HTC Settles F.T.C. Charges Over Security Flaws in Devices


WASHINGTON — More than 18 million smartphones and other mobile devices made by HTC, a Taiwanese company that is one of the largest sellers of smartphones in the United States, had security flaws that could allow location tracking of users against their will and the theft of personal information stored on their phones, federal officials said Friday.


The Federal Trade Commission charged HTC with customizing the software on its Android- and Windows-based phones in ways that let third-party applications install software that could steal personal information, surreptitiously send text messages or enable the device’s microphone to record the user’s phone calls.


The action is the first attempt by the commission to police a manufacturer of mobile devices. As smartphones and tablets become a common way for consumers to shop, bank and chat online, personal information and privacy will need to be guarded.


HTC America, based in Bellevue, Wash., agreed to settle the civil suit with the commission by issuing software patches that close the security holes, and by creating a security program that will be monitored by an independent party for the next 20 years. The F.T.C. does not have the authority to assess fines in consumer protection cases.


“The company didn’t design its products with security in mind,” Lesley Fair, a senior lawyer in the commission’s Bureau of Consumer Protection, wrote in a blog post. “HTC didn’t test the software on its mobile devices for potential security vulnerabilities, didn’t follow commonly accepted secure coding practices and didn’t even respond when warned about the flaws in its devices.”


An HTC official said Friday that the company had already started to update its software and distribute it to users of some, but not all, of the affected phones.


“Working with our carrier partners, we have addressed the identified security vulnerabilities on the majority of devices in the U.S. released after December 2010,” Sally Julien, an HTC spokeswoman, said in a statement. “We’re working to roll out the remaining software updates now and recommend customers download them once available.”


“Privacy and security are important,” the statement added, “and we are committed to improving practices that help safeguard our customers’ devices and data.”


The trade commission charged that the security flaws resulted from HTC’s modifying the operating system software used on most of the affected phones. In the case of Android, created by Google, the system is designed to protect sensitive information and phone functions through what is known as a permission-based security model.


That requires a user, when installing an application that is not a standard part of the operating system, to be notified and to agree that the application could gain access to certain information or functions.


HTC, however, preinstalled certain apps on its phones in a way that, in addition to preventing consumers from removing them, disabled the permission-based model and allowed newly installed apps to have immediate access to personal data.


“The analogy isn’t exact,” wrote Ms. Fair of the F.T.C., “but it’s like giving a friend the combination to a safe only to find out he’s handing it over to anyone who asks.”


That security hole could, for example, let the rogue software secretly record users’ phone conversations or track their location.


Flaws in the security system could also give third-party apps access to phone numbers, contents of text messages, browsing history and information like credit card numbers and banking transactions. Those flaws also affected HTC phones that used Windows-based operating systems.


While HTC’s actions introduced numerous security vulnerabilities to its phones, a commission official said it was not clear how many users experienced illegal incursions into their phones and personal information.


The flaw in the company’s phones has been known since at least 2011. HTC acknowledged the problems at that time and developed software patches for at least some of the deficiencies that year.


But the problems were far from minor. The F.T.C. said that text-message toll fraud, in which a hacker causes a phone to send text messages to a number that charges the user for delivery of the message, “is one of the most common types of Android malware,” or malicious software.


HTC’s user manuals either said or implied that a user was protected against malware because of the permission-based security, the commission said.


The commission will collect public comments on the proposed remedies for 30 days, after which it will decide whether to formally carry out the order. If HTC subsequently violates the order’s restrictions and requirements, it faces civil penalties of up to $16,000 a violation.


This article has been revised to reflect the following correction:

Correction: February 25, 2013

A picture with an earlier version of this article was published in error. The settlement between HTC and the F.T.C. involves phones running Windows Mobile; it did not involve the later operating system Windows 8, which the phone in the picture was running.



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Kerry Promises Not to Leave Syrian Rebels ‘Dangling in the Wind’


Hussein Malla/Associated Press


In a cave in Idlib Province, Free Syrian Army fighters did a traditional dance and sang songs critical of President Bashar al-Assad.







BERLIN — Secretary of State John Kerry said on Monday that the Obama administration has been considering new steps to increase support for the Syrian opposition and hasten the departure of President Bashar al-Assad and that some of them would be decided at an international conference in Rome this week.




“We are determined that the Syrian opposition is not going to be dangling in the wind wondering where the support is or if it’s coming,” Mr. Kerry said at a news conference in London. “And we are determined to change the calculation on the ground for President Assad.”


Mr. Kerry’s comments came amid diplomatic maneuvering and some drama over the Rome meeting, scheduled for Thursday.


After the Syrian opposition signaled that it would boycott the Rome conference to protest what it sees as negligible help from Western nations, Mr. Kerry called Moaz al-Khatib, the leader of the Syrian opposition coalition, and persuaded him to attend.


American officials have said that their goal in supporting the Syrian resistance is to build up its leverage in the hope that Mr. Assad will agree to yield power and a political transition can be negotiated to end the nearly two-year-old conflict.


In Moscow, however, Syria’s foreign minister, Walid al-Moallem, appeared to be making a competing initiative. In a statement during a visit to Russia, which has been one of the Assad government’s main backers, Mr. Moallem said that Syrian authorities were “ready for a dialogue with anyone who’s willing, even with those who carry arms.”


It was the first time that a high-ranking Syrian official had signaled that the government is open to talking with Syrian rebels who have taken up weapons against the armed forces.


It was unclear whether Mr. Moallem’s offer came with caveats, such as a precondition that the Syrian rebels must disarm first. More fundamentally, if the aim of Mr. Moallem’s offer was to achieve a cease-fire while perpetuating Mr. Assad’s hold on power it would be fundamentally at odds with the demand of the opposition that the Syrian leader must be ousted.


Mr. Kerry, for his part, was skeptical of Mr. Moallem’s intentions as well.


“What has happened in Aleppo in the last days is unacceptable,” Mr. Kerry said, referring to the Scud missile attacks the Assad government directed at the city last week. “It’s pretty hard to understand how, when you see these Scuds falling on the innocent people of Aleppo, it’s possible to take their notion that they’re ready to have a dialogue very seriously.”


London was the first stop on Mr. Kerry’s nine-nation tour and Syria figured prominently in his discussions with William Hague, the British foreign secretary, who reinforced the message that more had to done to support the Syrian opposition because the possibility of a political solution was “blocked off.”


“Our policy cannot stay static as the weeks go by,” Mr. Hague said at a joint news conference with Mr. Kerry. “It will have to change and develop.”


The European Union agreed to a British proposal that nonlethal assistance could be sent to armed groups inside Syria. Discussions were now under way among European nations to determine just what sort of aid could be sent, but some American officials had said it might include night-vision equipment or armored cars.


Mr. Kerry declined to say whether the United States would also be willing to send nonlethal assistance to armed factions fighting Mr. Assad, saying that a variety of ideas was under discussion.


“We are not coming to Rome simply to talk,” he said. “We are coming to Rome to make a decision about next steps and perhaps even other options that may or may not be discussed further after that.”


Mr. Obama last year rebuffed a proposal from the C.I.A., State Department and Pentagon that the United States train and arm a cadre of Syrian rebel fighters.


After his meetings in Britain, Mr. Kerry flew to Germany for meetings on Tuesday with German officials and Sergey V. Lavrov, the Russian foreign minister.


Michael R. Gordon reported from Berlin, and Anne Barnard from Beirut, Lebanon. Hania Mourtada contributed reporting from Beirut, and Rick Gladstone from New York.



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Johnson & Johnson Told to Pay $3.35 Million in Vaginal Mesh Case





A jury said on Monday that Johnson & Johnson should pay a South Dakota woman $3.35 million for failing to warn her doctor adequately of the potential dangers of a vaginal mesh implant made by the company’s Ethicon subsidiary, and for misrepresenting the product in brochures.




It was the first verdict among some 1,800 vaginal mesh cases pending in New Jersey against Ethicon and Johnson & Johnson, and it could affect thousands of lawsuits against other manufacturers of similar products.


The lawsuit, in state Superior Court in Atlantic City, was brought by Linda Gross, 47, of Watertown, S.D., in November 2008. It asserted that the Gynecare Prolift vaginal mesh was not safe and that J.& J. and Ethicon were liable, among other things, for “their defective design, manufacture, warnings and instructions.”


The Ethicon product, before being taken off the American market last year, was used to treat pelvic organ collapse, a condition for which the plaintiff, a nurse, was treated in November 2008. That condition occurs when tissue that holds the pelvic organs in place is weak or stretched and bulges into the vagina.


Ms. Gross filed her lawsuit after having an operation in 2006 to install a Gynecare Prolift for pelvic prolapse. Her suit said the operation led to a variety of problems, including mesh erosion, scar tissue, inflammation and “neurologic compromise.”


The suit said she had to seek medical treatment and had 18 operations to repair the damage caused by the mesh.


Ben Anderson, a member of the trial team for the plaintiff, called the jury verdict “a strong statement to Johnson & Johnson and Ethicon that they cannot put profits before women’s safety.”


The verdict, by a panel of six women and three men, followed a six-week trial before Judge Carol Higbee. After the verdict was delivered, the judge ruled that she would allow arguments on punitive damages, beginning on Tuesday.


Sheri Woodruff, a spokeswoman for Ethicon, said, “While we are always concerned when a patient experiences medical conditions like those suffered by the plaintiff, all surgeries for pelvic organ prolapse present risks of complications.”


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The Texas Tribune: Advocates Seek Mental Health Changes, Including Power to Detain


Matt Rainwaters for Texas Monthly


The Sherman grave of Andre Thomas’s victims.







SHERMAN — A worried call from his daughter’s boyfriend sent Paul Boren rushing to her apartment on the morning of March 27, 2004. He drove the eight blocks to her apartment, peering into his neighbors’ yards, searching for Andre Thomas, Laura Boren’s estranged husband.






The Texas Tribune

Expanded coverage of Texas is produced by The Texas Tribune, a nonprofit news organization. To join the conversation about this article, go to texastribune.org.




For more articles on mental health and criminal justice in Texas, as well as a timeline of the Andre Thomas case: texastribune.org






Matt Rainwaters for Texas Monthly

Laura Boren






He drove past the brightly colored slides, swings and bouncy plastic animals in Fairview Park across the street from the apartment where Ms. Boren, 20, and her two children lived. He pulled into a parking spot below and immediately saw that her door was broken. As his heart raced, Mr. Boren, a white-haired giant of a man, bounded up the stairwell, calling out for his daughter.


He found her on the white carpet, smeared with blood, a gaping hole in her chest. Beside her left leg, a one-dollar bill was folded lengthwise, the radiating eye of the pyramid facing up. Mr. Boren knew she was gone.


In a panic, he rushed past the stuffed animals, dolls and plastic toys strewn along the hallway to the bedroom shared by his two grandchildren. The body of 13-month-old Leyha Hughes lay on the floor next to a blood-spattered doll nearly as big as she was.


Andre Boren, 4, lay on his back in his white children’s bed just above Leyha. He looked as if he could have been sleeping — a moment away from revealing the toothy grin that typically spread from one of his round cheeks to the other — except for the massive chest wound that matched the ones his father, Andre Thomas (the boy was also known as Andre Jr.), had inflicted on his mother and his half-sister as he tried to remove their hearts.


“You just can’t believe that it’s real,” said Sherry Boren, Laura Boren’s mother. “You’re hoping that it’s not, that it’s a dream or something, that you’re going to wake up at any minute.”


Mr. Thomas, who confessed to the murders of his wife, their son and her daughter by another man, was convicted in 2005 and sentenced to death at age 21. While awaiting trial in 2004, he gouged out one of his eyes, and in 2008 on death row, he removed the other and ate it.


At least twice in the three weeks before the crime, Mr. Thomas had sought mental health treatment, babbling illogically and threatening to commit suicide. On two occasions, staff members at the medical facilities were so worried that his psychosis made him a threat to himself or others that they sought emergency detention warrants for him.


Despite talk of suicide and bizarre biblical delusions, he was not detained for treatment. Mr. Thomas later told the police that he was convinced that Ms. Boren was the wicked Jezebel from the Bible, that his own son was the Antichrist and that Leyha was involved in an evil conspiracy with them.


He was on a mission from God, he said, to free their hearts of demons.


Hospitals do not have legal authority to detain people who voluntarily enter their facilities in search of mental health care but then decide to leave. It is one of many holes in the state’s nearly 30-year-old mental health code that advocates, police officers and judges say lawmakers need to fix. In a report last year, Texas Appleseed, a nonprofit advocacy organization, called on lawmakers to replace the existing code with one that reflects contemporary mental health needs.


“It was last fully revised in 1985, and clearly the mental health system has changed drastically since then,” said Susan Stone, a lawyer and psychiatrist who led the two-year Texas Appleseed project to study and recommend reforms to the code. Lawmakers have said that although the code may need to be revamped, it will not happen in this year’s legislative session. Such an undertaking requires legislative studies that have not been conducted. But advocates are urging legislators to make a few critical changes that they say could prevent tragedies, including giving hospitals the right to detain someone who is having a mental health crisis.


From the time Mr. Thomas was 10, he had told friends he heard demons in his head instructing him to do bad things. The cacophony drove him to attempt suicide repeatedly as an adolescent, according to court records. He drank and abused drugs to try to quiet the noise.


bgrissom@texastribune.org



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The Texas Tribune: Advocates Seek Mental Health Changes, Including Power to Detain


Matt Rainwaters for Texas Monthly


The Sherman grave of Andre Thomas’s victims.







SHERMAN — A worried call from his daughter’s boyfriend sent Paul Boren rushing to her apartment on the morning of March 27, 2004. He drove the eight blocks to her apartment, peering into his neighbors’ yards, searching for Andre Thomas, Laura Boren’s estranged husband.






The Texas Tribune

Expanded coverage of Texas is produced by The Texas Tribune, a nonprofit news organization. To join the conversation about this article, go to texastribune.org.




For more articles on mental health and criminal justice in Texas, as well as a timeline of the Andre Thomas case: texastribune.org






Matt Rainwaters for Texas Monthly

Laura Boren






He drove past the brightly colored slides, swings and bouncy plastic animals in Fairview Park across the street from the apartment where Ms. Boren, 20, and her two children lived. He pulled into a parking spot below and immediately saw that her door was broken. As his heart raced, Mr. Boren, a white-haired giant of a man, bounded up the stairwell, calling out for his daughter.


He found her on the white carpet, smeared with blood, a gaping hole in her chest. Beside her left leg, a one-dollar bill was folded lengthwise, the radiating eye of the pyramid facing up. Mr. Boren knew she was gone.


In a panic, he rushed past the stuffed animals, dolls and plastic toys strewn along the hallway to the bedroom shared by his two grandchildren. The body of 13-month-old Leyha Hughes lay on the floor next to a blood-spattered doll nearly as big as she was.


Andre Boren, 4, lay on his back in his white children’s bed just above Leyha. He looked as if he could have been sleeping — a moment away from revealing the toothy grin that typically spread from one of his round cheeks to the other — except for the massive chest wound that matched the ones his father, Andre Thomas (the boy was also known as Andre Jr.), had inflicted on his mother and his half-sister as he tried to remove their hearts.


“You just can’t believe that it’s real,” said Sherry Boren, Laura Boren’s mother. “You’re hoping that it’s not, that it’s a dream or something, that you’re going to wake up at any minute.”


Mr. Thomas, who confessed to the murders of his wife, their son and her daughter by another man, was convicted in 2005 and sentenced to death at age 21. While awaiting trial in 2004, he gouged out one of his eyes, and in 2008 on death row, he removed the other and ate it.


At least twice in the three weeks before the crime, Mr. Thomas had sought mental health treatment, babbling illogically and threatening to commit suicide. On two occasions, staff members at the medical facilities were so worried that his psychosis made him a threat to himself or others that they sought emergency detention warrants for him.


Despite talk of suicide and bizarre biblical delusions, he was not detained for treatment. Mr. Thomas later told the police that he was convinced that Ms. Boren was the wicked Jezebel from the Bible, that his own son was the Antichrist and that Leyha was involved in an evil conspiracy with them.


He was on a mission from God, he said, to free their hearts of demons.


Hospitals do not have legal authority to detain people who voluntarily enter their facilities in search of mental health care but then decide to leave. It is one of many holes in the state’s nearly 30-year-old mental health code that advocates, police officers and judges say lawmakers need to fix. In a report last year, Texas Appleseed, a nonprofit advocacy organization, called on lawmakers to replace the existing code with one that reflects contemporary mental health needs.


“It was last fully revised in 1985, and clearly the mental health system has changed drastically since then,” said Susan Stone, a lawyer and psychiatrist who led the two-year Texas Appleseed project to study and recommend reforms to the code. Lawmakers have said that although the code may need to be revamped, it will not happen in this year’s legislative session. Such an undertaking requires legislative studies that have not been conducted. But advocates are urging legislators to make a few critical changes that they say could prevent tragedies, including giving hospitals the right to detain someone who is having a mental health crisis.


From the time Mr. Thomas was 10, he had told friends he heard demons in his head instructing him to do bad things. The cacophony drove him to attempt suicide repeatedly as an adolescent, according to court records. He drank and abused drugs to try to quiet the noise.


bgrissom@texastribune.org



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French Tax Proposal Tackles Data Harvest by Google and Facebook


PARIS — Only a few weeks after the French Constitutional Council rejected one new tax idea — a 75 percent levy on annual incomes of more than 1 million euros ($1.3 million) — another began percolating through the halls of the finance ministry here: a proposal to tax the collection of personal data on the Internet.


Google and Facebook know that John Doe “likes” wine, is shopping for a Volkswagen and often e-mails Jane Doe. The new idea would require the companies to pay for gathering that information.


Nicolas Colin, one of the authors of a report in which the idea of taxing data collection was floated in January, said the immediate goal would be to promote sound practices for data collection and protection.


While the report does not specify how much revenue the tax would yield, Mr. Colin said it would probably be minimal.


“It’s meant to incentivize everyone to operate at a higher level, not to raise a lot of money,” he said. “You can’t go from zero to collecting hundreds of millions overnight.”


Like other European countries, France has been frustrated by its inability to raise significant tax revenue from the billions of dollars in sales and profits that Internet companies, many of them American, generate in Europe every year.


And despite so-called austerity measures, budget deficits remain large.


“Every government needs revenues,” Mr. Colin, a government auditor and technology entrepreneur, said in an interview. “If they can’t get them from the most profitable companies, then they have to get them from the rest of us — individual taxpayers and smaller, struggling companies.”


Internet companies like Amazon.com, Facebook and Google stay largely out of reach of tax collectors in large European countries like Britain, France and Germany by routing their sales through smaller countries, like Ireland and Luxembourg, where corporate tax rates are lower. The companies insist that such practices are permitted under European Union law and international taxation treaties.


France and other countries have begun talks to change those conventions, so Internet companies could be taxed in the country where a sale takes place, rather than in the location where the transaction is recorded. But that could take many years, with no guarantee of any change.


On the other hand, France could impose a tax on data collection unilaterally and quickly, Mr. Colin said.


The prospects for his proposal are unclear. While the report was commissioned by the government, it is not an official policy document, and the finance ministry has yet to take a position on the idea.


On other issues involving the digital economy, the administration of President François Hollande has sent mixed signals. After threatening Google with a law that would have let publishers charge the search engine for links to their Web sites, for example, the government backed down and accepted a negotiated deal that maintains Google’s existing business model, under which links are free.


The French data protection agency, which is known by the initials C.N.I.L. and is independent of the government, has been more forthcoming about the taxation proposal.


“Personal data are the fuel of the digital economy,” Edouard Geffray, the agency’s secretary general, told the French version of the online magazine Slate. “Given that, it would seem like a natural idea to envision taxing the use of them.”


While business plans built on mining consumers’ personal information from the Internet are proliferating, so are concerns about the use of the data.


Last week, the data protection authorities of the 27 European Union countries threatened Google with punitive action over a privacy policy that the company put in effect last year, under which it harvests data from a range of services. The agencies, led by C.N.I.L., gave Google four months to make changes or face legal action. Google insists its policy complies with European Union law.


A recent study by Ovum, a research firm in London, showed that 81 percent of Internet users in France would use a “do not track” feature on Web sites if it were readily available. That was the highest percentage in any of the 11 countries surveyed.


“The privacy market is heating up,” said Mark Little, an analyst at Ovum. “There is a move away from what I would call data fracking to consumers’ creating their own contracts governing data use, and corporations’ having to abide by those.”


Mr. Colin said the main goal of his tax plan would be to reward companies for providing their customers with useful information, while penalizing those that did not do so.


Internet companies, for example, could be taxed if they collected “cookies” — digital markers of the Web sites that Internet users visit — without enabling consumers to see how the information was used. Companies that did provide that information readily would be exempt.


Analysts call such a practice “smart disclosure” because it can help consumers make informed decisions. Utilities that provide consumers with more detailed information on, for example, their patterns of electricity or natural gas consumption could help them reduce their bills.


Mr. Colin said there was no intention to stop Internet companies from collecting data.


“That would be bad for business, and it would hurt French companies too,” he said.


While Internet companies are not alone in collecting vast amounts of data, Mr. Colin made it clear that the proposal was aimed at the likes of Google and Facebook, which are making inroads in more and more areas.


“I’m convinced the telecoms, even car manufacturers, will be disrupted by these companies,” Mr. Colin said. “We’d better learn to tax them before they eat the whole economy.”


A secondary purpose of the proposal, Mr. Colin said, would be to provide leverage in negotiations for a change in international conventions on corporate taxes. If those were altered so that France could tax foreign Internet companies on their profits, then the data tax could be dropped, he said.


“In France, we are seen as a nation of tax lovers, which isn’t always good for the French image, and isn’t always true, either,” he said. “But it is true that we are leaders in this area. Maybe the French government has the opportunity to make the case for accelerated negotiations.”


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Kerry’s Meeting With Syrian Opposition at Risk






Pool photo by Jacquelyn Martin

Secretary of State John Kerry spoke to reporters on the way to London on Sunday. Mr. Kerry has said that he has new ideas on how to force President Bashar al-Assad from power in Syria.








Mr. Kerry and foreign ministers from Europe and the Middle East are scheduled to meet in Rome on Thursday with opponents of President Bashar al-Assad of Syria, including Sheik Ahmad Moaz al-Khatib, who leads the opposition. But they are threatening to boycott the conference to protest what they see as fainthearted international support.


To try to rescue the meeting, Robert S. Ford, the American ambassador to Syria and chief envoy to the opposition, was sent to Cairo on Sunday to implore opposition leaders to attend the session in Rome.


“The Syrian opposition leadership is under severe pressure now from its membership, from the Syrian people, to get more support from the international community,” said a senior administration official who was traveling on Mr. Kerry’s plane. “And in that context, there’s quite a bit of internal discussion about the value of going in international conferences.”


The issue upset the first day of a carefully choreographed trip that is intended to introduce Mr. Kerry as the chief American envoy and to give a lift to the diplomatic stalemate on Syria. Mr. Kerry, who took office this month, is traveling to Britain, Germany, France, Italy, Turkey, Egypt, Saudi Arabia, the United Arab Emirates and Qatar over 11 days.


Even before his trip was formally announced, Mr. Kerry raised expectations by saying he had new ideas on how to change Mr. Assad’s calculations that he could remain in power.


Mr. Kerry has not publicly explained the proposals, but they appear to include marshaling support from Russia, which has been providing arms and financial help to Mr. Assad. Toward that end, Mr. Kerry plans to meet in Berlin on Wednesday with Sergey V. Lavrov, Russia’s foreign minister.


The meeting with the Syrian opposition is to be hosted by Italy. Last week, the European Union agreed to extend its embargo on weapons shipments to Syria for another three months, a move that precludes European arms shipments to the opposition.


But the European Union did agree to a British proposal that nonlethal assistance be expanded. As a result, body armor, night-vision goggles, armored vehicles and other equipment can be sent to armed opposition groups in Syria, an American official said.


So far, the Obama administration has not gone that far in its support. While the United States provides nonlethal assistance like computers and radios to the opposition, it has not been willing to provide nonlethal aid to armed factions within Syria, an approach that experts say has limited its influence with these groups.


State Department officials traveling with Mr. Kerry declined to discuss whether the United States would soon be prepared to take that step.


President Obama rebuffed a proposal last year from the State Department, the Pentagon and the C.I.A. that the United States arm and train a cadre of opposition fighters.


With the violence escalating, Aleppo under attack by Scud missiles and members of a quarrelsome Syrian opposition challenging the value of the Rome meeting — which was supposed to be a highlight of Mr. Kerry’s trip — the State Department issued a statement on Saturday evening that condemned the rocket attacks “in the strongest possible terms” and prodded the Syrian opposition to attend the session.


The statement continued, “We look forward to meeting soon with the leadership of the legitimate representative of the Syrian people, the Syrian Opposition Coalition, to discuss how the United States and other friends of the Syrian people can do more to help the Syrian people achieve the political transition that they demand and that they deserve.”


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Barnes & Noble Weighs Its Nook Losses


Elise Amendola/Associated Press


Barnes & Noble has committed heavily to making and selling its own e-readers, and despite an upswing in tablet sales over the Christmas season, the Nook was not a beneficiary.







Even for a company with a lot of bad news lately, the bulletin from Barnes & Noble this month had an ominous feel.




Barnes & Noble, the nation’s largest book chain, warned that when it reports fiscal 2013 third-quarter results on Thursday, losses in its Nook Media division — which includes sales of e-books and devices — will be greater than the year before and that the unit’s revenue for all of fiscal 2013 would be far below projections it gave of $3 billion.


The problem was not so much the extent of the losses, but what the losses might signal: that the digital approach that Barnes & Nobles has been heavily investing in as its future for the last several years has essentially run its course.


A person familiar with Barnes & Nobles’s strategy acknowledged that this quarter, which includes holiday sales, has caused executives to realize the company must move away from its program to engineer and build its own devices and focus more on licensing its content to other device makers.


“They are not completely getting out of the hardware business, but they are going to lean a lot more on the comprehensive digital catalog of content,” said this person, who asked not to be identified discussing corporate strategy.


On Thursday, the person said, the company will emphasize its commitment to intensify partnerships with other tablet producers like Microsoft and Samsung to make deals for content that it controls.


If Barnes & Noble does indeed pull back from building tablets, it would be a 180-degree shift for a company that as late as last year was promoting the Nook as its future. “Had we not launched devices and spent the money we invested in the Nook, investors and analysts would have said, ’Barnes & Noble is crazy, and they’re going to go away,’ ” William Lynch, the company’s chief executive, said in an interview last January.


Since 2009, when Barnes & Noble first decided to invest in building the device, its financial commitment to the division has been substantial. (The company does not disclose exact figures.) At the beginning of 2012, that bet seemed to be paying off and the digital future seemed hopeful.


In May, Microsoft decided to give a cash infusion to the product by pledging more than $600 million to Nook Media. In December, the British textbook publisher Pearson bought a 5 percent stake in the unit for nearly $90 million.


Going into the 2012 Christmas season, the Nook HD, Barnes & Noble’s entrant into the 7-inch and 9-inch tablet market, was winning rave reviews from technology critics who praised its high-quality screen. Editors at CNET called it “a fantastic tablet value” and David Pogue in The New York Times told readers choosing between the Nook HD and Kindle Fire that the Nook “is the one to get.”


But while tablet sales exploded over the Christmas season, Barnes & Noble was not a beneficiary. Buyers preferred Apple devices by a long mile but then went on to buy Samsung, Amazon and Google products before those of Barnes & Noble, according to market analysis by Forrester Research.


“In many ways it is a great product,” Sarah Rotman Epps, a senior analyst at Forrester, said of the Nook tablet. “It was a failure of brand, not product.


“The Barnes & Noble brand is just very small,” she added. “It has done a great job at engaging its existing customers but failed to expand their footprint beyond that.”


Others pointed out that even if the Nook itself was a nice device, its offerings were not as rich as that of its rivals. Shaw Wu, a senior analyst at Sterne Agee, a midsize investment bank in San Francisco, said, “It is a very tough space. It is highly competitive, and extras like the depth of apps are very important. But it requires funding and a lot of attention, and Barnes & Noble is competing against companies like Apple and Google, which literally have unlimited resources.”


Horace Dediu, an independent analyst based in Finland who focuses on the mobile industry, said that the difference in quality among the products was so small as to be increasingly irrelevant.


“We’ve moved beyond a game of specs,” he said. “Now it is about your business model, about distribution and economics of scale.”


He said that while the cellphone business used to have numerous competitors, it now has only two companies that are really profitable: Apple and Samsung. He said he expected a similar consolidation in the tablet market, with companies like Barnes & Noble “maybe falling off the map.”


There is no immediate danger to the book retailer, which has some 677 stores nationwide. The company has said it plans to close about 15 unprofitable stores a year and replace them at a much slower rate. It also still holds roughly one quarter of the digital sales of books and more of magazines.


Still, the threat is large enough that Barnes & Noble executives are working hard to determine a strategy that focuses on core strengths like content distribution. Its content is its “crown jewel,” said the person familiar with the company’s strategy, “and where the profitable income stream lies.”


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Off the Dribble: Salley Offers a Healthy Assist

When Carmelo Anthony went on a vegetarian diet a few weeks ago and caused the biggest culinary conundrum in sports since fried chicken and beer had starring roles in the Red Sox clubhouse, John Salley could only shake his head.

Anthony’s diet was blamed for his sluggish play and the Knicks’ 3-4 record during the 15-day fast.

Anthony admitted that his body felt “depleted out there.”

But Salley, the former N.B.A. player, said that if Anthony had eaten a vegetarian diet correctly, he would have felt invigorated and anything but depleted.

And not just for two weeks but for the entire season.

For Salley, many of his salad days in the N.B.A. really were salad days. Particularly kale salad.

Salley, a 6-foot-11 power forward and center, became a vegetarian in January 1991 after he felt he had to make changes in his lifestyle, much like Anthony’s stated desire for “clarity in his life.”

Vegetarians do not eat meat, fish or poultry, but may eat dairy products like cheese, eggs, yogurt or milk.

Salley had read a story about the Celtics’ Robert Parish, whom he had always admired, and his interest in yoga and a red-meat-free diet.

While Parish’s regimen was not total vegetarian, he recently said that it made a difference in his career, helping him withstand the rigors of playing center against behemoths in the paint.

“My diet consisted of chicken, fish, seafood, salad, pasta and organic when possible,” he said. “I had very little sugar and drank a gallon of water every day. I also ate rice and beans, peas, cabbage, mustard, collards greens and assorted nuts. I would always focus on healthy eating. My success depended on my body and I tried to do right by it. ”

His body responded with 20 years of service in his Hall of Fame career. Parish retired at 43.

Salley was striving for similar health and success.

“I was 27, and I felt I had to change my life,” Salley said. “My knees were sore, my joints ached, I had back problems and my cholesterol was 275. ”

When he was with the Pistons, Salley visited a nutritionist in Detroit who advised him to eliminate fried foods and adopt a macrobiotic diet (grains and vegetables).

Salley, invigorated and healthy, had his best season in 1991. A defensive specialist, he had more energy and quickness and averaged a career best 9.5 points a game.

He kept his healthy diet a secret from his burly Bad Boy Piston steak-and-pork-chop teammates, who included Bill Laimbeer, Rick Mahorn and Dennis Rodman.

“I would tell them all the time,” Salley said, “if you go into a steak house it’s not that they have a certain thing inside the dead flesh or they cook it differently. They make it the same way everybody else does. All you’re doing is eating dead food.”

Salley would search out health food restaurants with a few tables or just counter service for his diet staples of quinoa, kale, spinach, stir fried vegetables, brown rice and wheatgrass on the menu.

“It was hard to find places in 1991,” he said. “So many times I would go into restaurants and ask the cook to steam my vegetables and make me the lightest fish.”

But it was worth it.

“I was playing so well it was crazy,” he said.

During his career, Salley, who retired in 2000, won four championships with the Detroit Pistons, the Chicago Bulls and the Los Angeles Lakers.

He now follows a vegan diet, which eliminates all dairy foods in addition to animal products.

“I’m eating raw,” said Salley, 48. “And I make all my food with no sugar, no salt and no oil.”

Salley is familiar with Anthony’s foray into vegetarian living. The Knicks star followed the Daniel Fast based on the book of Daniel in the Bible, which espouses a diet of mainly liquid and vegetables.

“He felt depleted because you need to find a natural source of vitamin B12,” Salley said.

B12 is not found in any significant amounts in plant food, and a deficiency can cause fatigue, weakness and tingling in the legs.

It can also cause irritability. Anthony said his diet might have caused him to lash out at Kevin Garnett in a game against the Boston Celtics.

“He didn’t take any supplements to help his body,” Salley said. “He did not get his body to heal. It’s like cutting yourself and not putting a Band-Aid on. He just got part of the plan right.”

Salley is working to make sure children get the plan right with food choices. He spreads the word about healthy eating in the community, having lobbied Congress for more vegetarian options in school lunches.

Although Anthony may have struggled to maintain his vegetarian diet, other N.B.A players and athletes have embraced it.

James Jones of the Miami Heat and Anthony’s teammate A’mare Stoudemire are vegetarians.

Baseball’s Prince Fielder, the triathlete Brendan Brazier, the mixed martial artist Mac Danzig, the bodybuilder Derek Tresize and the tennis player Serena Williams are among athletes who are vegans or vegetarians.

Dr. Joel Kahn, a clinical professor of medicine at Wayne State University School of Medicine and medical director of wellness programs, preventive cardiology, and cardiac rehabilitation at Detroit Medical Center, has counseled Salley and other athletes about the benefits of vegan and vegetarian diets.

“A plant-based, whole-food diet low on sugar and gluten is very anti-inflammatory and ideal for rapid recovery from workouts,” he said.

Read More..

Off the Dribble: Salley Offers a Healthy Assist

When Carmelo Anthony went on a vegetarian diet a few weeks ago and caused the biggest culinary conundrum in sports since fried chicken and beer had starring roles in the Red Sox clubhouse, John Salley could only shake his head.

Anthony’s diet was blamed for his sluggish play and the Knicks’ 3-4 record during the 15-day fast.

Anthony admitted that his body felt “depleted out there.”

But Salley, the former N.B.A. player, said that if Anthony had eaten a vegetarian diet correctly, he would have felt invigorated and anything but depleted.

And not just for two weeks but for the entire season.

For Salley, many of his salad days in the N.B.A. really were salad days. Particularly kale salad.

Salley, a 6-foot-11 power forward and center, became a vegetarian in January 1991 after he felt he had to make changes in his lifestyle, much like Anthony’s stated desire for “clarity in his life.”

Vegetarians do not eat meat, fish or poultry, but may eat dairy products like cheese, eggs, yogurt or milk.

Salley had read a story about the Celtics’ Robert Parish, whom he had always admired, and his interest in yoga and a red-meat-free diet.

While Parish’s regimen was not total vegetarian, he recently said that it made a difference in his career, helping him withstand the rigors of playing center against behemoths in the paint.

“My diet consisted of chicken, fish, seafood, salad, pasta and organic when possible,” he said. “I had very little sugar and drank a gallon of water every day. I also ate rice and beans, peas, cabbage, mustard, collards greens and assorted nuts. I would always focus on healthy eating. My success depended on my body and I tried to do right by it. ”

His body responded with 20 years of service in his Hall of Fame career. Parish retired at 43.

Salley was striving for similar health and success.

“I was 27, and I felt I had to change my life,” Salley said. “My knees were sore, my joints ached, I had back problems and my cholesterol was 275. ”

When he was with the Pistons, Salley visited a nutritionist in Detroit who advised him to eliminate fried foods and adopt a macrobiotic diet (grains and vegetables).

Salley, invigorated and healthy, had his best season in 1991. A defensive specialist, he had more energy and quickness and averaged a career best 9.5 points a game.

He kept his healthy diet a secret from his burly Bad Boy Piston steak-and-pork-chop teammates, who included Bill Laimbeer, Rick Mahorn and Dennis Rodman.

“I would tell them all the time,” Salley said, “if you go into a steak house it’s not that they have a certain thing inside the dead flesh or they cook it differently. They make it the same way everybody else does. All you’re doing is eating dead food.”

Salley would search out health food restaurants with a few tables or just counter service for his diet staples of quinoa, kale, spinach, stir fried vegetables, brown rice and wheatgrass on the menu.

“It was hard to find places in 1991,” he said. “So many times I would go into restaurants and ask the cook to steam my vegetables and make me the lightest fish.”

But it was worth it.

“I was playing so well it was crazy,” he said.

During his career, Salley, who retired in 2000, won four championships with the Detroit Pistons, the Chicago Bulls and the Los Angeles Lakers.

He now follows a vegan diet, which eliminates all dairy foods in addition to animal products.

“I’m eating raw,” said Salley, 48. “And I make all my food with no sugar, no salt and no oil.”

Salley is familiar with Anthony’s foray into vegetarian living. The Knicks star followed the Daniel Fast based on the book of Daniel in the Bible, which espouses a diet of mainly liquid and vegetables.

“He felt depleted because you need to find a natural source of vitamin B12,” Salley said.

B12 is not found in any significant amounts in plant food, and a deficiency can cause fatigue, weakness and tingling in the legs.

It can also cause irritability. Anthony said his diet might have caused him to lash out at Kevin Garnett in a game against the Boston Celtics.

“He didn’t take any supplements to help his body,” Salley said. “He did not get his body to heal. It’s like cutting yourself and not putting a Band-Aid on. He just got part of the plan right.”

Salley is working to make sure children get the plan right with food choices. He spreads the word about healthy eating in the community, having lobbied Congress for more vegetarian options in school lunches.

Although Anthony may have struggled to maintain his vegetarian diet, other N.B.A players and athletes have embraced it.

James Jones of the Miami Heat and Anthony’s teammate A’mare Stoudemire are vegetarians.

Baseball’s Prince Fielder, the triathlete Brendan Brazier, the mixed martial artist Mac Danzig, the bodybuilder Derek Tresize and the tennis player Serena Williams are among athletes who are vegans or vegetarians.

Dr. Joel Kahn, a clinical professor of medicine at Wayne State University School of Medicine and medical director of wellness programs, preventive cardiology, and cardiac rehabilitation at Detroit Medical Center, has counseled Salley and other athletes about the benefits of vegan and vegetarian diets.

“A plant-based, whole-food diet low on sugar and gluten is very anti-inflammatory and ideal for rapid recovery from workouts,” he said.

Read More..