PC titans take notes from tablets to regain customers

SAN FRANCISCO (Reuters) – Personal computer makers, trying to beat back a tablet mania that’s eating into their sales, are making what may be a last-ditch attempt to sway customers by mimicking the competition.

Many of the laptops to be unveiled around the world in coming months will be hybrids or “convertibles” – morphing easily between portable tablets and full-powered laptops with a keyboard, industry analysts say.

The wave of hybrids comes as Intel Corp and Microsoft Corp, long the twin leaders of the PC industry, prepare to report results this week and next. Wall Street is predicting flat to sluggish quarterly revenue growth for both, underscoring the plight of an industry that has struggled to innovate.

In 2013, some are hoping that will change.

With the release of Microsoft’s touch-centric, re-imagined Windows 8 platform in October and more power-efficient chips from Intel, PC makers are trying to spark growth by focusing on creating slim laptops with touchscreens that convert to tablets and vice versa.

Microsoft, expanding beyond its traditional business of selling software, is expected this month to roll out a “Surface Pro” tablet compatible with legacy PC software developed over decades.

That’s a major selling point for corporate customers like German business software maker SAP, which plans to buy Surface Pros for employees that want it, said SAP Chief Information Officer Oliver Bussmann.

“The hybrid model is very compelling for a lot of users,” Bussmann told Reuters last week. “The iPad is not replacing the laptop. It’s hard to create content. That’s the niche that Microsoft is going after. The Surface can fill that gap.”

Apple’s iPad began chipping away at demand for laptops in 2010, an assault that accelerated with the launch of Amazon.com Inc’s Kindle Fire and other Google Android devices like Samsung Electronics’ Note.

With sales of PCs falling last year for the first time since 2001, this year may usher in a renaissance in design and innovation from manufacturers who previously focused on reducing costs instead of adding new features to entice consumers.

“People used to be able to just show up at the party and do well just because the market was going up,” Lisa Su, a senior vice president at Advanced Micro Devices, which competes against Intel. “It’s harder now. You can’t just show up at the party. You have to innovate and have something special.”

At last week’s Consumer Electronics Show in Las Vegas, devices on display from Intel and others underscored the PC industry’s plan to bet more on convertible laptops.

Lenovo’s North America President Gerry Smith told Reuters last week that over the holidays he sold out of the company’s “Yoga”, a laptop with a screen that flips back behind its keyboard, and the “ThinkPad Twist”, another lightweight laptop with a swiveling screen.

Intel itself showed off a hybrid prototype laptop dubbed “North Cape”, housed in a thin tablet screen that attaches magnetically to a low-profile keyboard. And Asus showed a hefty 18-inch, all-in-one Windows 8 PC that converts to a tablet running Google’s Android operating system.

Lenovo and Asus, which have both won positive reviews for their devices in recent months, increased their PC shipments by 14 percent and 17 percent respectively last year, according to Gartner.

“The number of unique systems that our partners have developed for Windows has almost doubled since launch. That gives an indication of how much innovation is going into the PC market,” Tami Reller, chief financial officer of Microsoft’s Windows unit, told Reuters.

FINGER-POINTING

To be sure, hybrids with detachable or twistable screens do not yet account for a significant proportion of global PC sales, and consumers still need to be sold on their benefits.

Previous attempts by PC makers to reinvigorate the market have had limited success. Pushed by Intel, manufacturers launched a series of slimmed down laptops early last year with features popular on tablets, like solid-state memory.

They were too expensive, often at more than $ 1,000 apiece, and failed to arrest the PC decline.

Microsoft’s Windows 8 launch in October brought touchscreen features but failed to spark a resurgence in PC sales many manufacturers had hoped for. A round of finger-pointing ensued, with PC and chip executives blaming a shortage of touchscreen components and others saying it was the manufacturers that sharply underestimated consumer demand for touch devices.

Regardless, the entire PC ecosystem is onboard for 2013. Almost half of the Windows laptops rolled out this year may have touch screens. Of those, most will be in convertible form, according to IDC analyst David Daoud.

Further blurring the distinction between kinds of devices, about a quarter of upcoming Windows 8 gadgets will be tablets that can easily act as laptops with the help of keyboard accessories, he added.

But buyers may have to wait until the second half of the year to see many of them.

“The most likely scenario today is for the industry to have these products ready for the back-to-school season,” Daoud said.

(Reporting and writing by Noel Randewich; Additional reporting by Poornima Gupta and Bill Rigby in Seattle; Editing by Tim Dobbyn)

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Sniping, then singing as 'American Idol' returns

LOS ANGELES (AP) — There was no hair-pulling between Mariah Carey and Nicki Minaj on the season debut of "American Idol," although some viewers may have been reduced to it.

The pop divas exchanged insults worthy of middle schoolers, fellow freshman judge Keith Urban looked trapped between them, and there was a whiff of make-believe Wednesday about the show's touted feud.

"We can have accessories. I didn't know that was allowed. That's all I'm gonna say," Carey commented archly about Minaj's flashy, drum major-style hat.

The rapper took offense.

"Why'd you have to reference my hat?" Minaj said, with Carey then accusing Minaj of rudeness to her during an earlier elevator meeting.

Mercifully, a contestant arrived to break up the bickering and remind viewers that we tuned in to a talent show, not an episode of "Real Housewives of American Idol."

When the action resumed, Minaj demonstrated a magnificent talent for eye-rolling and upped the ante with a muttered insult.

"If she called me something that begins with a 'b' and ends with an 'itch,' I rebuke it," Carey declared.

Whether the clash is real, Minaj's scrappiness came off as far more entertaining than Carey's demure, even queenly, manner. Carey is getting a truly royal paycheck: $18 million, to Minaj's $12 million.

The award for least self-absorbed judge goes to genial country singer Urban.

The two-hour episode opened by showcasing last year's winner, Phillip Phillips, and those alumni with established careers, including Carrie Underwood, Kelly Clarkson and Jennifer Hudson.

Then host Ryan Seacrest brought "American Idol" back down to Earth and to its new judges.

"Our legacy continues as a new era begins," he said, reciting the panelists' resumes, including record sales, Grammys won and, in Carey's case, vocal range (five octaves, "the definition of diva," Seacrest said).

Cue the parade of good, bad and touching performances and biographies, with contestants facing serious challenges once again an "Idol" hallmark.

The judges, including veteran Randy Jackson, hardened their hearts and rejected a young man who had lost a leg to cancer but melted for a teenage girl whose family fosters children with medical concerns and another singer with partial hearing loss.

Forty-one people survived the New York auditions to sing another day in the Hollywood rounds, with the action moving to Chicago on Thursday's episode.

"I feel like we jell well in a weird, crazy way," Minaj declared optimistically of the panel near the episode's conclusion.

Fox certainly hopes so. Last season, "Idol" lost its status as the most-watched TV program for the first time since 2003, eclipsed by NBC's "Sunday Night Football," and pegged its lowest-rated season since it debuted in summer 2002.

___

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

The jig is up.

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

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

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

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

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

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

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

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

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

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

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

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

They will need:

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

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

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

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DealBook: After Mortgage Settlements, Bank of America's Profit Drops 63%

7:42 a.m. | Updated
Bank of America continues to cope with the self-inflicted wounds it suffered during the financial crisis.

The bank on Thursday reported a widely expected 63 percent drop in fourth-quarter profit after making huge payments to settle legal claims over its mortgage business. The bank’s earnings, a slim $732 million, amounted to 3 cents a share. That figure narrowly beat estimates of 2 cents a share, based on a survey of analysts by Thomson Reuters.

Bank of America’s quarterly revenue sank as well, down about 25 percent to $18.7 billion, a drop that stems from the steep legal charges tied to mortgage settlements with the government. The figures underscored the extent of the bank’s mortgage woes, an albatross it largely inherited from Countrywide Financial, the subprime lending giant it bought in 2008. Without the various charges, fourth-quarter revenue would have totaled $22.6 billion.

But the results also point to signs of a recovery for Bank of America. For the entire year, profit jumped to $4.2 billion, from $1.4 billion in 2011. Delinquent loans declined in the quarter, another sign of health, and the bank’s wealth management unit continued huge gains.

Bank of America also noted that the one-time legal charges, which skewed the bank’s true performance, helped it to continue shedding the legacy of the crisis.

“We enter 2013 strong and well positioned for further growth,” Bank of America’s chief executive, Brian T. Moynihan, said in a statement.

Bank of America’s bleak quarterly profit numbers come as no surprise to investors. The bank previously announced that it incurred a $700 million charge on the perceived improvement in its debt, an accounting-related cost that actually indicated greater public confidence in the stability of the bank. (The charges were offset because of a one-time $1.3 billion gain from foreign tax credits.)

The bank’s recent legal settlements also weighed down its results. Bank of America had warned investors that it deducted $2.5 billion to settle with regulators over claims of foreclosure abuses.

The bank last week also struck an $11 billion agreement to resolve claims that it sold troubled mortgages to the government-controlled housing finance giant Fannie Mae, which suffered deep losses from the loans. As part of the announcement, Bank of America disclosed that its fourth-quarter pretax income took a $2.7 billion hit to cover part of the deal.

The expenses, all told, wiped out $5.9 billion, or 34 cents a share, from fourth-quarter earnings.

“Litigation expenses have taken a huge toll,” said James Sinegal, an analyst with the research firm Morningstar.

But the settlements are also helping the bank close a dark chapter in its history. The deal last week put to rest a bitter battle with Fannie Mae that lingered since the housing bubble burst.

Bank of America, which recently sold off about 20 percent of its loan servicing business, also reached a $2.43 billion settlement with shareholders last fall. The agreement, stemming from its takeover of Merrill Lynch, resolved accusations that Bank of America misled investors about Merrill’s health.

“As long as they keep taking these charges, they can say they’re putting this behind them,” Mr. Sinegal said.

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Islamists Attack Algerian Gas Field and Kidnap Foreigners

ALGIERS (Reuters) - Islamist militants attacked a gas production field in southern Algeria on Wednesday, kidnapping at least seven foreigners and killing a French national, local and company officials said.

An al Qaeda-linked group operating in the Sahara said it had carried out the raid on the In Amenas facility, Mauritania's ANI news agency reported.

The field, located close to the border with Libya, is operated by a joint venture including BP, Norwegian oil firm Statoil and Algerian state company Sonatrach.

Five Japanese nationals working for the Japanese engineering firm JCG Corp were kidnapped as well as a French national, local officials said. An Irishman was also seized, the Irish government said.

A French national was killed in the attack, a local source said, but it was unclear if the victim was the same person who had been kidnapped.

The foreigners were taken from In Amenas in the morning. Algerian troops had mounted an operation to rescue the hostages and had also surrounded the workers' camp at Tiguentourine, a local source said.

Algeria has allowed France to use its air space during its military intervention against Al Qaeda-linked Islamist rebels in Mali, although officials have yet to make a link between Wednesday's attack and the conflict in Algeria's southern neighbor.

ANI, which has regular direct contact with Islamists, said that fighters under the command of Mokhtar Belmokhtar were holding the foreigners seized from the gas field.

Belmokhtar for years commanded al Qaeda fighters in the Sahara before setting up his own armed Islamist group late last year after an apparent fallout with other militant leaders.

BP confirmed there had been a "security incident" at the In Amenas field but could give no more details.

Statoil, a minority shareholder in the venture, said it was notified of the incident on Wednesday morning but could not say if any of its fewer than 20 employees were affected.

Statoil described the incident as serious and called it an emergency situation.

BP said the field was approximately 1,300 km (825 miles) from the capital, Algiers.

The five Japanese work for the engineering firm JGC Corporation, Jiji news agency reported, quoting company officials. JGC has a deal with Sonatrach-BP-Statoil Association for work in gas production at In Amenas.

In Tokyo, the Japanese Foreign Ministry said it was gathering information on the situation but could not comment. French Foreign Ministry officials also said they had no immediate comment and were trying to verify the reports.

(Reporting by Lamine Chikhi in Algiers, additional reporting by Catherine Bremer in Paris; Editing by Angus MacSwan)

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“Banshee” head Greg Yaitanes: secrets galore, but hold the olives

NEW YORK (TheWrap.com) – Like many TV creators, Greg Yaitanes isn’t crazy about the alternate identities people adopt online – and the Emmy-winning former “House” executive producer gets to explore anonymity and becoming someone else in the new Cinemax series “Banshee.”

“I’ve been harassed by ‘House’ Twitter fans for years now. I’m always kind of surprised at people’s level of saying something that they would never say to my face – that they would never say to another human being’s face,” he said.

Not that Yaitanes has a problem with social media – he was an early investor in Twitter, and used a litany of apps and new technology to make his pulpy drama, executive produced by Alan Ball, as scrappy as a tech startup.

With “Banshee,” Yaitanes gets to explore “the best of the wish fulfillment that people have of reinventing themselves or being able to disappear. In a way, all the characters are reinventing themselves.”

Those characters include a thief who steals the identity of the sheriff in Banshee, Pa., his cat burglar ex-girlfriend, who has eked out a new life as a homemaker, and the villain, a man who becomes a criminal mastermind after he is ousted from his Amish community. Then there’s the identity thief – Job – who keeps changing which gender he appears to be.

We talked with Yaitanes about how he made his show look expensive, how to describe Job, and the importance of counting olives.

The Wrap: The show looks expensive – starting with a sequence in New York in which a bus falls over and skids through an intersection. Can you talk about how you kept costs down?

Yaitanes: It’s a way of thinking from working with startups. They’re often one, two, three man operations when they first operate. Twitter was an example of that. You have to look at what is the simplest, most effective way to do this, to deliver to the consumer. We had a very specific box that “Banshee” could be made in, in terms of our budget.

The first thing that came to mind was what I call the “one olive.” The one olive is a story that originates with American Airlines back in the ’80s, when American Airlines took one olive out of their inflight meal – and saved $ 40,000. It’s all about challenging and making everybody their own producer and their own CEO and asking, ‘What is that one thing I can take out that either saves money or makes us that more efficient over the course of 100 days?’

Maybe $ 1,000 isn’t particularly exciting, but when you do it across a season, that’s an official day of shooting. That’s seven more minutes of content that we can get done that day.

We just looked for all these small ways that I feel put nearly an episode’s worth of saving back into the show, so we could make our show more robust and make the action scenes that much bigger and get the actor that we really want.

These are things that the audience gets to enjoy.

What are some of the cost-saving measures?

We also tried to find our olives by using the apps and technology that’s right in front of us, like Skype and Facetime and iChat so we don’t have to fly everybody around? I think probably 75 percent of the crew including directors were hired through some form of video conferencing. You saw the pilot, with the bus crash. We scouted all of that via Google Streetview. We could find blocks and circle around and look up and down and did all the legwork until we absolutely had to go to New York. So we saved on those flights, those hotels, those per diems.

You’ve invested in so many social media sites. Is there something that want to say on the show about the changing nature of identity when we can all take on different personalities online? Your main character, Lucas Hood (Antony Starr) actually takes on another person’s life.

Lucas does the most obvious adoption. A lot of people’s secrets and new identities and new lives are happening before the series starts, which is why we’ve shot an entire online series with our cast.

One of those characters, Job, is constantly in flux – even in terms of whether he appears male or female. Is he transgendered?

He’s straddling this line of androgyny. We specifically don’t want to answer questions about Job’s sexuality… he is a chameleon. He has something that he can tap into depending on his situation. By the time you get to the finale you won’t believe where Job goes.

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Oxygen halts controversial 'Babies' Mamas' project

NEW YORK (AP) — Oxygen Media has pulled the plug on "All My Babies' Mamas," a reality special the network was developing about a musician who has fathered 11 children with 10 different mothers.

The network offered no reason for curtailing the project. In a statement issued Tuesday, Oxygen said that, "as part of our development process, we have reviewed casting and decided not to move forward with the special."

The one-hour program would have featured Atlanta rap artist Shawty Lo, his children and their mothers. It was expected to air later this year on Oxygen, an NBCUniversal cable network owned by Comcast.

"All My Babies' Mamas" got a hostile public reception after Oxygen announced it last month. At least one petition calling for Oxygen to shut it down has collected more than 37,000 signatures.

The Parents Television Council called the program's concept "grotesquely irresponsible and exploitive" and pledged to contact advertisers of the show if it reached the air.

Previously, Oxygen denied charges that the show was meant to be "a stereotypical representation of everyday life for any one demographic or cross section of society," but rather would reveal "the complicated lives of one man, his children's mamas and their army of children."

On Tuesday, Oxygen said it will "continue to develop compelling content that resonates with our young female viewers and drives the cultural conversation."

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The New Old Age Blog: In Flu Season,Use a Mask. But Which One?

Do face masks help prevent people from getting the flu? And if so, how much protection do they give?

You might think the answer to this question would be well established. It’s not.

In fact, there is considerable uncertainty over how well face masks guard against influenza when people use them outside of hospitals and other health care settings. This has been a topic of discussion and debate in infectious disease circles since the 2009 H1N1 flu pandemic, also known as swine flu.

As the government noted in a document that provides guidance on the issue, “Very little information is available about the effectiveness of facemasks and respirators in controlling the spread of pandemic influenza in community settings.” This is also true of seasonal influenza — the kind that strikes every winter and that we are experiencing now, experts said.

Let’s jump to the bottom line for older people and caregivers before getting into the details. If someone is ill with the flu, coughing and sneezing and living with others, say an older spouse who is a bit frail, the United States Centers for Disease Control and Prevention recommends the use of a face mask “if available and tolerable” or a tissue to cover the nose and mouth.

If you are healthy and serving as a caregiver for someone who has the flu — say, an older person who is ill and at home — the C.D.C. recommends using a face mask or a respirator. (I’ll explain the difference between those items in just a bit.) But if you are a household member who is not in close contact with the sick person, keep at a distance and there is no need to use a face mask or respirator, the C.D.C. advises.

The recommendations are included in another document related to pandemic influenza — a flu caused by a new virus that circulates widely and ends up going global because people lack immunity. That is not a threat this year, but the H3N2 virus that is circulating widely is hitting many older adults especially hard. So the precautions are a good idea, even outside a pandemic situation, said Dr. Ed Septimus, a spokesman for the Infectious Diseases Society of America.

The key idea here is exposure, Dr. Septimus said. If you are a caregiver and intimately exposed to someone who is coughing, sneezing and has the flu, wearing a mask probably makes sense — as it does if you are the person with the flu doing the coughing and sneezing and a caregiver is nearby.

But the scientific evidence about how influenza is transmitted is not as strong as experts would like, said Dr. Carolyn Bridges, associate director of adult immunization at the C.D.C. It is generally accepted that the flu virus is transmitted through direct contact — when someone who is ill touches his or her nose and then a glass that he or she hands to someone else, for instance — and through large droplets that go flying through the air when a person coughs or sneezes. What is not known is the extent to which tiny aerosol particles are implicated in transmission.

Evidence suggests that these tiny particles may play a more important part than previously suspected. For example, a November 2010 study in the journal PLoS One found that 81 percent of flu patients sent viral material through air expelled by coughs, and 65 percent of the virus consisted of small particles that can be inhaled and lodge deeper in the lungs than large droplets.

That is a relevant finding when it comes to masks, which cover much of the face below the eyes but not tightly, letting air in through gaps around the nose and mouth. As the C.D.C.’s advisory noted, “Facemasks help stop droplets from being spread by the person wearing them. They also keep splashes or sprays from reaching the mouth and nose of the person wearing them. They are not designed to protect against breathing in the very small particle aerosols that may contain viruses.”

In other words, you will get some protection, but it is not clear how much. In most circumstances, “if you’re caring for a family member with influenza, I think a surgical mask is perfectly adequate,” said Dr. Carol McLay, an infection control consultant based in Lexington, Ky.

By contrast, respirators fit tightly over someone’s face and are made of materials that filter out small particles that carry the influenza virus. They are recommended for health care workers who are in intimate contact with patients and who have to perform activities like suctioning their lungs. So-called N95 respirators block at least 95 percent of small particles in tests, if properly fitted.

Training in how to use respirators is mandated in hospitals, but no such requirement applies outside, and consumers frequently put them on improperly. One study of respirator use in New Orleans after Hurricane Katrina, when mold was a problem, found that only 24 percent of users put them on the right way. Also, it can be hard to breathe when respirators are used, and this can affect people’s willingness to use them as recommended.

Unfortunately, research about the relative effectiveness of masks and respirators is not robust, and there is no guidance backed by scientific evidence available for consumers, Dr. Bridges said. Nor is there any clear way of assessing the relative merits of various products being sold to the public, which differ in design and materials used.

“Honestly, some of the ones I’ve seen are almost like a paper towel with straps,” Dr. McLay said. Her advice: go with name-brand items used by your local hospital.

Meanwhile, it is worth repeating: The single most important thing that older people and caregivers can do to prevent the flu is to be vaccinated, Dr. Bridges said. “It’s the best tool we have,” she said, noting that preventing flu also involves vigilant hand washing, using tissues or arms to block sneezing, and staying home when ill so people do not transmit the virus. And it is by no means too late to get a shot, whose cost Medicare will cover for older adults.

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DealBook: JPMorgan’s 4th-Quarter Profit Jumps 53% to $5.7 Billion

JPMorgan Chase touted a strong quarter of earnings, although the bank opted to slash the chief executive’s pay in light of a multi-billion dollar trading loss last year.

The bank reported a record profit of $5.7 billion for the fourth quarter, up 53 percent from the previous year. Revenues, too, were strong, rising 10 percent to $23.7 billion.

“The firm’s results reflected strong underlying performance across virtually all our businesses for the fourth quarter and the full year, with strong lending and deposit growth,” chief executive Jamie Dimon said in statement.

But the year was also clouded by a multi-billion dollar trading loss stemming from a bad bet on derivatives. JPMorgan continues to unwind the bungled trade that had racked up $6.2 billion in losses through the third quarter of 2012. The bank said it “experienced a modest loss” during the recent quarter.

In light of the trading losses, the bank’s board opted to reduce Mr. Dimon’s total compensation. That decision was driven by a desire to hold the chief executive accountable for some of the oversight failings that led to the bungled bet, according to several people close to the board.

The board cut Mr. Dimon’s total compensation for 2012 to $11.5 million from $23 million a year before. While Mr. Dimon’s salary remained the same at $1.5 million, his incentive compensation was reduced to $10 million, paid out in restricted stock.

Despite the overhang of the bad bet, JPMorgan produced record profit, as the economy and credit conditions improved. The bank continued to reduce the money it set aside for potential losses, adding to profits overall. And the bank notched gains in all its major divisions, showing strength in both consumer and corporate banking operations.

For the full year, JPMorgan reported earnings of $21.3 billion, compared with $19 billion in 2011. Revenues in 2012 were essentially flat at $99.9 billion.

Despite the rocky market conditions and uncertainty related to the budget impasse, the corporate-focused businesses reported nice gains. Investment banking fees jumped 54 percent to $1.7 billion, with debt and equity underwriting. Revenue in the commercial banking group hit $1.75 billion, with the tenth consecutive quarter of loan growth.

Income in JPMorgan’s asset management group rose 60 percent to $483 million. JPMorgan has been ramping up the business, as other riskier ventures get crimped by new regulation.

Like other big lenders, the bank’s earnings have also been bolstered by a surge in mortgage lending, driven in part by a series of federal programs that have helped drive down interest rates. As homeowners seize on the low rates, JPMorgan is experiencing a flurry of refinancing applications. The bank is also making bigger gains when those loans are packaged and eventually sold to big investors.

Overall, the mortgage banking group notched profit of $418 million, compared with a loss of $269 million in the previous year.

But those low interest rates also present a challenge for JPMorgan, which is dealing with glut of deposits. The bank reported average total deposits of $404 billion, up 10 percent from a year earlier.

As deposits pile up, the situation is weighing on profitability. The net interest margin, a key measure of a bank’s profitability, continued to shrink, dropping to 2.44 percent from 2.76 percent the previous year.

The bank also continues to face a slew of legal problems.

In the last year, JPMorgan has worked to move beyond some of the issues stemming from the mortgage crisis. Along with competitors, JPMorgan hashed out deals with federal regulators over claims that its foreclosures practices may have led to wrongful eviction of homeowners. Earlier this month, JPMorgan and other agrees $8.5 billion settlement with the Comptroller of the Currency and the Federal Reserve, which ends a costly and flawed review of loans in foreclosure ordered up by the regulators in 2011. The bank spent roughly $700 million this quarter on costs associated with the review.

Still, the bank is dealing with other cases that could prove costly. The New York attorney general, Eric T. Schneiderman, filed a lawsuit against the bank related to Bear Stearns, the troubled unit the JPMorgan bought in the depths of the financial crisis. In the lawsuit, filed in October, the attorney general claimed JPMorgan defrauded investors who bought securities created from shoddy mortgages.

JPMorgan was also hit with two enforcement actions earlier in this week, the first formal sanctions from federal banking regulators over the bank’s multibillion trading loss. Regulators from the Federal Reserve and the Comptroller of the Currency, identified flaws throughout the bank, citing failures in the bank’s ability to asses how big losses might swell as a result of the complex trades. In addition, regulators found that bank executives did not adequately inform board members about the potential losses.

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Pakistan Supreme Court Orders Arrest of Prime Minister

ISLAMABAD, Pakistan – Pakistan’s Supreme Court ordered the arrest of Prime Minister Raja Pervez Ashraf in a corruption case on Tuesday afternoon, dramatically raising the stakes in a tense standoff between the government and its opponents.

The court order came as an enigmatic preacher turned politician, Muhammad Tahir ul Qadri, addressed thousands of supporters outside Parliament and repeated calls for the government’s ouster. In earlier speeches, he said that a caretaker administration led by technocrats should take its place.

The confluence of the two events stoked growing speculation that Pakistan’s powerful military was quietly supporting moves that would delay general elections that are due to take place this spring, most likely through the imposition of a military-backed caretaker administration.

“Victory, victory, victory. By the grace of God,” said Mr. Qadri at the conclusion of a speech to his supporters, who have vowed not to leave a public square outside Parliament until their demands are satisfied.

It was not certain that the events were linked. Some analysts said that in ordering the prime minister’s arrest, the court, which is led by the independent-minded chief justice Iftikhar Muhammad Chaudhry, was simply taking advantage of anti-government sentiment generated by Mr. Qadri to pursue its longstanding grudge against President Asif Ali Zardari.  

Whatever its motivations, the court’s actions added to the chaos in Pakistan, with the stock market dropping 3 percent after word of the court’s order came down.

In the order issued Tuesday, the Supreme Court ordered the National Accountability Bureau, a government body that investigates graft, to arrest Mr. Ashraf and 15 other senior current or former officials, including a former finance minister and a former finance secretary.

The case relates to longstanding allegations that Mr. Ashraf took millions of dollars in kickbacks as part of a deal to build two electricity plants while serving as minister for water and power between March 2008 and February 2011.

The order comes more than a year after two opposition figures filed a complaint in the Supreme Court against Mr. Ashraf. Three months later, in March 2012, the court ruled that the power plants were illegal, ordered their closure, and instituted proceedings against Mr. Ashraf.

The case has particular political resonance because Pakistan’s energy crisis, which has seen severe electricity rationing across the country, is the source of some of the main complaints against the government.

The information minister, Qamar Zaman Kaira, said the government had not received any official notification of the order to arrest Mr. Ashraf.

Fawad Chaudhry, a senior adviser to the prime minister, said that any such order would be "illegal and unconstitutional."

"Under the law, the court cannot arrest him," he said President Zardari called a meeting of senior advisers at his Karachi residence to discuss the crisis late Tuesday, Mr. Chaudhry added.

Mr. Zardari’s supporters have painted the prosecution as part of a politically-motivated drive by Justice Chaudhry to unseat Mr. Zardari. Mr. Ashraf came to power last June after the Supreme Court forced his predecessor, Yousaf Raza Gilani, to resign from office over another corruption-related case.

Whether there was any link between the court order and Mr. Qadri’s march on Islamabad – billed by the preacher as a “million man march” but in reality far smaller – the timing was certainly striking.

Mr. Qadri stormed onto the political scene in Pakistan after returning from a seven-year stint in Canada, where he also holds citizenship, armed with considerable funding that he has used for an intensive television advertising campaign and large rallies.

In his speech Tuesday, which was peppered with emotional Islamic references, he demanded the immediate resignation of the government and painted the country’s elected politicians as “criminals” who deserved to be prosecuted for corruption.

“There is no Parliament. There is a group of looters, thieves and dacoits!” he said in a  thundering voice, pointing to the building behind him. “Our lawmakers are the lawbreakers.”

In contrast, Mr. Qadri offered fulsome support for the military and the Supreme Court, both of which have been at odds with Mr. Zardari’s government at various points in recent years. “Now only two institutions are there – the judiciary and the armed forces,” he said.

Responding to the allegations that he is secretly supported by the military, Mr. Qadri said he was supported by Allah, the Prophet Muhammad and the 180 million people of Pakistan.

The government’s five-year term of office ends in mid-March. Under the constitution, elections are to take place within the following 60 days.

But Ayaz Amir, an opposition politician, said the crisis could actually benefit the government as it would enable it to play the “victim card.”

The developments raise doubts about the government’s ability to make headway in Pakistan’s efforts to achieve stability as a democracy. Should Mr. Ashraf’s administration complete its term and hold peaceful elections, it would be the first such transfer of power in Pakistan’s history.

But speculation that Mr. Qadri or the court could derail that transition grew steadily as events unfolded on Tuesday.

Theories about a link between the two players and the military are not easy to reconcile. Over the last year, Justice Chaudhry has openly clashed with top generals, as part of his court’s bid to carve out its independence from both civilian and military rulers.

Justice Chaudhry has stressed that his court will not act as a rubber stamp to military rule, as previous courts have, and earlier on Tuesday he reportedly stressed the importance of holding elections by mid-May.

Salman Masood contributed reporting.

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