialing to casting the shape of the keypad on touch-tone phones. And that keypad, in turn, would inform the design of a spate of other everyday objects.

It is not so much that Mr. Karlin trained midcentury Americans how to use the telephone. It is, rather, that by studying the psychological capabilities and limitations of ordinary people, he trained the telephone, then a rapidly proliferating but still fairly novel technology, to assume optimal form for use by midcentury Americans.

“He was the one who introduced the notion that behavioral sciences could answer some questions about telephone design,” Ed Israelski, an engineer who worked under Mr. Karlin at Bell Labs in the 1970s, said in a telephone interview on Wednesday.

In 2013, the 50th anniversary of the introduction of the touch-tone phone, the answers to those questions remain palpable at the press of a button. The rectangular design of the keypad, the shape of its buttons and the position of the numbers — with “1-2-3” on the top row instead of the bottom, as on a calculator — all sprang from empirical research conducted or overseen by Mr. Karlin.

The legacy of that research now extends far beyond the telephone: the keypad design Mr. Karlin shepherded into being has become the international standard on objects as diverse as A.T.M.’s, gas pumps, door locks, vending machines and medical equipment.

Mr. Karlin, associated from 1945 until his retirement in 1977 with Bell Labs, headquartered in Murray Hill, N.J., was widely considered the father of human-factors engineering in American industry.

A branch of industrial psychology that combines experimentation, engineering and product design, human-factors engineering is concerned with easing the awkward, often ill-considered marriage between man and machine. In seeking to design and improve technology based on what its users are mentally capable of, the discipline is the cognitive counterpart of ergonomics.

“Human-factors studies are different from market research and other kinds of studies in that we observe people’s behavior and record it, systematically and without bias,” Mr. Israelski said. “The hallmark of human-factors studies is they involve the actual observation of people doing things.”

Among the issues Mr. Karlin examined as the head of Bell Labs’ Human Factors Engineering department — the first department of its kind at an American company — were the optimal length for a phone cord (a study that involved gentle, successful sabotage) and the means by which rotary calls could be made efficiently after the numbers were moved from inside the finger holes, where they had nestled companionably for years, to the rim outside the dial.

John Elias Karlin was born in Johannesburg on Feb. 28, 1918, and reared nearby in Germiston, where his parents owned a grocery store and tearoom.

He earned a bachelor’s degree in philosophy, psychology and music, and a master’s degree in psychology, both from the University of Cape Town. Throughout his studies he was a violinist in the Cape Town Symphony Orchestra and the Cape Town String Quartet.

Moving to the United States, Mr. Karlin earned a Ph.D. from the University of Chicago in 1942. Afterward, he became a research associate at Harvard; he also studied electrical engineering there and at the Massachusetts Institute of Technology.

At Harvard, Mr. Karlin did research for the United States military on problems in psychoacoustics that were vital to the war effort — studying the ways, for instance, in which a bomber’s engine noise might distract its crew from their duties.

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Russian Protest Leader Put Under House Arrest

MOSCOW — A Moscow district court ordered Sergei Udaltsov, a prominent opposition leader, to be placed under house arrest on Saturday, in one of the most assertive legal measures to date against a leader of the anti-Kremlin protests that began more than a year ago.

Mr. Udaltsov, the leader of the radical socialist Left Front movement, faces a charge of conspiracy to incite mass disorder, under a statute that can bring a maximum sentence of 10 years in prison. According to Saturday’s ruling, he may not leave his house, use the Internet, receive letters or communicate with anyone outside his family and legal team until April 6, the current date for the end of the investigation of his case.

The ruling seemed to signal a new stage in the government’s effort to bring criminal cases against well-known critics of President Vladimir V. Putin. Though most of the well-known protest leaders have served short sentences for administrative violations, and several are the subject of criminal inquiries, none had yet been held on criminal charges.

Mr. Udaltsov, a passionate public speaker and the great-grandson of a prominent Bolshevik, has stood out among the Moscow protesters, many of them middle-class Russians who distance themselves from calls for revolution. He was also one of the few to focus early on economic issues relevant to Russians outside large cities.

Speaking with journalists outside the courtroom, Mr. Udaltsov said he had broken no laws and called the decision “a political order against me because my public actions anger the government.”

“All the reasons being offered as evidence were already perfectly clear to them in October, when I was first placed under a travel ban,” Mr. Udaltsov said. “Nothing has changed.”

During Saturday’s hearing, prosecutors also claimed that Mr. Udaltsov had threatened to attack his wife, Anastasia, and that she at one point had fled to Ukraine with their children. A judge refused to allow Ms. Udaltsova to testify in court on Saturday, but she told the Novaya Gazeta daily newspaper that the accusation was “a total lie.”

Mr. Udaltsov has been accused of attacking the police and rioting at an anti-Putin demonstration that ended in clashes last May, and of attempting to organize anti-government riots in cities across Russia.

He has been under a travel ban since October, but prosecutors said that he had gone outside Moscow and continued to lead public rallies while under investigation. A statement from investigators charged that Mr. Udaltsov “has not lived at his registered address for a long time, his mobile telephone is often switched off, making it difficult to summon the accused to investigators.”

The statement also said Mr. Udaltsov “does not inform the investigation of his factual location.”

Saturday’s ruling came at the request of Russia’s powerful Investigative Committee, which has recently revived several stalled criminal investigations against Russian opposition leaders including Aleksei Navalny, a popular blogger and corruption whistle-blower accused in December of stealing hundreds of thousands of dollars in a business swindle.

Mr. Udaltsov, in his closing arguments, told the judge that if he was placed under house arrest, he would like the state to afford him a 13-room apartment, a cook and a maid — a reference to the house-arrest conditions reportedly granted to a Defense Ministry official currently facing corruption charges.

This article has been revised to reflect the following correction:

Correction: February 9, 2013

An earlier version of this article incorrectly stated Sergei Udaltsov’s family ties. He is the great-grandson of a prominent Bolshevik, not the grandson.

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Bits Blog: Google Changes Its Ad Program to Try to Solve the Mobile Ad Riddle

Google has a mobile problem, and it is trying to fix it.

Searches on desktop computers, Google’s most lucrative way to sell ads, are slowing. Searches on mobile devices are increasing, but mobile ads cost less.

The result has been that an important business metric for Google — the amount that advertisers pay each time someone clicks on an ad — has declined for five quarters in a row.

This week, Google tried to reverse this trend by introducing one of the biggest changes in years to its AdWords program, which it called enhanced campaigns. The program, which will thrust advertisers onto mobile devices, has become the talk of the ad industry, and some advertisers are already protesting against it.

Until now, advertisers have had to create separate campaigns for different devices and audiences. Now, they will create a single campaign and give Google directions about how they want to target the campaign by bidding higher on certain devices, locations and times of day. Then, Google’s algorithms will place the ads.

Say a pizza restaurant in San Francisco wanted to advertise. If someone searched for “pizza” using a computer at noon in the financial district, Google might show an ad with a link to the take-out menu. If someone did the same search on a cellphone at 8 p.m. a half-mile from the restaurant, Google might show a click-to-call ad and walking directions.

The theory is that the distinctions among devices have blurred. People use their phones on the sidewalk and on the sofa, and switch indiscriminately between tablets and computers. Now, according to Google, context is most important, like time of day and whether someone is on the go or at home.

The change will make things simpler for some advertisers, and enable many who did not have the resources to try mobile advertising to jump onto mobile devices.

But many advertisers are also complaining. Google’s ads are sold in an auction system, and mobile ads have been less expensive partly because their demand has been relatively low. But now all Google ad campaigns will include mobile devices by default (though advertisers can opt out of mobile.) This will drive more bidders into each auction and likely forcing up mobile ad rates. This is good for Google but disappointing to advertisers.

Some advertisers also say they do not want to lose their fine-grained control over their ad campaigns and cede that control to Google. For example, iPad users generally spend more on e-commerce sites than users of other kinds of tablets, so many retailers showed ads only to iPad users, but now they will lose that option.

Like any change Google makes to its advertising rules, this will force advertisers — who, following Google’s previous instructions, have spent money and time creating separate campaigns for separate devices — to revise their ad campaigns for the new, multi-device era.

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Well: One Dish, One Hour

Fast-food from a restaurant is not as fast as you think. There is drive time to and from the restaurant, waiting time to pay and collect your food, and then it still takes a few minutes to sort through it and set it on the table at home. (Assuming you don’t just eat it in the car.) But if you are willing to invest a few more minutes of time for a more healthful option, you can still make a homemade meal from scratch in less than an hour, writes Martha Rose Shulman in this week’s Recipes for Health column:

This week, in response to readers’ requests on the Recipes for Health Facebook page, I focused on quick one-dish dinners. You may have a different opinion than I do about what constitutes a quick meal. There are quick meals that involve little or no cooking — paninis and sandwiches, uncomplicated omelets, scrambled eggs, and meals that combine prepared items with foods that you cook — but I chose to focus on dishes that are made from scratch. I bought a cabbage and a generous bunch of kale at the farmers’ market, some sliced mushrooms and bagged baby spinach at Trader Joe’s, and used them in conjunction with items I had on hand in the pantry and refrigerator.

I decided to use the same rule of thumb that a close French friend uses. She refuses to spend more than a half hour on prep but always turns out spectacular dinners and lunches. My goal was to make one-dish meals that would put us at the table no more than 45 minutes after I started cooking (the soup this week went over by 5 or 10 minutes but I left it in because it is so good). For each recipe test I set the timer for 30 minutes, then let it count up once it went off. All of the meals are vegetarian and the only prepared foods I used were canned beans.

I do believe that it is healthy — and enjoyable — to take time to prepare meals for the family (or just for yourself), even when you are juggling one child’s afterschool soccer practice and homework with another child’s dance recitals and homework. Sometimes it is hard to find that half hour, but everybody benefits when you do.

Here are five new one-dish meals that you can make in an hour or less.

Soft Black Bean Tacos With Salsa and Cabbage: Canned black beans and lots of cabbage combine in a quick, utterly satisfying one-dish taco dinner.

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Couscous With Tomatoes, Kale and Chickpeas: A comforting topping that is both a stew and a sauce.

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Mushroom and Spinach Frittata: A hearty frittata that is good for any meal of the day.

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Quick Tomato, White Bean and Kale Soup: A hearty minestrone that can be made in under an hour, start to finish.

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Stir-Fried Cabbage, Tofu and Red Pepper: The chopping is the most time-consuming part of this recipe, but you can still be eating within 35 minutes.

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Well: One Dish, One Hour

Fast-food from a restaurant is not as fast as you think. There is drive time to and from the restaurant, waiting time to pay and collect your food, and then it still takes a few minutes to sort through it and set it on the table at home. (Assuming you don’t just eat it in the car.) But if you are willing to invest a few more minutes of time for a more healthful option, you can still make a homemade meal from scratch in less than an hour, writes Martha Rose Shulman in this week’s Recipes for Health column:

This week, in response to readers’ requests on the Recipes for Health Facebook page, I focused on quick one-dish dinners. You may have a different opinion than I do about what constitutes a quick meal. There are quick meals that involve little or no cooking — paninis and sandwiches, uncomplicated omelets, scrambled eggs, and meals that combine prepared items with foods that you cook — but I chose to focus on dishes that are made from scratch. I bought a cabbage and a generous bunch of kale at the farmers’ market, some sliced mushrooms and bagged baby spinach at Trader Joe’s, and used them in conjunction with items I had on hand in the pantry and refrigerator.

I decided to use the same rule of thumb that a close French friend uses. She refuses to spend more than a half hour on prep but always turns out spectacular dinners and lunches. My goal was to make one-dish meals that would put us at the table no more than 45 minutes after I started cooking (the soup this week went over by 5 or 10 minutes but I left it in because it is so good). For each recipe test I set the timer for 30 minutes, then let it count up once it went off. All of the meals are vegetarian and the only prepared foods I used were canned beans.

I do believe that it is healthy — and enjoyable — to take time to prepare meals for the family (or just for yourself), even when you are juggling one child’s afterschool soccer practice and homework with another child’s dance recitals and homework. Sometimes it is hard to find that half hour, but everybody benefits when you do.

Here are five new one-dish meals that you can make in an hour or less.

Soft Black Bean Tacos With Salsa and Cabbage: Canned black beans and lots of cabbage combine in a quick, utterly satisfying one-dish taco dinner.

---

Couscous With Tomatoes, Kale and Chickpeas: A comforting topping that is both a stew and a sauce.

---

Mushroom and Spinach Frittata: A hearty frittata that is good for any meal of the day.

---

Quick Tomato, White Bean and Kale Soup: A hearty minestrone that can be made in under an hour, start to finish.

---

Stir-Fried Cabbage, Tofu and Red Pepper: The chopping is the most time-consuming part of this recipe, but you can still be eating within 35 minutes.

---

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DealBook: Einhorn Sues Apple Over Plan to Discard Preferred Stock

9:02 p.m. | Updated

Wall Street has had a long romance with Apple. Now one of the company’s best-known investors is saying: I love you, but you need to change.

The surprising declaration by the billionaire hedge fund manager David Einhorn adds to the growing dissatisfaction with Apple and its once soaring stock.

On Thursday, Mr. Einhorn urged his fellow shareholders to block a plan by Apple to scrap a certain class of stock. He says that the move limits the company’s ability to use its enormous war chest — some $137 billion in cash — to reward investors.

The campaign is an unusually aggressive one for Mr. Einhorn, who came to fame betting against Lehman Brothers. To thwart the proposal, Mr. Einhorn is suing Apple in Federal District Court in Manhattan, claiming that it violated securities rules by tying the plan with two other initiatives that he sees as good corporate governance.

The standoff sets up an unusual clash between two sides who can each claim a huge following on Wall Street. In one corner is Apple, whose stock’s almost unearthly growth has bewitched investors across the globe — at least until recently. In the other is Mr. Einhorn, widely regarded as an intelligent investor whose moves inspire legions of copycats. His merely asking a few questions on an earnings call for Herbalife, a nutritional supplement company, last May prompted a plunge in its shares.

So far, each side has remained cordial. Mr. Einhorn called Apple “phenomenal” and contended that his campaign had nothing to do with its recent stock decline. His firm, Greenlight Capital, currently holds 1.3 million shares, now worth nearly $609 million.

“We own more Apple today than we ever have before,” he said in a telephone interview. “We’re optimistic about the company’s prospects, and think too much bad news has been priced in.”

In a response, Apple said that it “welcomes” Mr. Einhorn’s views and added that its management and its board were actively discussing how to return more cash to shareholders.

But the spat underlines recent hand-wringing over Apple, whose stock has proved vulnerable in recent weeks. Over the decade that ended in late September, its share price soared an astounding 18,749 percent, to more than $700. Scores of hedge funds bought into the stock, riding its coat tails to bolster their own returns.

Since about Sept. 21, however, Apple’s stock price has tumbled almost 33 percent, closing on Thursday at $468.22. (Even so, its market capitalization stands at $439.7 billion, making Apple the most valuable public company in the world.)

As the shares have fallen, the volume of criticism has risen.

“Because the stock has sold off from its high, and because Apple’s earnings have declined for the first time in a decade, you’ll hear people become more vocal,” said Walter Piecyk Jr., an analyst at BTIG Research.

Since at least 2005, no shareholder has conducted a formal campaign against an Apple management proposal, according to the data provider FactSet.

Mr. Einhorn’s main concern is Apple’s cash hoard, which is bigger than Intel’s entire market value. Shareholders have long complained that the cash, invested in the likes of Treasury bonds, is increasingly a drag on the stock price and should either be invested in new opportunities for growth or returned to them.

Last spring, the company announced a plan to return $45 billion to shareholders over three years, in the form of share buybacks and a dividend for its common stock. But that will hardly make a dent in a cash pile that swelled by $117 million a day during its most recent quarter.

Mr. Einhorn on Thursday compared Apple to his grandmother, whose experience surviving the Great Depression molded her into an extreme saver who did not leave voice mail messages for fear of using extra cellphone minutes. The company’s own near-death experience in 1997, he said, left a similarly profound scar on its corporate psyche.

As an alternative, he has been proposing since last May what he calls a “win-win” for Apple and its investors. The company, he says, could issue $50 billion in preferred shares to existing shareholders, which would carry a roughly 4 percent annual dividend. Over time, Apple could issue more preferred stock and increase its overall payouts.

The idea, which Mr. Einhorn said had been discussed within his firm for some time, would reward shareholders while ensuring that Apple would spend that additional cash over time. He raised the idea with company executives, including Apple’s chief financial officer, Peter Oppenheimer, over several months, but was rebuffed.

Mr. Einhorn became more aggressive after seeing Apple’s proposal to eliminate so-called blank check preferred stock from its corporate charter. The move would prohibit it from issuing preferred stock without shareholder approval. To Mr. Einhorn, that would sharply limit options for “unlocking value.”

He was further irked by Apple’s tying the plan with two others that he said he would ordinarily support.

In its statement, Apple said that its proposal was actually aimed at making itself more responsive to investors. It added that the plan would not prevent the introduction of precisely the kind of initiative that Mr. Einhorn had discussed.

At least one major investor has sided with Apple. Calpers, the giant California public employee pension fund that is the company’s 43rd-biggest shareholder, said in a statement that the proposal “significantly strengthens share owner rights and deserves full support.”

For his part, Mr. Einhorn said he planned on trying to persuade other shareholders. And he has reconciled himself to Apple’s days of meteoric growth now lying in the past.

“It’s not going to grow 80 percent a year,” he said of the company, “but that doesn’t mean it’s going to go bankrupt.”

David Einhorn's Lawsuit Against Apple by

A version of this article appeared in print on 02/08/2013, on page B1 of the NewYork edition with the headline: Investor Sues Apple Over Plan For Stocks.

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China Denies Directing Radar at Japanese Military

HONG KONG — China on Friday denied Japanese accusations that its ships directed a radar capable of aiding weapon strikes at a Japanese naval vessel and helicopter near disputed islands recently, then lobbed its own accusation: that Japan was trying to fan tensions. The latest exchange underscored the depth of a festering discord between the two countries, and trading partners, over the territorial dispute.

The tit-for-tat accusations started on Tuesday, when Japan’s Ministry of Defense announced that a Chinese military vessel had trained a radar on a Japanese naval destroyer near the islands in the East China Sea on Jan. 30. The ministry said a Chinese frigate had directed the same kind of radar at one of its military helicopters on Jan. 19.

Because using such “fire-control” radar can precede an attack, the Japanese defense minister, Itsunori Onodera, said that a misstep “could have pushed things into a dangerous situation.”

China did not respond at the time, but on Friday the Defense Ministry Web site said that the naval vessels’ radar had “maintained normal observational alertness, and there was no use of fire-control radar.” It did not explain what it meant by “normal observational alertness,” though the ministry added that the Japanese claims were “out of step with the facts.”

For all China’s vehemence, the statement by its defense ministry suggested that senior officials in Beijing want to avoid an escalating quarrel, said Denny Roy, a senior fellow at the East-West Center in Honolulu who researches security issues.

“I think it’s a positive development that the Chinese would deny doing this, as opposed to saying, ‘Yes we did it, and we’ll do it again,’ ” said Mr. Roy. “For the Chinese to not want to be portrayed as an aggressor, I think, is a good sign.”

By contrast, when Japan complained in early January that Chinese ships had entered Japanese-controlled waters near the islands for 13 hours the ambassador responded that the islands belong to China and the Japanese ships that had no right to be there, according to Japanese officials. That incursion was particularly long, but it came amid weeks of cat-and-mouse games between ships and occasionally planes from both countries.

This time, the Chinese defense ministry accompanied its denial with accusations that Japan was to blame for any unnervingly close encounters between their ships and aircraft near the islands known as the Diaoyu in China and the Senkaku in Japan, which has controlled them for decades.

Japan was “deliberately creating a tense atmosphere and misleading international opinion,” the defense ministry said.

Later on Friday, the Chinese Foreign Ministry also dismissed Japan’s assertions as “spun out of thin air.”

“We have no choice but to stay highly vigilant about Japan’s true intentions,” Hua Chunying, a Chinese Foreign Ministry spokeswoman, told reporters.

Long-standing tensions over the islands flared in September, when the Japanese government bought three of the five islands from a private owner in what it said was an effort to keep them out of the hands of a Japanese nationalist. China, however, said the purchase amounted to a provocative denial of its territorial claims, and sometimes violent protests broke out in dozens of Chinese cities.

In the months since, the Chinese government has underscored its claim to the islands by sending government vessels and military ships and aircraft to the waters near the islands which are patrolled by Japanese Coast Guard ships.

In Tokyo, Japan’s Chief Cabinet Secretary Yoshihide Suga responded Friday to China’s denial about the radar, saying, “We cannot accept China’s explanation.”

“We urge China to take sincere measures to prevent dangerous actions which could cause a contingency situation,” he said.

Japan earlier said that Russian fighter planes had briefly entered its airspace on Thursday, raising tensions in a separate dispute between those two countries over another set of islands. Russia denied any incursion.

Bree Feng and Patrick Zuo contributed research from Beijing.

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Fed Official Sees Tension in Some Credit Markets

WASHINGTON – Some credit markets are showing signs of overheating as investors take larger risks in response to the persistence of low interest rates, a senior Federal Reserve official said Thursday.

Kevin Lamarque/Reuters

Jeremy Stein, a Federal Reserve governor, said some credit markets were showing signs of overheating.

The official, Fed Governor Jeremy Stein, highlighted a surge in junk bond issues, the popularity of certain kinds of real estate investment trusts and shifts in bank balance sheets as areas the central bank is watching closely, although he downplayed any immediate threat to the financial system or the economy.

“We are seeing a fairly significant pattern of reaching-for-yield behavior emerging in corporate credit,” Mr. Stein said in a St. Louis speech. He added, however, “it need not follow that this risk-taking has ominous systemic implications.”

Mr. Stein gave no indication that the Fed is contemplating any change in its aggressive efforts to hold down interest rates. Rather, he described the overheating as a trend that might require a response if it intensified over the next 18 months. But the speech nonetheless underscored that the Fed increasingly regards bubbles, rather than inflation, as the most likely negative consequence of its efforts to reduce unemployment by stimulating growth.

It also showed that theoretical concerns are becoming more tangible.

Critics of the Fed’s policies have pointed to the high-profile junk bond market as evidence that low interest rates are encouraging excessive speculation. Investors are eagerly providing money to companies and countries with low credit ratings – and they are demanding relatively low interest rates in return. Junk bond issuance in the United States set a new annual record last year – by the end of October.

Mr. Stein noted dryly that this may not “bode well” for investors in those bonds, but the Fed is not charged with preventing them from losing money. It is charged with maintaining the function of the financial system and preventing the consequences from dragging on the broader economy.

In the wake of the financial crisis, regulators have focused increasingly on where investors get their money, reasoning that short-term funding is particularly vulnerable to panic. And Mr. Stein said that here, too, there was evidence that short-term funding was growing in importance.

He described similar evidence of growing risks in other corners of the financial market, and emphasized that the Fed was also concerned about other kinds of financial speculation that it did not see.

“Overheating in the junk bond market might not be a major systemic concern in and of itself, but it might indicate that similar overheating forces were at play in other parts of credit markets, out of our range of vision,” he said.

Central bankers historically have been skeptical that asset bubbles can be identified or prevented from popping. Moreover, they tend to regard financial regulation as the appropriate means to prevent excessive speculation and not changes in monetary policy, which affect the entire economy. In other words, when mortgage-lending standards loosen, regulators should tighten those standards rather than raising interest rates on all kinds of loans.

But the crisis has forced central bankers to reconsider both the importance of financial stability and the role of monetary policy.

Mr. Stein said Thursday that central bankers should keep an “open mind.”

Regulators, he noted, can address only problems that they can see. Monetary policy, by contrast, can reduce risk-taking across the economy.

“It gets in all of the cracks,” Mr. Stein said. “Changes in rates may reach into corners of the market that supervision and regulation cannot.”

He said that the Fed also could use its vast investment portfolio to address some kinds of risk-taking because the Fed can reduce the profitability of a given investment by shifting the composition of its holdings.

And he closed on a cautionary note.

“Decisions will inevitably have to be made in an environment of significant uncertainty,” he said. “Waiting for decisive proof of market overheating may amount to an implicit policy of inaction on this dimension.”

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Well: Expressing the Inexpressible

When Kyle Potvin learned she had breast cancer at the age of 41, she tracked the details of her illness and treatment in a journal. But when it came to grappling with issues of mortality, fear and hope, she found that her best outlet was poetry.

How I feared chemo, afraid
It would change me.
It did.
Something dissolved inside me.
Tears began a slow drip;
I cried at the news story
Of a lost boy found in the woods …
At the surprising beauty
Of a bright leaf falling
Like the last strand of hair from my head

Ms. Potvin, now 47 and living in Derry, N.H., recently published “Sound Travels on Water” (Finishing Line Press), a collection of poems about her experience with cancer. And she has organized the Prickly Pear Poetry Project, a series of workshops for cancer patients.

“The creative process can be really healing,” Ms. Potvin said in an interview. “Loss, mortality and even hopefulness were on my mind, and I found that through writing poetry I was able to express some of those concepts in a way that helped me process what I was thinking.”

In April, the National Association for Poetry Therapy, whose members include both medical doctors and therapists, is to hold a conference in Chicago with sessions on using poetry to manage pain and to help adolescents cope with bullying. And this spring, Tasora Books will publish “The Cancer Poetry Project 2,” an anthology of poems written by patients and their loved ones.

Dr. Rafael Campo, an associate professor of medicine at Harvard, says he uses poetry in his practice, offering therapy groups and including poems with the medical forms and educational materials he gives his patients.

“It’s always striking to me how they want to talk about the poems the next time we meet and not the other stuff I give them,” he said. “It’s such a visceral mode of expression. When our bodies betray us in such a profound way, it can be all the more powerful for patients to really use the rhythms of poetry to make sense of what is happening in their bodies.”

On return visits, Dr. Campo’s patients often begin by discussing a poem he gave them — for example, “At the Cancer Clinic,” by Ted Kooser, from his collection “Delights & Shadows” (Copper Canyon Press, 2004), about a nurse holding the door for a slow-moving patient.

How patient she is in the crisp white sails
of her clothes. The sick woman
peers from under her funny knit cap
to watch each foot swing scuffing forward
and take its turn under her weight.
There is no restlessness or impatience
or anger anywhere in sight. Grace
fills the clean mold of this moment
and all the shuffling magazines grow still.

In Ms. Potvin’s case, poems related to her illness were often spurred by mundane moments, like seeing a neighbor out for a nightly walk. Here is “Tumor”:

My neighbor walks
For miles each night.
A mantra drives her, I imagine
As my boys’ chant did
The summer of my own illness:
“Push, Mommy, push.”
Urging me to wind my sore feet
Winch-like on a rented bike
To inch us home.
I couldn’t stop;
Couldn’t leave us
Miles from the end.

Karin Miller, 48, of Minneapolis, turned to poetry 15 years ago when her husband developed testicular cancer at the same time she was pregnant with their first child.

Her husband has since recovered, and Ms. Miller has reviewed thousands of poems by cancer patients and their loved ones to create the “Cancer Poetry Project” anthologies. One poem is “Hymn to a Lost Breast,” by Bonnie Maurer.

Oh let it fly
let it fling
let it flip like a pancake in the air
let it sing: what is the song
of one breast flapping?

Another is “Barn Wish” by Kim Knedler Hewett.

I sit where you can’t see me
Listening to the rustle of papers and pills in the other room,
Wondering if you can hear them.
Let’s go back to the barn, I whisper.
Let’s turn on the TV and watch the Bengals lose.
Let’s eat Bill’s Doughnuts and drink Pepsi.
Anything but this.

Ms. Miller has asked many of her poets to explain why they find poetry healing. “They say it’s the thing that lets them get to the core of how they are feeling,” she said. “It’s the simplicity of poetry, the bare bones of it, that helps them deal with their fears.”

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Have you written a poem about cancer? Please share them with us in the comments section below.

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Gadgetwise Blog: This Robot Does Do Windows

The robots at this year’s Consumer Electronics Show fell largely into two categories: floor cleaners and toys. But there was an exception.

That was a robot taken cleaning to new heights – literally. It is the Winbot 7 Series from Ecovacs, and this robot does do windows.

The Winbot works much like any of the floor cleaning robots, only it works on vertical surfaces. Stick it outside on your window glass and it figures out the size of your window, then travels in a zigzag pattern to clean the surface.

The Winbot has to be plugged into an electrical outlet that feeds a powerful vacuum motor that keeps it stuck to the glass as it creeps around. There is a safety tether to keep the Winbot from bombing pedestrians below if it were to lose power. If the Winbot encounters a problem it sounds an alarm.

The Winbot has a damp cleaning pad on its leading edge that is followed by a squeegee and a drying pad in back. The reusable pads could require machine washing after a single large dirty window, but more typically the company said they needed a wash every few months.

The price of replacement parts and cleaning solution have not been yet determined. The Winbot becomes available in April at a list price of $300 for the 710 model that cleans framed windows, and $400 for the 730 model that cleans framed and frameless windows.

They will be available through the Ecovacs Web site.

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This post has been revised to reflect the following correction:

Correction: February 7, 2013

Because of incorrect information from a company representative, an earlier version of this post misstated the prices of Winbot robots. The Winbot 710 costs $300, not $200, and the Winbot 730 costs $400, not $300.

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The Lede: Egyptian Prime Minister Criticized for Soliloquy on 'Ignorant' Mothers

Video of remarks by Egypt’s prime minister, Hisham Qandil, who blamed infant illness on “ignorant” rural mothers who fail to clean their breasts before nursing.

Last Updated, Thursday, 1:21 p.m. With angry protesters challenging the Egyptian government’s grip on strategic cities of the Suez Canal, the army chief warning of the potential “collapse of the state,” violent sexual assault plaguing demonstrations in Tahrir Square and more than 50 deaths in the latest round of street clashes, the nation’s prime minister spoke this week on state television about a social problem that few people saw coming: unclean breasts.

In rambling remarks broadcast on the state broadcaster Nile TV, Prime Minister Hisham Qandil turned his attention to the problem of diarrhea among infants in the Egyptian countryside. Specifically, he said: “I am certain, I don’t know, but am certain, that there are villages in Egypt in the 21st century where children get diarrhea” because “the mother nurses them and out of ignorance does not undertake personal hygiene of her breasts.”

He said that in rural areas, “there is no water and there is no sanitary sewer drainage.” Mr. Qandil also made a confusing reference to sexual assault, saying that in many villages “the men go to the mosque” while “the women go to the fields and they get raped.”

Mr. Qandil, an agricultural engineer and former water minister, spoke about villages that he said he had visited in the rural province of Beni Suef, 70 miles south of Cairo, the capital. Video of the remarks posted on YouTube shows that several male and female listeners appeared uncomfortable as the prime minister spoke.

On Thursday, Bloomberg News reported that a group of Beni Suef residents responded to Mr. Qandil’s comments by filing a legal complaint for libel and slander against the Prime Minister:

The claim against Prime Minister Hisham Qandil alleges he slandered and insulted the city’s female residents by saying they did not pay enough attention to personal hygiene, resulting in infants coming down with diarrhoea.

The remarks have also sparked controversy online and in Egypt’s raucous Arabic-language media. On Monday night, a talk show host on the independent Tahrir television network, Dina Abdel Fattah, asked her viewers, “Can you imagine, an Egyptian prime minister addressing a topic like that, while we have martyrs in the street, we have people being killed every day, we have entire provinces in a state of unrest?”

An Egyptian television host, Dina Abdel Fattah, attacked the prime minister for his comments blaming rural women’s personal hygiene for infant diarrhea.

On Twitter, several people agreed that it was odd for the prime minister to broach this subject in the midst of Egypt’s political crises. Others were shocked that Mr. Qandil, who holds a Ph.D. from North Carolina State University, would argue that women’s personal hygiene could cause diarrhea.

Qandil, a PhD holder in agriculture, who knows abt toxic, polluted water in delta & blames “unclean” breastfeeding to a diarrhea epidemic

— Gigi Ibrahim (@Gsquare86) 5 Feb 13

In a mind-boggling yet strangely familiar break from reality,Egypt PM Qandil blamed country’s rural diarrhea epidemic on women’s breasts #PT

— Rasha Abdulla (@RashaAbdulla) 6 Feb 13

In the United States, medical consensus says that breast-feeding is beneficial for babies, and few studies appear to have been done on the effect of a mother’s personal hygiene on infant digestion. According to a pamphlet produced by the Office of Women’s Health at the United States Department of Health and Human Services, breast milk is “liquid gold,” rich in nutrients and antibodies, with “just the right amount of fat, sugar, water and protein” to help babies grow.

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Tool Kit: Protecting Your Privacy on the New Facebook

Facebook is a personal vault that can contain photos of your firstborn, plans to bring down your government and, occasionally, a record of your indiscretions.

It can be scoured by police officers, partners and would-be employers. It can be mined by marketers to show tailored advertisements.

And now, with Facebook’s newfangled search tool, it can allow strangers, along with “friends” on Facebook, to discover who you are, what you like and where you go.

Facebook insists it is up to you to decide how much you want others to see. And that is true, to some extent. But you cannot entirely opt out of Facebook searches. Facebook, however, does let you fine-tune who can see your “likes” and pictures, and, to a lesser extent, how much of yourself to expose to marketers.

The latest of its frequent changes to the site’s privacy settings was made in December. Facebook is nudging each of its billion subscribers to review them. The nudge could not have been more timely, said Sarah Downey, a lawyer with the Boston company Abine, which markets tools to help users control their visibility online. “It is more important than ever to lock down your Facebook privacy settings now that everything you post will be even easier to find,” she said.

That is to say, your settings will determine, to a large extent, who can find you when they search for women who buy dresses for toddlers or, more unsettling, women who jog a particular secluded trail.

What can you do? Ask yourself four simple questions.

QUESTION 1 How would you like to be found?

Go to “who can see my stuff” on the upper right side of your Facebook page. Click on “see more settings.” By default, search engines can link to your timeline. You can turn that off if you wish.

Go to “activity log.” Here you can review all your posts, pictures, “likes” and status updates. If you are concerned about who can see what, look at the original privacy setting of the original post.

In my case, I had been tagged eating a bowl of ricotta with my fingers at midnight near Arezzo. My friend who posted the picture enabled it to be seen by anyone, which means that it would show up in a stranger’s search for, I don’t know, people who eat ricotta with their fingers at midnight. I am tagged in other photos that are visible only to friends of the person who posted them. The point is, you want to look carefully at what the original settings are for those photos and “likes,” and decide whether you would like to be associated with them “I don’t get this Facebook thing either,” said one woman whose friend request I had accepted in January 2008. “But everyone in our generation seems to be on it.”

If you are concerned about things that might embarrass or endanger you on Facebook — Syrians who endorse the opposition may not want to be discovered by government apparatchiks — comb through your timeline and get rid of them. The only way to ensure that a post or photo is not discovered is to “unlike” or “delete” it.

Make yourself a pot of tea. This may take a while. The nostalgia may just be amusing.

QUESTION 2 What do you want the world to know about you?

Go to your profile page and click “About me.” Decide if you would like your gender, or the name of your spouse, to be visible on your timeline. Think about whether you want your birthday to be seen on your timeline. Your date of birth is an important piece of personal information for hackers to exploit.

A tool created a couple of weeks ago by a team of college students offers to look for certain words and phrases that could embarrass other college students as they apply for internships and jobs. It is called Simplewash, formerly Facewash, and it looks for profanity, references to drugs and other faux pas that you do not necessarily want, say, a law school admissions officer to see. Socioclean is another application that scours your Facebook posts. It is selling its service to college campuses to offer to students.

QUESTION 3 Do you mind being tracked by advertisers?

Facebook has eyes across the Web; one study found that its so-called widget — the innocuous blue letter “f” — is integrated into 20 percent of the 10,000 most popular Web sites.

This is how it works. I browsed an e-commerce site for girls’ dresses. When I logged back on to Facebook several days later, I was urged to buy dresses for “my darling daughter.” Facebook says that this kind of “retargeting” is a lucrative source of revenue. If that is annoying, several tools can help you block trackers. Abine, DisconnectMe and Ghostery offer browser extensions. Once installed on your Web browser, these extensions will tell you how many trackers they have blocked.

If you see an ad on the right rail of your Facebook page based on your Web browsing history, you can also opt out directly on Facebook. Hover over the “X” next to the ad and choose from the drop-down menu: “Hide this ad,” you could say. Or hide all ads from this brand. Facebook does not serve the ads itself, so to opt out of certain kinds of targeted ads, you must go to the third party that Facebook works with to show ads based on the Web sites you have browsed.

QUESTION 4 Whom do you want to befriend?

Now is the time to review whom you count among your Facebook friends. Your boss? Do you really want her to see pictures of you in Las Vegas? And the woman you met in Lamaze class: do you want the apps she has installed to know who you are? Privacyfix.com, a browser extension, shows you how to keep your friends’ Facebook applications from sucking you into their orbit. It is preparing to introduce a tool to control what it calls your “exposure” to the Facebook search engine.

Secure.me offers a similar feature. Depending on your privacy settings, that photo-sharing app that your Lamaze compatriot just installed could, in one click, know who you are and have access to all the photos that you thought you were sharing with “friends.”

One of Facebook’s cleverest heists is the word “friend.” It makes you think all your Facebook contacts are really your “friends.” They may not be.

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The New Old Age Blog: For Women, Reduced Access to Long-Term Care Insurance

“This was a very, very good business for a short time, with people buying long-term care insurance like it was candy in a candy store,’’ said Michael Perry, a vice president at the Opus Advisory Group, a strategic financial planning firm in Purchase, N.Y.

No more. Mr. Perry has sold only one long-term care policy in the last six months and is “backing off from marketing’’ them as he watches this corner of the insurance business contract, raise premiums, tighten eligibility requirements and reduce key benefits. Long-term care insurance is a comparatively new product, launched in the late ’80s, and only now, as claims begin to pour in, have the actual costs to insurers become apparent.

Companies like MetLife, Prudential Financial, Allianz and Berkshire Financial (a subsidiary of Guardian) have stopped selling new policies and are hiking premiums for the ones already in place — up 37 percent, by one estimate, in 2011. Insurers are increasing elimination periods — the period during which a beneficiary must cover his or her own costs — and reducing inflation protection to 3 percent from 5 percent, once customary. They are requiring home visits instead of phone interviews from new applicants, as well as blood tests and a thorough examination of their medical records.

But the change that has generated the most public attention is so-called gender-distinct pricing, a new strategy that will raise rates for single women by as much as 40 percent beginning in April. Genworth Financial, the nation’s largest long-term care insurance provider with more than a million policy holders, is the first to win approval by state insurance commissions to raise rates for single women purchasing new policies. Women, most of them single by the time they reach advanced age, cost the company $2 of every $3 in benefits paid so far, according to Steve Zabel, Genworth’s senior vice president for long-term care insurance.

The company also will introduce what Mr. Zabel called “enhanced underwriting,” or more stringent qualifying standards, including blood testing to check for nicotine, drugs and markers of cardiovascular disease for all new applicants, regardless of gender or marital status.

Now permitted in all states except Montana and Colorado, gender-distinct pricing will not affect Genworth’s current policyholders, only new applicants. But all other carriers are likely to follow, according to Jesse Slome, executive director of the American Association for Long-Term Insurance, a trade group in Westlake Village, Calif. With the entire industry headed toward higher rates, Mr. Slome recently warned women that “the window is closing” and that now is the time to grab a policy while the price is still manageable.

Women have always paid less than men for life insurance. But because they live longer, women are the disproportionate beneficiaries of long-term care insurance, which paid out $6.6 billion in benefits in 2011. Mr. Slome expects that number to top $7 billion in 2012.

The reasons are well known:

* On average, women outlive men by five years. Among those born in 1960, the average man will live to age 67 and the average woman to age 73. And women who reach age 65 can expect to live an average of 20 more years.

* By age 75, 7 in 10 women are widowed, divorced or have never been married. Some 40 percent of them live alone, compared to 22 percent of men. Two-thirds of those past the age of 85 are women, as are 80 percent of centenarians.

* Women who live to age 65 experience on average two years of disability requiring assistance before death. Those who reach age 80 will require three years of assistance.

* In nursing homes, the most expensive form of long-term care, 7 in 10 residents are women. They represent 76 percent of the residents in assisted living facilities and two-thirds of the recipients of home care. Virtually none of this is paid for by Medicare, the government’s health plan for those 65-and-over. In nursing homes, Medicaid, a poverty program, kicks in for residents who run out of money.

“Woman live longer than men,” said Suzanna de Baca, a vice president of wealth strategies at Ameriprise Financial. “This may mean we experience a longer period of decline. Unfortunately, we are often less likely to have a partner around to help take care of us than our male counterparts.’’

Long-term care, Mr. Slome said, “is truly a women’s issue.”

While acknowledging the extra expense of caring for women, Mr. Slome said that in his view insurance carriers are being disingenuous in blaming the new policies on long-apparent gender differences. Rather he said, the culprit in the changing requirements is interest rates. “Blame the Federal Reserve,’’ he said.

Insurance carriers invest premiums and need to earn enough on that investment to pay benefits. When interest rates were higher, it was not all that difficult. Now the numbers don’t pencil out, and stockholders are fuming. But it is illegal to file for premium increases with the state insurance commissions based on changes in the financial market, Mr. Slome said.

This position does not endear Mr. Slome to his membership, at least one of whom disputes the claim. Asked if the new rate policies were related to interest rates, Mr. Zabel of Genworth, in an e-mail, replied with a succinct “no.”

Insurers say they were not able to judge the costs of care until the payouts began in earnest.

So what is a woman trying to prepare for old age supposed to do, especially after the elimination of the Class Act, a modest attempt to include long-term care in the Affordable Care Act?

Ms. da Baca suggests “careful and thorough budgeting,” “focusing on wellness,” and “proactive steps” to research suitable places to live when home is no longer an option. Ms. da Baca also advises women to make home modifications — incrementally, as one’s budget permits — to increase the chances that you’ll be able to stay there longer.

Mr. Perry, of the Opus Advisory Group, suggests an intriguing option: life insurance with a chronic care rider, which permits the policy-holder to spend money for such needs while alive, although doing so will reduce the tax-free death benefit. Still, not all buyers — or their survivors — are willing to sacrifice those benefits.

“The need is still there, no question about it,’’ Mr. Perry said. But long-term care insurance is likely to become much harder for everyone to find and afford, especially women.

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Gadgetwise Blog: Your Lost Bags Sent a Text, Come Get Them

While services for tracking luggage with RFID tags, bar codes or GPS have been around for a while, a company called Trakdot is taking a slightly different approach. It is putting a radio transceiver on your bags that tells you where your luggage is when it isn’t where it should be.

It costs less than GPS trackers and the company says it is more secure than the RFID tags and bar codes.

The Trakdot doesn’t use GPS, which uses a lot of battery power. You don’t want the batteries to die before you get your bags back. Instead, it sends out a mobile phone signal that lets you find its general vicinity – within 30 feet, the company says – by seeing which cell towers it is near. This uses a lot less power than GPS. Trakdot estimates it can work for up to a month of continuous use on standard AA batteries.

Another battery saver, the Trakdot shuts down when on a plane. It senses when it is moving at more than 100 knots, then shuts down. Both the Federal Communications Commission and the Federal Aviation Administration have approved the device, according to the company.

Every 20 minutes the device pops on briefly to check speed, then shuts down again until the plane lands. Then it sends a text to show where the bag has arrived.

The Trakdot is $50, with an activation fee of $9 and a $13 annual fee. The device will be available in April.

The company concedes that a big warehouse might effectively block the signal, and that the Trakdot is as prone to dead areas as your mobile phone. If your bag disappears you should check Buffalo. That’s where my lost luggage goes. Always Buffalo.

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Clashes Erupt in Damascus, Shattering Lull, as Prospects for Talks Dim

Goran Tomasevic/Reuters

A building in the Damascus suburb of Zamalka was hit by a mortar shell fired by the Syrian Army on Wednesday.

BEIRUT, Lebanon — Syrian insurgents attacked military checkpoints and other targets in parts of central Damascus on Wednesday, antigovernment activist groups reported. The fighting shattered a lull there as prospects for any talks between the antagonists appeared to dim, a week after the opposition coalition leader first proposed the surprise idea of a dialogue aimed at ending the war.

Some antigovernment activists described the resumption of fighting, which had lapsed for the past few weeks, as part of a renewed effort by rebels to seize control of central Damascus, the Syrian capital, although that depiction seemed highly exaggerated. Witness accounts said many people were going about their business, while others noted that previous rebel claims of territorial gains in Damascus had almost always turned out to be embellished or unfounded.

Representatives of the Military Council of Damascus, an insurgent group, said that at least 33 members of President Bashar al-Assad’s security forces in Damascus had surrendered, while others had fled central Al Abasiyeen Square, and that other forces had erected roadblocks on all access streets to the area to thwart the movement of rebel fighters.

Salam Mohammed, an activist in Damascus, described Al Abasiyeen Square as “on fire,” and a video clip uploaded on YouTube showed a thick column of black smoke spiraling over the area while the sound of shelling could be heard. A voice is heard saying the shelling had started a fire. The Local Coordination Committees, an anti-Assad activist network in Syria, also reported gunfire in nearby streets.

Firas al-Horani, a military council spokesman, said fighters of the Free Syrian Army, the main armed opposition group, were in control of Al Abasiyeen Square. He also said, “The capital, Damascus, is in a state of paralysis at the moment, and clashes are in full force in the streets.”

It was impossible to confirm Mr. Horani’s assertions or the extent of the fighting because of Syrian government restrictions on foreign news organizations. But Syria’s state-run media said insurgent claims of combat success in Damascus were false. “Those are miserable attempts to raise the morale of terrorists who are fleeing our valiant armed forces,” said SANA, the official news agency.

Deadly violence also was reported in the Homs Province town of Palmyra, the site of a notorious prison where Mr. Assad’s father, Hafez, ordered the summary execution of about 1,000 prisoners during an uprising against his family’s grip on power in the 1980s.

The Syrian Observatory for Human Rights, a Britain-based group with a network of contacts inside Syria, said two booby-trapped cars exploded near the military intelligence and state security branches, killing at least 12 members of the security forces and wounding more than 20. The observatory said government forces deployed throughout Palmyra afterward, engaging in gun battles with insurgents that left at least eight civilians wounded in the cross-fire.

SANA also reported an attack but said it was caused by two suicide bombers who had targeted a residential part of the town, killing an unspecified number of civilians.

The new mayhem came as discord appeared to grow within the National Coalition of Syrian Revolutionary and Opposition Forces, the umbrella anti-Assad group, over a proposal made on Jan. 30 by Sheik Ahmad Moaz al-Khatib, its leader, to engage in talks with Mr. Assad’s government aimed at ending the nearly two-year-old conflict, which has left more than 60,000 people dead. Although Sheik Khatib’s proposal contained a number of conditions, it broke a longstanding principle that Mr. Assad must relinquish power before any talks can begin.

Many of Sheik Khatib’s colleagues grudgingly agreed to go along with the proposal after it had been made, but critical voices have been rising, especially among the coalition’s more militant elements.

In a new video uploaded on YouTube, a cleric from the Nusra Front, an anti-Assad Islamist militant group that the Obama administration has classified as a terrorist organization, said in a prayer speech that brute force against Mr. Assad and his disciples was the only solution.

“We will cut their heads, we swear to kill them all, and they will see our worst war,” said the cleric, who spoke in Libyan-accented Arabic at a mosque in the contested northern city of Aleppo, holding a sword in his right hand. “No for the negotiations, no for the talks, no retreat in a jihad for God’s sake.”

Hania Mourtada reported from Beirut, and Rick Gladstone from New York. Karam Shoumali contributed reporting from Antakya, Turkey.

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DealBook: Case Details Internal Tension at S.&P. Amid Subprime Problems

The subprime loans packaged up as complex securities for Standard & Poor’s to rate were already failing at such a fast clip in the fall of 2006 that some analysts at the firm thought they must be seeing typographical errors.

At the time, the nation’s biggest rating agency was making record profits, attaching sterling ratings to mortgage-related securities that were increasingly going bad. Inside the firm’s headquarters in lower Manhattan, tensions were escalating. Some executives pushed to revise the firm’s rating models in hopes of preserving market share and profits, while others expressed deep concerns about the poor performance of the securities, according to court records.

“This market is a wildly spinning top which is going to end badly,” one executive wrote in a confidential memo.

The account, culled from reams of internal e-mails, is part of civil fraud charges that the Justice Department filed late Monday against S.&P. in federal court in Los Angeles, accusing the firm of inflating ratings of mortgage investments and setting them up for a crash when the financial crisis struck.

The government is seeking $5 billion in penalties against the company to cover losses to investors like state pension funds and federally insured banks and credit unions. The amount would be more than five times what S.&P. made in 2011. S.&P. said it would vigorously defend itself against “these unwarranted claims.”

Sixteen states, including Iowa, Mississippi and Illinois, joined the joined the federal suit, and the New York attorney general said he was taking separate actions. California’s attorney general, Kamala D. Harris, said the state pension funds lost nearly $1 billion on the soured investments. The Securities and Exchange Commission has also been investigating possible wrongdoing at S.& P.

“The action we announce today marks an important step forward in the administration’s ongoing effort to investigate — and punish — the conduct that is believed to have continued to the worst economic crisis in recent history,” said Attorney General Eric Holder. The Justice Department called its investigation “Alchemy,” after medieval alchemists’ attempts to turn lead into gold.

Standard & Poor’s defended its corporate practices on Tuesday, saying the civil lawsuit filed by the Justice Department was “meritless.”

“Claims that we deliberately kept ratings high when we knew they should be lower are simply not true. S.&P. has always been committed to serving the interests of investors and all market participants by providing independent opinions on creditworthiness based on available information,” the rating agency said in a statement on Tuesday.

The company said that at all times its actions reflected its best judgments about the investments at the heart of the suit — about 40 collateralized debt obligations, or C.D.O.’s, an exotic type of security made up of bundles of residential mortgage-backed securities, which in turn were composed of individual home loans.

“Unfortunately,” the company’s statement said, “S.&P., like everyone else, did not predict the speed and severity of the coming crisis and how credit quality would ultimately be affected.”

McGraw-Hill shares were down 5 percent to $47.51 in early afternoon trading on the New York Stock Exchange, and have lost 19 percent of their value over the past two days.

The case is the first significant federal action against the ratings industry, which during the boom years bestowed high ratings that made many mortgage-related investments appear safer than they actually were.

It was unclear whether the Justice Department was looking at the other two major ratings agencies, Moody’s Investors Service and Fitch. Mr. West said he would not discuss actions against other rating agencies. In addition to joining the suit against S.&P., James Hood, the attorney general in Mississippi, said his state has also filed lawsuit against Moody’s.

The joint federal-state suit against S.&P. claims that from September 2004 through October 2007, S.&P. “knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud investors” in certain mortgage-related securities. S.&P. also falsely represented that its ratings “were objective, independent, uninfluenced by any conflicts of interest,” the suit said.

Settlement talks between S.&P. and the Justice Department broke down in the last two weeks after prosecutors sought a penalty in excess of $1 billion and insisted that the company admit wrongdoing, several people with knowledge of the talks said. That amount would wipe out the profits of McGraw-Hill for an entire year. S.&P. had proposed a settlement of around $100 million, the people said. The government pressed for an admission of guilt to at least one count of fraud, said the people. S.&P. told prosecutors it could not admit guilt without exposing itself to liability in a multitude of civil cases.

On Monday, a spokesman for Moody’s declined to comment. A spokesman for Fitch, Daniel J. Noonan, said the agency could not comment on an action against Standard & Poor’s, but added, “We have no reason to believe Fitch is a target of any such action.”

The securities were created at the height of the housing boom, mainly for investment banks. S.&P. was paid fees of about $13 million for rating them. The firm gave the government more than 20 million pages of e-mails as part of its investigation, the people with knowledge of the process said.

Since the financial crisis in 2008, the ratings agencies’ business practices have been widely criticized and questions have been raised as to whether independent analysis was corrupted by Wall Street’s push for profits.

A Senate investigation made public in 2010 found that S.& P. and Moody’s used inaccurate rating models from 2004 to 2007 that failed to predict how high-risk mortgages would perform; allowed competitive pressures to affect their ratings; and failed to reassess past ratings after improving their models in 2006.

The companies failed to assign adequate staff to examine exotic investments, and failed to take mortgage fraud, lax underwriting and “unsustainable home price appreciation” into account in their models, the inquiry found.

“Rating agencies continue to create an even bigger monster — the C.D.O. market,” one S.&P. employee wrote in an internal e-mail in December 2006. “Let’s hope we are all wealthy and retired by the time this house of cards falters.”

Another S.&P. employee wrote in an instant message the next April, reproduced in the complaint: “We rate every deal. It could be structured by cows and we would rate it.”

In its statement Tuesday, S.&P. said that “the e-mail that says deals ‘could be structured by cows’ and be rated by S.&P. had nothing to do with R.M.B.S. or C.D.O. ratings or any S.&P. model. The company added that “the analyst had her concerns addressed with the issuer before S.&P. issued any rating.” S.&P. said that there was robust internal debate about how a rapidly deteriorating housing market might affect the C.D.O.’s, “and we applied the collective judgment of our committee-based system in good faith.”

“The e-mail excerpts cherry picked by D.O.J. have been taken out of context, are contradicted by other evidence, and do not reflect our culture, integrity or how we do business,” the credit rating agency said.

The three major ratings agencies are typically paid by the issuers of the securities they rate — in this case, the banks that had packaged the mortgage-backed securities and wanted to market them. The investors were not involved in the process but depended on the rating agencies’ assessments.

In a separate statement on Monday, S.&P. said it had begun stress-testing the mortgage-backed securities as early as 2005, trying to see how they would perform in a severe market downturn. S.&P. said it had also sent out early warning signals, downgrading hundreds of mortgage-backed securities, starting in 2006. Nor was it the only one to have underestimated the coming crisis, it said — even the Federal Reserve’s Open Market Committee believed that any problems within the housing sector could be contained.

The Justice Department, the company said, “would be wrong in contending that S.&P. ratings were motivated by commercial considerations and not issued in good faith.”

For many years, the ratings agencies have defended themselves successfully in civil litigation by saying their ratings were independent opinions, protected by the First Amendment, which guarantees the right to free speech. But developments in the wake of the financial crisis have raised questions about the agencies’ independence.

One federal judge, Shira A. Scheindlin, ruled in 2009 that the First Amendment did not apply in a lawsuit over ratings issued by S.&P. and Moody’s, because the mortgage-backed securities had not been offered to the public at large. Judge Scheindlin also agreed with the plaintiffs, who argued the ratings were not opinions, but misrepresentations, possibly the result of fraud or negligence.

The federal-state action is the first time a credit-rating agency has been charged under a 1989 law intended to protect taxpayers from frauds involving federally insured financial institutions, which since the financial crisis has been used against a number of federally insured banks, including Wells Fargo, Bank of America and Citigroup.

The government is taking a novel approach by accusing S.&P. of defrauding a federally insured institution and therefore injuring the taxpayer.

The lawsuit was filed in Central District of California, home to the defunct Western Federal Corporate Credit Union, which was the largest corporate credit union in the country. The credit union collapsed during the 2008 financial crisis after suffering huge losses on mortgage-backed securities rated by S.&P.

The Justice Department said it interviewed about 150 people in the investigation, including former S.&P. executives and analysts.

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Personal Health: Effective Addiction Treatment

Countless people addicted to drugs, alcohol or both have managed to get clean and stay clean with the help of organizations like Alcoholics Anonymous or the thousands of residential and outpatient clinics devoted to treating addiction.

But if you have failed one or more times to achieve lasting sobriety after rehab, perhaps after spending tens of thousands of dollars, you’re not alone. And chances are, it’s not your fault.

Of the 23.5 million teenagers and adults addicted to alcohol or drugs, only about 1 in 10 gets treatment, which too often fails to keep them drug-free. Many of these programs fail to use proven methods to deal with the factors that underlie addiction and set off relapse.

According to recent examinations of treatment programs, most are rooted in outdated methods rather than newer approaches shown in scientific studies to be more effective in helping people achieve and maintain addiction-free lives. People typically do more research when shopping for a new car than when seeking treatment for addiction.

A groundbreaking report published last year by the National Center on Addiction and Substance Abuse at Columbia University concluded that “the vast majority of people in need of addiction treatment do not receive anything that approximates evidence-based care.” The report added, “Only a small fraction of individuals receive interventions or treatment consistent with scientific knowledge about what works.”

The Columbia report found that most addiction treatment providers are not medical professionals and are not equipped with the knowledge, skills or credentials needed to provide the full range of evidence-based services, including medication and psychosocial therapy. The authors suggested that such insufficient care could be considered “a form of medical malpractice.”

The failings of many treatment programs — and the comprehensive therapies that have been scientifically validated but remain vastly underused — are described in an eye-opening new book, “Inside Rehab,” by Anne M. Fletcher, a science writer whose previous books include the highly acclaimed “Sober for Good.”

“There are exceptions, but of the many thousands of treatment programs out there, most use exactly the same kind of treatment you would have received in 1950, not modern scientific approaches,” A. Thomas McLellan, co-founder of the Treatment Research Institute in Philadelphia, told Ms. Fletcher.

Ms. Fletcher’s book, replete with the experiences of treated addicts, offers myriad suggestions to help patients find addiction treatments with the highest probability of success.

Often, Ms. Fletcher found, low-cost, publicly funded clinics have better-qualified therapists and better outcomes than the high-end residential centers typically used by celebrities like Britney Spears and Lindsay Lohan. Indeed, their revolving-door experiences with treatment helped prompt Ms. Fletcher’s exhaustive exploration in the first place.

In an interview, Ms. Fletcher said she wanted to inform consumers “about science-based practices that should form the basis of addiction treatment” and explode some of the myths surrounding it.

One such myth is the belief that most addicts need to go to a rehab center.

“The truth is that most people recover (1) completely on their own, (2) by attending self-help groups, and/or (3) by seeing a counselor or therapist individually,” she wrote.

Contrary to the 30-day stint typical of inpatient rehab, “people with serious substance abuse disorders commonly require care for months or even years,” she wrote. “The short-term fix mentality partially explains why so many people go back to their old habits.”

Dr. Mark Willenbring, a former director of treatment and recovery research at the National Institute for Alcohol Abuse and Alcoholism, said in an interview, “You don’t treat a chronic illness for four weeks and then send the patient to a support group. People with a chronic form of addiction need multimodal treatment that is individualized and offered continuously or intermittently for as long as they need it.”

Dr. Willenbring now practices in St. Paul, where he is creating a clinic called Alltyr “to serve as a model to demonstrate what comprehensive 21st century treatment should look like.”

“While some people are helped by one intensive round of treatment, the majority of addicts continue to need services,” Dr. Willenbring said. He cited the case of a 43-year-old woman “who has been in and out of rehab 42 times” because she never got the full range of medical and support services she needed.

Dr. Willenbring is especially distressed about patients who are treated for opioid addiction, then relapse in part because they are not given maintenance therapy with the drug Suboxone.

“We have some pretty good drugs to help people with addiction problems, but doctors don’t know how to use them,” he said. “The 12-step community doesn’t want to use relapse-prevention medication because they view it as a crutch.”

Before committing to a treatment program, Ms. Fletcher urges prospective clients or their families to do their homework. The first step, she said, is to get an independent assessment of the need for treatment, as well as the kind of treatment needed, by an expert who is not affiliated with the program you are considering.

Check on the credentials of the program’s personnel, who should have “at least a master’s degree,” Ms. Fletcher said. If the therapist is a physician, he or she should be certified by the American Board of Addiction Medicine.

Does the facility’s approach to treatment fit with your beliefs and values? If a 12-step program like A.A. is not right for you, don’t choose it just because it’s the best known approach.

Meet with the therapist who will treat you and ask what your treatment plan will be. “It should be more than movies, lectures or three-hour classes three times a week,” Ms. Fletcher said. “You should be treated by a licensed addiction counselor who will see you one-on-one. Treatment should be individualized. One size does not fit all.”

Find out if you will receive therapy for any underlying condition, like depression, or a social problem that could sabotage recovery. The National Institute on Drug Abuse states in its Principles of Drug Addiction Treatment, “To be effective, treatment must address the individual’s drug abuse and any associated medical, psychological, social, vocational, and legal problems.”

Look for programs using research-validated techniques, like cognitive behavioral therapy, which helps addicts recognize what prompts them to use drugs or alcohol, and learn to redirect their thoughts and reactions away from the abused substance.

Other validated treatment methods include Community Reinforcement and Family Training, or Craft, an approach developed by Robert J. Meyers and described in his book, “Get Your Loved One Sober,” with co-author Brenda L. Wolfe. It helps addicts adopt a lifestyle more rewarding than one filled with drugs and alcohol.

This is the first of two articles on addiction treatment.

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