iPhone 5 hits China as Apple market share slips

SHANGHAI (Reuters) – The China release of its iPhone 5 on Friday should win Apple Inc some respite from a recent slide in its share of what is likely already the world’s biggest smartphone market, but its longer-term hopes may depend on new technology being tested by China‘s top telecoms carrier.

Cupertino, California-based Apple has been in talks about a tie-up with China Mobile for four years. A deal with China’s biggest carrier is seen as crucial to improve Apple’s distribution in a market of 290 million users – which is forecast to double this year.

China is Apple’s second-largest and fastest-growing market – it brings in around 15 percent of total revenue – but the company’s failure to strike a deal with China Mobile means it is missing out on a large number of phone users. As the China pie grows, Apple’s sales increase, but without China Mobile, it’s losing ground at a faster rate compared to other brands.

“In absolute terms, this (iPhone 5) launch will certainly result in strong sales for Apple in China. However, in relative terms, I don’t believe it will move the needle enough in market share,” said Shiv Putcha, a Mumbai-based analyst at Ovum, a global technology consultant.

China Mobile and Apple initially said they were separated only by a technical issue – as the Chinese carrier runs a different 3G network from most of the world – but that has evolved into a broader and more complex issue of revenue-sharing.

“China Mobile and Apple still have to solve many issues, such as the business model, articles of cooperation and revenue division, but I believe we will reach an agreement eventually,” China Mobile CEO Li Yue was reported by Chinese media as saying in Guangzhou last week.

Apple China declined to comment. China Mobile said it had no update to the Apple discussions.

STRONG PRE-ORDERS

Apple’s ranking in China’s smartphone market slipped to sixth in July-September, according to research firm IDC, [ID:nL4N09G1QK] but investors, primed to look to China product launches for an uptick in Apple’s quarterly sales, have good headline numbers to digest – more than 300,000 iPhones pre-ordered on one carrier alone. But it’s the lack of a deal with the No.1 carrier that prevents those numbers being stronger.

The iPhone is currently sold through Apple’s seven stores, resellers and through China Unicom and China Telecom – which together have fewer than half the mobile subscribers of bigger rival China Mobile.

“Apple’s market share declined because of the transition between the iPhone 4S and 5. Their market share will recover (with the iPhone 5), but if you don’t have China Mobile, the significant market share gains will be very difficult,” said Huang Leping, an analyst at Nomura in Hong Kong.

TD-LTE: STILL DISTANT

Cutting a deal with a Chinese state-owned carrier may be less optimal than the deals Apple is used to in other markets, and analysts note that China Mobile wouldn’t necessarily open the flood gates for Apple.

Ovum’s Putcha believes Apple and China Mobile will eventually strike a deal – though this would be for an iPhone running on China Mobile’s next-generation network rather than its current 3G network.

Of China Mobile’s 704 million subscribers, only 79 million are on its 3G network, and Apple has been reluctant to sign up to China Mobile’s under-utilized, homegrown TD-SCDMA technology. “Apple likely doesn’t see the return-on-investment in extending themselves for TD-SCDMA,” Putcha said.

China Mobile is currently trialling its next-generation network, TD-LTE, which could be of more interest to Apple, but full-scale commercial use – and an iPhone tie-up – could still be years away.

ANDROID THREAT

Meanwhile, rivals are circling, eating away at Apple’s smartphone market share. Samsung Electronics, Lenovo Group and little-known Chinese brand Coolpad held the top three slots in the third quarter, according to IDC.

All three have relationships with China Mobile and offer smartphone models at different price points. Apple competes exclusively at the high-end, and even there, rivals are rolling out models with China Mobile. Last week, Nokia said it planned to release its latest Lumia smartphone with China’s top carrier, which is also expected to launch Research in Motion’s new Blackberry 10, analysts predict.

“The threat will still come more from the Android camp where they have many vendors already working with China Mobile and offering high-end phones,” said TZ Wong, a Singapore-based IDC analyst.

While these smartphones don’t generate the buzz of a new iPhone, Chinese buyers are not known for their brand loyalty, and this could siphon away users considering an Apple upgrade.

“I’ve used a Blackberry, Android and iOS and, personally, I want to try the Windows 8,” said Andy Huang, a 37-year-old fund manager, who owns most iPad models, an iPhone 4 and a 4S. “I think the Windows 8 is very innovative.”

With a China Mobile deal looking some way off, Apple could always boost market share by offering cheaper models – the basic iPhone 5 will cost 5288 yuan ($ 850) without a contract – though this appears an unlikely route for a high-end brand.

“If they want to expand market share, probably the only way to do it here dramatically would be to put out a lower cost phone,” said Michael Clendenin, managing director at RedTech Advisors. “It’s really uncertain if they’d decide to go that route … Apple’s a mystery in that regard.”

($ 1 = 6.2518 Chinese yuan)

(Additional reporting by the Shanghai Newsroom and Jane Lee; Editing by Kazunori Takada and Ian Geoghegan)

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How “Life of Pi” animators visualized Ang Lee’s blank slate

LOS ANGELES (TheWrap.com) – “Life of Pi” is a movie that has the proverbial cast of thousands… of animals, that is. In one shot set on the ocean, there are 40,000 flying fish. In another one set on a floating island, there are 60,000 meerkats. And not one of them was living and breathing, of course.

“No real meerkats were used,” senior animation supervisor Erik-Jan De Boer told the audience at an effects-themed Q&A following TheWrap’s screening of the movie at the Landmark Theatre on Monday night. “Except of course we went to meerkat sanctuaries and zoos to shoot a lot of reference footage…”

“And the two of us watched every episode of ‘Meerkat Manor,’” interrupted visual effects supervisor Bill Westenhofer. “We were gonna watch one, but it gets addictive.”

That was about all the time these two had to indulge in reality TV during the long gestation and post-production of Pi, which establishes a new benchmark for awe-inspiring digital trickery – particularly in 3D, or “stereo,” as Westenhofer and De Boer refer to the effects-complicating process.

“In total,” De Boer told TheWrap’s editor-in-chief Sharon Waxman, “we animated 580 animals in about 290 shots for the movie, which includes a giraffe, a fox, a fish, and of course the hyena and orangutan.” Not to mention the little matter of the tiger, “Richard Parker,” whose appearances as one of the movie’s co-leads are 15 percent real, 85 percent digital.

That’s not including the aforementioned meerkat and flying fish extras, brought to life via a software program appropriately titled Massive. (If only it had been around in Cecil B. DeMille‘s day.)

“The flying fish sequence is where we start to take some artistic liberties, since Pi’s telling you a tale,” said Westenhofer. “Maybe there were a thousand flying fish in reality, or even a hundred, but you’re seeing his mind’s eye, which saw this multitude, so we have 40,000 in one particular spot. The Massive software is almost artificial intelligence, where you write a little program that’s the brain for each individual fish, and it decides if it’s going to hop out of the water, and how long it’s going to fly; if it sees someone in its path, it does avoidance.”

But before any of that was animated, there was the live-action filming that took place on a 70 meter-by-30 meter wave tank that director Ang Lee had specially built for the film. And there, said Westenhofer, “you had (star) Suraj Sharma on a boat with two guys in rubber rafts just chucking rubber fish at him as hard as they possibly can. It’s a good mixture of the low-tech and the high-tech.”

Of course, it wasn’t fish but previous experience with big cats that got Rhythm & Hues the assignment from Lee to go from lions to tigers and Pi. “He knew we had done the lion in the first Narnia movie. He asked, ‘Does a digital character look more or less real in 3D?’ We looked at each other and thought that was a pretty good question.”

As well as a leading one, since Lee had already made the decision at that point, in 2009, to shoot in 3D. “We took one of the shots and rendered it in stereo and said ‘Yeah, it gives it a little more presence and makes it more real.’” Good answer! “That was the start of our relationship with him.”

Although “Life of Pi” doesn’t exactly go for documentary-style realism, every effort was made to keep the tiger’s actions and reactions to what experts and trainers told them a creature would really do in those situations. Not having him spout any Aslan-style aphorisms was a nice start on that de-anthropomorphizing.

“We always strive for photorealism,” said De Boer – even when they’re working on a Narnia or Cats and Dogs. “Motion-wise we strive for perfect physicality and try to get that animal to behave as characteristically as possible – and then we always have to make them talk or dance or do something really weird, and the realism goes out the window and everybody knows that we were there. For me what was really cool about this movie is not only do we stick with the real animal but we also have to intercut it with a live-action animal, so that made the challenge for us that much bigger.”

Added Westenhofer, “We told the crew we wanted to work ourselves out of any recognition by making it look as real as possible.”

It was at least as big of a challenge, as far as Westenhofer was concerned, to make the digital waves match or amplify the real tank waves – and to create the film’s skies completely from scratch. “There’s not many films where we spend this much time on the water. I think ‘Old Man and the Sea’ harkens back! But even with ‘Titanic,’ you’ll see the water and then go inside.” For much of “Life of Pi,” “inside” amounts to a few furtive peeks under a tarp.

Hence what, on a project like this, becomes a fine line where digital effects providers are also, to some extent, taking over the role of cinematography and art direction. Going to work on filling up these blue-screen shots, the Rhythm & Hues people might well have been humming Bruce Springsteen’s “Empty Sky” to themselves.

“What I’m absolutely most proud of is with these visual effects is that we were given a blank slate for a lot of these shots,” Westenhofer told the audience. “We were given a boat in front of a blue screen, and it was the visual effects team who really were a lot of the creative innovators on the movie. Certainly it was Ang’s vision we were creating. But we’d start a shot, and though Ang absolutely knows what he wants, his communication is sometimes not as specific as you want. Instead of saying ‘I want a three-quarters cloudy sky with yellow over here and some blue,’ he’d say ‘I want a pensive sky.’

Or, ‘I want it to be operatic.’ So it would be our job to go translate that, and the team did a great job of supplying that.

“And Claudio Miranda did an awesome, awesome job on the cinematography, but a lot of the cinematography on the ocean is digital effects.”

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Aetna plans to join 15 exchanges under U.S. healthcare reform

NEW YORK (Reuters) – Aetna Inc, the third largest U.S. health insurer, said on Wednesday that by 2014 it expects to be part of about 15 healthcare exchanges being established under government reforms.

Aetna, one of the companies on the front lines of healthcare changes in the United States, told analysts and investors that it believes an increase in the number of customers from the new market places will likely contribute to its growth.

An estimated 30 million more people are expected to join the insured over the next decade because of the U.S. Patient Protection and Affordable Care Act of 2010. Millions of those will seek their health insurance through the exchanges.

States have until December 14 to decide whether they will participate in a state-based, federal or partnership exchange. About 18 states have said they will create their own state-based exchanges and 18 others plan to default to a federal exchange, according to the Kaiser Family Foundation, a non-profit health policy group.

The shift to exchanges is fundamentally changing the managed care business, Aetna executives said during Wednesday’s meeting with analysts and investors.

“More and more consumers are going to be buying their healthcare, even if the employer-sponsored system survives,” Chief Executive Officer Mark Bertolini said. “A lot of things that we do today are no longer necessary to the end buyer.”

Aetna said profits will be helped by cost controls and growth of carefully managed care organizations — networks of doctors that work together — and expansion in government programs, such as Medicare for the elderly and Medicaid for the poor, and Aetna’s pending purchase of Coventry Health Care Inc..

Aetna expects earnings of $ 5.40 per share in 2013, below analyst estimates of $ 5.52 per share according to ThomsonReuters I/B/E/S. It sees revenue growth of 9 percent in 2013.

Competitors such as UnitedHealth Group Inc and Cigna Corp also gave weaker than expected 2013 earnings outlooks during their year-end meetings with analysts and investors. Aetna shares rose about $ 1.96 to $ 46.43 in midday New York Stock Exchange trading.

Aetna, whose $ 5.6 billion acquisition of regional insurer Coventry is being looked at by antitrust regulators, said that it still expects the deal to close in the middle of next year. It said it has not run into any issues that are beyond its expectations.

Aetna Chief Financial Officer Joe Zubretsky said in an interview that Aetna had not factored the possibility of the United States going over the so-called fiscal cliff into its 2013 outlook. The “fiscal cliff” is a combination of mandatory spending cuts and tax increases that will go into effect at the beginning of next year if a deficit cutting resolution is not reached by U.S. lawmakers.

Aetna’s outlook is based on a cautious view of the economy and one in which unemployment remains at about 7.5 percent and interest rate returns remain extremely low, the company said.

“We’re pretty much assuming the cliff gets solved,” Zubretsky said.

But he said the company is concerned and guarded against the possibility that it is not resolved. If that does happen, he said U.S. employees poised to lose their jobs and health insurance may increase use of medical services, or Aetna’s large employer business may decrease as companies cut back on employees, both of which would likely hurt profits.

(Editing by Bill Berkrot and Grant McCool)

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Fed ties rate pledge to a threshold as new stimulus set

WASHINGTON (Reuters) – The Federal Reserve, announcing a new round of monetary stimulus, took the unprecedented step on Wednesday of indicating interest rates would remain near zero until unemployment falls to at least 6.5 percent.

It was the latest in a series of unorthodox measures taken by central banks around the world as major economies face erratic, sub-par recoveries from the global financial crisis and recession of 2007-2009.

The Fed said it expects to hold rates steady until its new threshold on unemployment was reached as long as inflation does not threaten to break above 2.5 percent and inflation expectations are contained.

Fed officials, who cut their forecasts for both economic growth and inflation next year, also replaced an expiring stimulus program with a fresh round of Treasury debt purchases.

“The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions,” the Fed’s policy-setting panel said in a statement at the close of a two-day meeting.

Fed officials committed to purchase $ 45 billion in longer-term Treasuries each month on top of the $ 40 billion per month in mortgage-backed bonds the U.S. central bank started buying in September. They also repeated a pledge to keep pumping money into the economy until the outlook for the labor market improves “substantially.”

The Fed will fund the new Treasury purchases with an expansion of its $ 2.8 trillion balance sheet. Under the “Operation Twist” program, the Fed bought an identical amount but paid for them with proceeds from sales and redemptions of short-term debt.

Some policymakers view actions that expand the Fed’s balance sheet as economically more potent than those that do not. However, Fed Chairman Ben Bernanke told a news conference that the stimulus would remain about the same, given that the central bank is still purchasing a combined $ 85 billion per month in longer-term securities.

“They see an anemic economy, and they’re doing all they can to get any economic progress,” said Alan Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio.

The Fed’s actions initially gave a small lift to U.S. stocks prices, but the major stock indexes closed mostly unchanged, while government bond prices fell. Oil prices rose and the dollar weakened against the euro.

Fed policymakers voted 11-1 to back the new plan. Jeffrey Lacker, president of the Richmond Federal Reserve Bank, dissented, as he has at every meeting this year, expressing opposition both to the bond buying and the new economic thresholds.

SWEATING A WEAK RECOVERY

The newly unveiled numerical policy guidelines offered the most specific suggestion yet that the Fed is willing to tolerate slightly higher inflation as it tries to juice up a moribund economy and spur stronger job growth.

A drop in the unemployment rate to 7.7 percent in November from 7.9 percent in October was driven by workers exiting the labor force, and therefore did not come close to satisfying the condition the Fed has set for trimming its stimulus.

“Decisions taken today further strengthen the Fed’s commitment to generate a stronger recovery and substantially improve conditions in the labor market,” said Michael Gapen, an economist at Barclays in New York.

In response to the financial crisis and recession, the Fed slashed overnight rates to zero almost exactly four years ago and bought some $ 2.4 trillion in mortgage and Treasury securities to keep long-term rates down.

Despite its unconventional and aggressive efforts, U.S. economic growth remains tepid. Gross domestic product grew at a 2.7 percent annual rate in the third quarter, but a Reuters poll published on Wednesday showed economists expect the economy to expand at just a 1.2 percent pace in the current quarter.

Businesses have hunkered down, fearful of a tightening of fiscal policy as politicians in Washington wrangle over ways to avoid a $ 600 billion mix of spending reductions and expiring tax cuts set to take hold at the start of 2013.

Bernanke has warned that running over this “fiscal cliff” would lead to a new recession. He told reporters the Fed could ramp up its bond buying “a bit,” but emphasized that monetary policy has limits and could not fully offset the impact.

NEW TACK ON RATES

By setting thresholds to help guide its decision on when to eventually hike rates, the Fed was able to jettison a previous prediction that borrowing costs would remain at rock bottom levels until at least mid-2015.

Officials were uncomfortable with guidance that relied on a calendar date, and they are hopeful the new framework will help financial markets assess incoming economic data in a way that helps them correctly guess were monetary policy is heading.

Bernanke emphasized that the central bank would look at a range of indicators, not just the rates of unemployment and inflation, in determining when to finally raise rates.

“Reaching the thresholds will not immediately trigger a reduction in policy accommodation,” said Bernanke, adding that the central bank would not be on “auto pilot.”

“No single indicator provides a complete assessment of the state of the labor market,” he said.

The prior practice of fixing an end point was criticized by some economists as sending a message that the Fed expected the economy to be weak until then. Bernanke said the new framework was consistent with the earlier calendar guidance, because officials do not expect the unemployment rate to reach the 6.5 percent threshold level until sometime in 2015.

Indeed, a fresh set of economic projections from the Fed put the jobless rate in a 6 percent to 6.6 percent range in the fourth quarter of 2015. At the same time, the projections showed that at no point over that forecast horizon does the central bank see inflation topping its 2 percent target.

Officials held to their assessment that they could eventually push the jobless rate down to a 5.2 percent to 6 percent range without sparking inflation, although Bernanke cautioned that policy would have to start tightening before it fell so low. In its statement, the Fed said its long-term asset purchase program would end well before any rate hike.

Fed policymakers see GDP expanding between 2.3 percent and 3.0 percent next year. That’s down from the 2.5 percent to 3.0 percent they forecast in September, but is still a bit more optimistic than most private forecasters. The Reuters poll of economists found a median U.S. growth estimate of 2.1 percent for next year.

(Writing by Pedro Nicolaci da Costa; Editing by Andrea Ricci, Tim Ahmann and Leslie Adler)

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The Hobbit: Richard Armitage Talks Preparations For Playing Thorin Oakenshield

British actor Richard Armitage admitted it wasn’t a walk in the park to play a J.R.R. Tolkien character in Peter Jackson’s reimagining of “The Hobbit,” the first installment of which is on its way into theaters.

Upon touching down in New Zealand, where the trilogy was shot, the cast had a lot of character preparation to do.

PLAY IT NOW: Martin Freeman Discusses The Hobbit’s ‘Good Chemistry’ & Playing Bilbo Baggins

“We arrived in February 2011 and we went straight into a training program, which was called ‘Dwarf Bootcamp,’ which was literally boots — these huge boots. We learned how to walk, we wrestled with each other, we did archery together, we did sword fighting, hammer fighting, horse riding — everything you could possibly think of,” Richard, who plays Thorin Oakenshield in the film told Access Hollywood at the film’s junket.

In addition, the cast, which includes his former “Cold Feet” co-star James Nesbitt as Bofur, found ways to get to know each other better off set.

VIEW THE PHOTOS: The Hobbit: An Unexpected Journey — New York City Premiere

“We went round to each other’s houses and we cooked food together, we went to the pub and got drunk together, so there was an incredibly great bonding time between the dwarves,” he said.

Richard had plenty of experience sword fighting and horse riding in the BBC America series “Robin Hood,” but it was something else that came in handy during the long days on set.

“I’d done a number of shows where I’d had to use sword fighting and I’d also done horse riding. I’d also pulled guns out of my pocket. That was less useful,” he laughed, likely referring to his recent role in the PBS-import series “MI-5,” where he played a British spy. “But, yeah, you draw on everything. I’d worked at the Royal Shakespeare Company, so the vocal work was really useful to kind of pull that from there. I’d worked in a circus, there were… all sorts of things that were really useful, but the one thing that I do have — for lack of talent — is stamina and that’s the one thing I think everybody needed on this job.”

VIEW THE PHOTOS: Meet ‘The Hobbit’ Cast!

An imagination was useful also, but Richard said what turned out on the big screen was still wilder – and more beautiful – than he dreamed of.

“So many moments… Actually, apart from the eagles — which every single time I’ve seen this film absolutely blows my mind and I can barely keep the tears back and [it has] nothing to do with the pathos of the scene, just that feeling of flight moves me — is the throne of Aragorn, in the beginning of the prologue,” he told Access of the moment that moved him most. “When it got to [filming] that scene, I walked on and… it was just a green cross on the floor with a tiny green chair… [But in the film], they just made this incredible, almost space aged, sort of suspended seat in the middle of this stalagmite. It just blows my mind when I see that.”

VIEW THE PHOTOS: The Brit Pack: Hot Shots Of Stars From The UK!

“The Hobbit: An Unexpected Journey” hits theaters on December 14, 2012, followed by “The Hobbit: The Desolation of Smaug,” on December 13, 2013 and “The Hobbit: There and Back Again,” on July 18, 2014.

– Jolie Lash

Copyright 2012 by NBC Universal, Inc. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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‘The Hobbit’: Like One Bad Video Game

Perhaps the most exciting thing about Peter Jackson‘s landmark, blockbuster Lord of the Rings films was that they made fans, through a combination of stunning landscapes and intricate special effects and soaring music and dramatic spectacle, feel as though we were seeing an almost impossible elevation of the potential size and scope of movies. Here was a rich, dense, sprawling series of films that thundered like myths, that were breathtaking in their realization of some pretty huge ambitions. Sure, they were massive corporate projects that earned lots of people millions of dollars, but to the regular moviegoer they were feats that proved the majesty of the movies, the potential to tell enthralling stories that also played like art. And so it’s hugely disappointing, if not all that surprising, that Jackson’s first foray back into the land of Middle Earth, The Hobbit: An Unexpected Journey, is such a sullenly, basely commercial and junky affair, a movie that feels not crafted with Jackson’s seemingly divine inspiration but by the hands of studio executives. Perhaps the reason that Warner Bros. is forgoing the usual console video-game tie-ins for simple mobile games is because the damn movie already looks like a video game, and not a very fun one at that.

RELATED: ‘The Hobbit’ Trailer Needs to Get Out of the Shire

The Lord of the Rings series succeeded aesthetically because it was such an elegant, painting-like wonder to behold. The textures and palettes all had the look of a particularly vibrant illustrated story book, the kind of immersive vision that exists somewhere between imagination and the real world. For The Hobbit, though, Jackson chose to film at a high frame rate and with Real 3D technology in mind — because 3D movies are doing well these days and, hell, doesn’t hurt that the tickets cost more — but the results are frequently hideous. Those among us who have bought shiny new flatscreen TVs over the past few years are likely familiar with the dreaded “Soap Opera Effect,” which turns what should be stunning, glossy images into cheap-looking messes, all strange movement and lighting, like any network soap or cheap British show. (Think Children of Men looking like Torchwood.) It’s the problem of technology over-thinking or over-performing, and it is on startling, gruesome display in The Hobbit. When you’re wearing the 3D glasses (and admittedly sitting a little off to the side), this hugely expensive movie looks like it was shot on a nice handheld digital camera on the cheap. Actors stand in strange contrast to the digital backgrounds behind them, motion looks too slick or unnatural. Gone are the somber vistas and rugged terrain, replaced by eye-aching shine and plastic-y smoothness. The most special effects-heavy sequences look very much like the non-playable parts of modern video games — the exposition bits that can amp up the graphics a bit because they don’t have to worry about the randomness of play, the stuff you see in the commercials, right before the “rated T for teen” part. I don’t know if I just had a bad projector or what, but I spent the bulk of this long movie distracted by how dreadful everything looked. With a few small exceptions — The Shire glows with lovely green, a mountain cave fight/chase sequence is bracingly rich — this is a dismally unattractive movie, featuring too many shots that I’m sure were lovely at some point but are too often ruined and chintzified by the terrible technology monster.

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So on its aesthetic merits, The Hobbit comes up more than short. The trouble is, it’s not rescued by many narrative successes. Jackson has taken largely from the first third of J.R.R. Tolkien‘s novel — about an expedition to reclaim a lost dwarf kingdom from a dragon — but he’s also added in some elements found in appendices detailing an expanded universe that Tolkien included in an edition of The Lord of the Rings. This is partly to flesh out the story as Jackson believes Tolkien meant it to be, but it’s also meant to satisfy the needs of a supersize film trilogy based on one mere book. And so we get several pointless and uninteresting diversions, mostly about dwarves and their bitter enemies the orcs, that read exactly like the filler they are. Jackson is trying to flesh out dwarf mythology, because we spend so much of our time with these little guys, but it feels tediously synthetic, as if there are two movies competing for attention with neither one getting its due. We go to the goblin caves of The Hobbit and then, upon deliverance from that dark place, are thrust right into some kind of honor-and-revenge-based conflict with a snarling, giant, one-armed orc. It’s all very crowded and strangely hurried for a movie that, all told, takes its sweet time.

RELATED: No One Likes Peter Jackson’s New ‘Hobbit’ Footage

I suspect that another of Jackson’s reasons for including all this extra dramatic battling is that, on its own, The Hobbit is something of a children’s book. We’ve got wacky, food-crazed dwarves, a mean old dragon, and a funny little guy to take us along on the journey. Jackson doesn’t deny his movie the kiddie flourishes — there’s snot humor and butt jokes and lots of other goofy stuff involving some trolls, plus two little musical numbers involving all the dwarves — but he then tries to complement them with the big, booming faith and honor stuff and it never properly congeals. One moment we’re on a sprightly children’s adventure, the next we’re talking in big fashion about all that warlike serious business. It’s a discordant mix, and I’d imagine it will leave both kids and adults out in the cold.

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The film is not without its bright spots, rare as they may be. Ian McKellen is a feisty, spirited, mysterious Gandalf as ever before, and Martin Freeman nicely and genially projects everyday hobbit-ness, even if he’s a tad underused in the film. (Yeah, in the movie called The Hobbit, there’s barely any time to focus on the darn Hobbit.) Cate Blanchett turns up once more as the ethereal elf Galadriel, lending the movie a cool classiness and a welcome dose of feminine energy. And, of course, we’re back, for one mesmerizing scene, with our beloved Gollum, so winningly and creepily played by Andy Serkis, and here yet another marvel of computer innovation. In some ways Gollum’s innate cartoonishness works better now than it did in the original trilogy, which is probably the only time that can be said of this movie. There are one or two moments in Gollum’s pivotal scene where he’s given a bit too much modern humor to play, but all told he’s the most welcome sight in the film. Maybe that’s just the newfound purist in me, yearning for the old days, but I suspect it has more to do with Gollum being the only genuinely realized character we’ve so far encountered in this new trio of films. Everyone else is a snoozy lesser version of someone else, especially the ridiculous bloodthirsty orc leader, who snarls and growls like something out of the Underworld movies. Sometimes, in the jumble of the The Hobbit‘s many cluttered and dull action scenes, the frantic blur looks like any sequence from one of those schlocky ’00s B-movies; all roughly hewn CGI clashing around nonsensically, with this orc fellow leading the charge.

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Despite all the technical advancements, if we can call them that, most moments in The Hobbit feel like Peter Jackson is sadly trying to make all those familiar LOTR elements work for him once more, without ever really being able to reignite the old flame. The supposedly awe-inducing visit to the elf city of Rivendell is a ho-hum experience in this new frame-rate-ruined world. A silly battle sequence involving a wizard, a silly Radagast the Brown, riding around pell-mell on a rabbit-drawn sled looks like an interstitial from late-era Super Mario. Even Elijah Wood, appearing briefly as Frodo, looks strange — a pale ghost of himself, as if stitched in from another movie by some forlorn and desperate hand. The film is inevitably resonant with memories of the original trilogy, and little about it can hold up to the comparison. There’s too much effort in the wrong places — action instead of story, technical tricks instead of actual design — and the constant rhythm of arbitrary event after arbitrary event becomes tiresome well before the film’s two hours and forty minutes have lurched to a halt. I’m sure there are kids who will like this wan, distracted effort — they might not yet have anything else to compare it to, depending on their age — but as a human who remembers what came before, I’m afraid The Hobbit left me nothing but frustrated, sad, and tired. Frustrated that these big-budget visionaries seem to consistently feel they have to taint their earlier masterpieces with techno-junk followups, sad that once magical lands now flicker cheap and garish in my head, and tired at the prospect of two more of these things. I exited the theater trying to remind myself that Attack of the Clones was way better than Phantom Menace and that Revenge of the Sith was better still. I then realized how depressing it was that I was making that comparison. Oh, Middle Earth. What has become of you?

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Lawsuit claims A&E’s ‘Storage Wars’ show is rigged

LOS ANGELES (AP) — Some of the valuables found hidden in abandoned lockers on A&E’s “Storage Wars” have been added by producers to deceive viewers, a former cast member of the show claims in a lawsuit filed Tuesday.

David Hester‘s suit claims producers have added a BMW Mini and newspapers chronicling Elvis Presley‘s death to lockers in order to build drama for the show and that his complaints about the practices led to his firing.

Hester is seeking more than $ 750,000 in his wrongful termination, breach of contract and unfair business practices lawsuit. A&E Television Network declined comment, citing the pending lawsuit.

“Storage Wars” follows buyers who bid for abandoned storage lockers hoping to find valuables tucked inside.

“A&E regularly plants valuable items or memorabilia,” the lawsuit states. Hester’s suit claims he was fired from participating in the series’ fourth season after expressing concerns that manipulating the storage lockers for the sake of the show was illegal.

He claims that producers stopped adding items to his units after his initial complaints but continued the practice for other series participants. The lawsuit alleges entire units have been staged and the practice may violate a federal law intended to prevent viewers from being deceived when watching a show involving intellectual skills.

“Storage Wars” depicts buyers having only a few moments to look into an abandoned unit before deciding on whether to bid on it at auction. The lawsuit claims some of the auction footage on the show is staged.

Hester, known as “The Mogul” on the show, has been buying abandoned storage units and re-selling their contents for 26 years, according to the suit.

Nielsen Co. has ranked “Storage Wars” among cable television’s top-ranked shows several times since its 2010 debut.

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Teva CEO promises to reshape, refocus company by 2017

NEW YORK (Reuters) – Teva Pharmaceutical Industries‘ new Chief Executive Jeremy Levin promised on Tuesday to reshape the company into “the most indispensable medicines company in the world” and to provide significant value to its shareholders along the way.

At a meeting in New York with investors and analysts, Levin, who took over as CEO in May, said Teva would sustain “profitable growth” through 2017 and beyond despite numerous challenges, such as the looming 2015 patent expiration of its most important branded product, the multiple sclerosis drug Copaxone. It accounts for about 20 percent of Teva sales and some 50 percent of its profits.

Teva said it would continue to return money to shareholders through its dividend and $ 3 billion share buyback program, but it did not announce increases to either.

By 2017, Levin said, “Teva will be a reshaped company,” and one that will be more transparent and accountable to Wall Street and its investors than it has been in the past. The Israel-based company provided more details about its cost-cutting plans, areas of focus going forward and new product development.

Investors were not immediately convinced and Teva shares were down 1.9 percent just ahead of the market close in New York.

Levin said that in the future he does not want Teva to be so dependent on one product for a significant portion of its profits, in part through growth of branded generics in emerging markets and through its joint venture with Procter & Gamble Co on over-the-counter consumer products.

But Levin, a former executive of Bristol-Myers Squibb Co., said the world’s largest maker of generic drugs would increasingly focus on bringing new medicines to market in its core areas of expertise, such as central nervous system disorders and respiratory diseases.

He said it also would focus on what Teva is calling new therapeutic entities, or NTEs. Those could be new uses, formulations, delivery methods or combinations of existing products.

Levin said China represents an enormous opportunity for future sales of respiratory disease products. “We haven’t yet scratched the surface of how to get into that part of the world,” he said.

NEW DRUGS

Teva has 15 drugs in late-stage development and another 13 programs in mid-stage trials, but has discontinued 12 other products in its pipeline to focus on core areas of expertise.

The company has $ 10 billion available for business development over the next five years.

It took a step toward adding to its portfolio of branded medicines earlier on Tuesday by announcing a deal for worldwide rights to an experimental pain drug being developed by Xenon Pharmaceuticals, a biotech company founded by Michael Hayden, Teva’s new chief scientific officer .

Hayden said NTEs, as they come from proven effective medicines, would provide high returns with much lower risks than developing new molecules. He said the company set a goal of approving development of 10-15 NTEs in 2013 and getting them to market beginning in 2016.

Hayden was particularly enthused by the prospects for Teva’s experimental multiple sclerosis drug laquinimod, a neuroprotective medicine with potential to address progressive as well as relapsing MS. It could hit the European market next year, but U.S. regulators have asked for another Phase III study before considering the drug for the world’s largest market.

Teva also sees the possibility of combining laquinimod with Copaxone, which works through a different anti-inflammatory mechanism, to better treat MS as well as address other neurodegenerative disorders such as Alzheimer’s disease, ALS and Parkinson’s disease.

The company sees prospects for extending Copaxone use beyond the patent expiration with a new, more convenient, three-times-a-week version compared with its current daily formulation. That could reach the market in 2014.

Teva is testing the sleep disorder drug Nuvigil, which it acquired with its $ 6.5 billion purchase of Cephalon last year, for bipolar disorder – a use that could substantially boost sales. The company sees 2013 Nuvigil sales of $ 280 million to $ 320 million, with a possible bipolar approval coming in 2014.

MIS-SIZED OR SMALL DEALS

While Teva was built through a series of large acquisitions, Levin reiterated his desire for mid-sized or small transactions, whether through licensing deals, acquisitions or strategic alliances with large pharmaceutical companies.

The company, whose shares have badly underperformed those of its smaller rivals during the last two years, said on November 30 that it would streamline operations and cut costs by $ 1.5 billion to $ 2 billion during the next five years, with most of the savings realized in 2014 and 2015.

Teva provided details on Tuesday of where it would find much of the savings, including $ 400 million to $ 700 million by centralizing global purchasing power rather than local procurement of goods. It sees another $ 150 million to $ 175 million in savings from shifting away from many small production facilities and instead relying on larger, more efficient manufacturing sites.

A move to centrally controlled supply chain inventory levels could save another $ 110 million to $ 140 million, the company said.

Levin said Teva would also continue to divest non-core assets, a process it began by selling its U.S. animal health business to Bayer for up to $ 145 million.

“We have a plan that’s reasonable and achievable,” Teva Chairman Phillip Frost said.

(Reporting by Bill Berkrot; Editing by Dan Grebler and Tim Dobbyn)

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HSBC guilty of ‘stunning failure’

11 December 2012 Last updated at 13:05 ET

Loretta Lynch, US Attorney: “Their US compliance department was woefully inadequate”

The US said “dangerous practices” at HSBC allowed the bank to pass money to “drug kingpins and rogue nations”, as it fined it $ 1.9bn (£1.2bn).

HSBC agreed the fine, the largest of its kind, earlier on Tuesday.

A US Senate investigation said the UK-based bank had been a conduit for drug barons and nations such as Iran against which it had sanctions, making it illegal to do business there.

HSBC admitted having poor money laundering controls and apologised.

Money laundering is the process of disguising the proceeds of crime so that the money cannot be linked to the wrongdoing.

US Assistant Attorney General Lanny Breuer said in a statement: “HSBC is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries.

Another official said it was implicated in “wilful and dangerous” practices.

‘Sorry’

“We accept responsibility for our past mistakes,” said HSBC group chief executive Stuart Gulliver in a statement.

“We have said we are profoundly sorry for them, and we do so again.”

The bank said it had spent $ 290m on improving its systems to prevent money laundering and clawed back some bonuses paid to senior executives in the past.

Continue reading the main story

If HSBC had been indicted for these offences, that would have meant that the US government and others could no longer have conducted business with it, which would have been humiliating and highly damaging.”

End Quote

It also said it expected to reach an agreement with the UK’s Financial Services Authority shortly.

Last month it announced it had set aside $ 1.5bn to cover the costs of any settlement or fines.

The news followed the announcement of a similar but much smaller settlement with UK-based Standard Chartered bank, which will pay $ 300m in fines for violating US sanctions.

The cases are seen as part of a crackdown on money laundering and sanctions violations being led by federal government agencies and New York state authorities.

Senate criticism

The settlement had been widely expected following a report by the US Senate, published earlier this year, that was heavily critical of HSBC’s money laundering controls.

The report alleged that:

• HSBC in the US had not treated its Mexican affiliate as high risk, despite the country’s money laundering and drug trafficking challenges


• The Mexican bank had transported $ 7bn in US bank notes to HSBC in the US, more than any other Mexican bank, but had not considered that to be suspicious


• It had circumvented US safeguards designed to block transactions involving terrorists drug lords and rogue states, including allowing 25,000 transactions over seven years without disclosing their links to Iran


• Providing US dollars and banking services to some banks in Saudi Arabia despite their links to terrorist financing


• In less than four years it had cleared $ 290m in “obviously suspicious” US travellers’ cheques for a Japanese bank, benefiting Russians who claimed to be in the used car business

The report suggested HSBC accounts in Mexico and the US were being used by drug barons to launder money.

BBC business editor Robert Peston said that as big as the $ 1.9bn penalty looks, it could have been much worse.

“HSBC has signed a Deferred Prosecution Agreement for breaches of the US Bank Secrecy Act, the Trading with the Enemy Act and assorted money laundering offences. This is in effect putting the bank on probation,” he said.

“But if HSBC had been indicted for these offences, that would have meant that the US government and others could no longer have conducted business with it, which would have been humiliating and highly damaging.”

‘Failures’

The bank stressed that it had taken on new senior management since the time the problems happened.

Lord Green was chairman of HSBC from 2006 until late 2010 and is now Minister of State for Trade and Investment.

In a statement, his department said: “The report by the US Senate Sub-Committee sets out in detail the evidence submitted to it, and the action taken by HSBC to ensure compliance with US regulations at the time that Lord Green was group chairman. It is for HSBC to respond to this report.”

HSBC has announced it has appointed a former US official to work as its head of financial crime compliance, which is a new position.

Bob Werner was previously the head of the US Treasury’s Office of Foreign Assets Control (OFAC) – the agency responsible for enforcing the US sanctions on countries including Iran.

He will be responsible for beefing up HSBC’s anti-money laundering and sanctions compliance systems.

It is unclear what impact the case will have on HSBC’s business. The bank is the biggest in Europe by market capitalisation, and made pre-tax profits of $ 12.7bn for the first six months of 2012.

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Corruption probe shrouds Quebec in new darkness

MONTREAL (Reuters) – Half a century ago, a new crop of Quebec leaders sparked the so-called Quiet Revolution to eradicate the “Great Darkness” – decades of corruption that kept Canada‘s French-speaking province under the dominance of one party and the Catholic church.

The revolution’s reforms, including cleaning up the way lawmakers were elected and secularizing the education system, seemed to work, paving the way for decades of growth, progress and prominence as Canada emerged as a model of democracy.

Fifty years later, a public inquiry into corruption and government bid-rigging suggests the province’s politics are not as clean as Quebecers had hoped or believed.

Since May, when the inquiry opened in Montreal, Canadians have been getting daily doses of revelations of fraud through live broadcasts on French-language television stations. Corruption involving the Mafia, construction bosses and politicians, the inquiry has shown, drove up the average building cost of municipal contracts by more than 30 percent in Montreal, Canada’s second-largest city.

Last month, Montreal Mayor Gerald Tremblay resigned as did the mayor of nearby Laval, Gilles Vaillancourt. Both denied doing anything wrong, but said they could not govern amid the accusations of corruption involving rigging of municipal contracts, kickbacks from the contracts and illegal financing of elections.

Tremblay has not been charged by police. Vaillancourt’s homes and offices have been raided several times by Quebec’s anti-corruption squad, which operates independently of the inquiry, but no charges have been filed against him either. Police said the raids were part of an investigation but they would not release further details.

“Quebecers lived for several years under the impression that they had found the right formula, that their parties were clean,” said Pierre Martin, political science professor at the University of Montreal. Now, he said, “people at all levels are fed up.”

The inquiry must submit its final report to the Quebec government by next October. It has exposed practices worthy of a Hollywood noir thriller – a mob boss stuffing his socks with money, rigged construction contracts, call girls offered as gifts, and a party fundraiser with so much cash he could not close the door of his safe.

“Even though we are in the early days, what is emerging is a pretty troubling portrait of the way public contracts were awarded,” said Antonia Maioni, director of the McGill Institute for the Study of Canada in Montreal.

Quebec’s Liberals, the force behind the Quiet Revolution, launched the inquiry as rumors of corruption swirled. The government then called an election for September, a year ahead of schedule, in what was seen as an attempt to stop damaging testimony hurting its popularity.

The tactic did not help. Jean Charest’s Liberals lost to the Parti Quebecois, whose ultimate aim is to take the French-speaking province, the size of Western Europe, out of Canada.

‘IT WASN’T COMPLICATED’

According to allegations at the inquiry, the corruption helped three main entities: the construction bosses who colluded to bid on contracts, the Montreal Mafia dons who swooped in for their share, and the municipal politicians who received kickbacks to finance campaigns.

In Quebec, the Mafia has been dominated by the Rizzuto family, with tentacles to the rest of Canada and crime families in New York and abroad. But recently the syndicate has been facing challenges from other crime groups in Montreal, according to the Toronto-based Mafia analyst and author Antonio Nicaso.

The reputed godfather of the syndicate, Vito Rizzuto, has been subpoenaed to appear before the commission, but the date for his testimony has not been set.

The hearings have zeroed in on four construction bosses and how their companies worked with the Mafia, bribed municipal engineers and provided funds for mayoralty campaigns in Montreal, the business capital for Quebec’s 8 million people.

“It’s not good for the economy,” said Martin. “It’s not good for any kind of legitimate business that tries to enter into any kind of long-term relationship with the public sector.”

Quebec’s anti-corruption squad has arrested 35 people so far this year, staging well-publicized raids on mayoral offices and on construction and engineering companies. The squad has arrested civil servants and owners of construction companies, among others.

“I now must suffer an unbearable injustice,” Tremblay said in a somber resignation speech earlier this month after a decade as mayor of Montreal, saying he could not continue in office because the allegations of corruption were causing a paralysis at City Hall.

Some of the most explosive allegations at the inquiry, headed by Quebec Superior Court Justice France Charbonneau, came from Lino Zambito, owner of a now bankrupt construction company, and from a top worker for Tremblay’s political party, Union Montreal.

Zambito, who is seen as one of the smaller players and who also faces fraud charges, described a system of collusion between organized crime, business cartels and corrupt civil servants, with payments made according to a predetermined formula.

“The entrepreneurs made money, and there was an amount that was due to the Mafia,” Zambito told the inquiry. “It wasn’t complicated.”

Zambito said the Mafia got 2.5 percent of the value of a contract, 3 percent went to Union Montreal and 1 percent to the engineer tasked with inflating contract prices.

Tremblay did not respond to emails requesting comment on the allegations of corruption at city hall.

A former party organizer, Martin Dumont, alleged the mayor was aware of double bookkeeping used to hide illegal funding during a 2004 election.

Dumont said the mayor walked out of the room during a meeting that explained the double bookkeeping system, saying he did not want to know anything about it.

Dumont also described how he was called into the office of a fundraiser for Union Montreal to help close the door of a safe because it was too full of money.

“I think it was the largest amount I’d ever seen in my life,” Dumont said at the inquiry.

GOLF, HOCKEY, ESCORTS

The inquiry also saw videos linking construction company players with Mafia bosses. In one police surveillance video, a Mafia boss was seen stuffing cash into his socks.

A retired city of Montreal engineer, Gilles Surprenant, described how he first accepted a bribe in the late 1980s after being “intimidated” by a construction company owner. Over the years he said he accepted over $ 700,000 from the owners in return for inflating the price of the contracts.

Another retired engineer, Luc Leclerc, admitted to bagging half a million dollars for the same service. He said the system was well-known to many at city hall and simply part of the “business culture” in Montreal. He also got gifts and paid golf trips to the Caribbean with other businessmen and Mafia bosses.

Gilles Vezina, who is currently suspended from his job as a city engineer, concurred.

“It was part of our business relationships to get advantages like golf, hockey, Christmas gifts” from construction bosses, he told the inquiry in mid-November.

The gifts didn’t stop there. Vezina said he was twice offered the services of prostitutes from different construction bosses in the 1980s or early 1990s, which he said he refused.

The accusations are jarring for a country that prides itself on being one of the least corrupt places in the world, according to corruption watchdog Transparency International. But experts say corruption in Montreal was something of an open secret.

“The alarm signals have been going off here for 20 years and no one has done anything,” said Andre Cedilot, a former journalist who co-wrote a book on the Canadian Mafia.

Quebec’s new government has introduced legislation tasking the province’s securities regulator with vetting businesses vying for public contracts and allowing it to block companies that do not measure up.

Anti-corruption activist Jonathan Brun was not optimistic.

“You’ve got to use modern technology,” said Brun, a co-founder of Quebec Ouvert, a group that wants to make all information about contracts freely available rather than asking regulators to oversee individual companies. “You’ve got to change the entire system if you really want to fight corruption.”

(Writing by Russ Blinch; Editing by Janet Guttsman, Mary Milliken and Prudence Crowther)

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