DealBook: Carlyle's Profit Fell in 4th Quarter as Growth Slowed

11:18 a.m. | Updated Most of the publicly traded private equity giants proudly reported glowing fourth-quarter earnings.

The Carlyle Group isn’t one of them.

On Thursday, the alternative investment giant disclosed a 28 percent drop in fourth-quarter profit from the period a year earlier, as the growth of its portfolio companies slowed. That sent the company’s stock down more than 8 percent by midmorning, to $33.70.

Carlyle reported fourth-quarter profit of $182 million, expressed as economic net income, compared with $254 million in the year-earlier period. That amounts to 47 cents per unit. Analysts surveyed by Capital IQ had expected about 66 cents per unit, on average.

And Carlyle’s distributable earnings, a measure the firm prefers because it tracks actual payouts to its limited partners, fell 24 percent, to $188 million. Using generally accepted accounting principles, Carlyle earned $12 million in net income.

The results fall short of those of rivals like the Blackstone Group and Kohlberg Kravis Roberts. Private equity firms in general have gained from improvements in the markets, which have lifted the valuations of their portfolios and bolstered their core business of buying and selling companies.

Carlyle attributed the decline in economic net income to a smaller appreciation in the value of its portfolio. It reported a 4 percent gain for the quarter, compared with a 7 percent increase in the period a year earlier.

The decision to delay reaping carried interest from its latest mainstay fund, Carlyle Partners V, weighed on distributable earnings. The company opted to hold off, given the relative freshness of the fund and the influx of new investments like the buyouts of the TCW Group and Getty Images.

Carlyle highlighted its strong fund-raising and gains from selling investments. The firm raised $4.6 billion in new money for the quarter and $14 billion for the year, compared with a total of $6.6 billion raised in all of 2011. It generated $6.8 billion in realized proceeds for the quarter and $18.7 billion for the year, compared with $17.6 billion in 2011.

“We had another excellent year,” David M. Rubenstein, one of Carlyle’s co-chief executives, said in a statement. “Our performance over the past two years was marked by steady, continuous progress across our business.”

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In Cyprus Trial, Man Says Hezbollah Scouted Israeli Targets in Europe

LIMASSOL, Cyprus — A man on trial here admitted Wednesday to being a member of the militant group Hezbollah, staking out locations Israelis would frequent and acting as a courier for the group inside the European Union.

In a little-watched proceeding in a small courtroom here, the defendant, Hossam Taleb Yaacoub, 24, described how he would be picked up in a van to meet with his handler, whom he knew only as Ayman, and used code words to confirm his identity. “I never saw the face of Ayman because he was always wearing a mask,” Mr. Yaacoub said.

In written testimony read out loud in Greek by his interpreter, the man said that he had not taken part in a plot to target Israeli tourists visiting Cyprus, as prosecutors charge. “Even if they asked me to participate in a terrorist action I would refuse. I could never do that,” Mr. Yaacoub said. “I’m only trained to defend Lebanon.”

But he was arrested in July with the license plates of buses ferrying Israelis written in a small red notebook. He said that he wrote them down because one of the license numbers, LAA-505, reminded him of a Lamborghini sports car, while the other, KWK-663, reminded him of a Kawasaki motorcycle.

The Cypriot police arrested Mr. Yaacoub on July 7. Less than two weeks later, a busload of Israelis was blown up in Burgas on Bulgaria’s Black Sea coast, killing five Israelis and a Bulgarian bus driver. This month, Bulgarian officials announced that evidence pointed to Hezbollah as being behind the attack.

While the trial here on this little Mediterranean island has received little public attention, the stakes are high both for Hezbollah and the European Union, which has thus far resisted following Washington’s lead and declaring the militant group a terrorist organization. Experts say that a conviction here in Cyprus could put even more pressure on the bloc for a designation.

Officials in Cyprus have tried to keep the case as low-key as possible, declining in most instances to comment on it or to release documents. “It’s a very serious and delicate case,” the justice minister, Loucas Louca, said shortly after Mr. Yaacoub was arrested. “I don’t want to make a statement because any publicity could harm the case.”

The prosecution and the defense have both declined to comment before a verdict is reached, sometime in March. But a preliminary ruling by the three-judge panel last week found that the prosecutor had provided enough evidence to proceed on all eight counts, including four charges of conspiracy to commit a felony, two charges for participating in a criminal organization, one for participating in the preparation of a crime and a charge for covering it up.

Mr. Yaacoub, who has both Swedish and Lebanese passports, said that he had been a member of Hezbollah since 2007, and worked for the group for four years. He also owned a trading company in Lebanon. He had visited Cyprus in 2008 but first came for business in December 2011. Though he traded in shoes, clothing and wedding goods, he was interested in branching out into importing juice.

It was unclear from his testimony exactly how he got involved with the man he called Ayman. He said that he had been on “previous missions with Hezbollah,” in Antalya, on Turkey’s southwest coast; Lyon, France; and Amsterdam.

In France he said he “picked up some bags,” while in Amsterdam he “picked up a cellphone, two SIM cards and something that was rolled in a newspaper but I don’t know what it was,” Mr. Yaacoub said. He said that he delivered the items to Lebanon.

On June 26, 2012, he traveled to Sweden to renew his passport there. He returned to Cyprus via Heathrow Airport. Ayman asked him to observe two locations, a parking lot behind a Limassol hospital and a hotel called the Golden Arches. He was also supposed to acquire two SIM cards for cellphones and locate Internet cafes in Limassol and the Cypriot capital, Nicosia. Ayman also asked him to locate restaurants that served kosher food, but Mr. Yaacoub said he could not find any.

Mr. Yaacoub said that on his visit to Cyprus last summer he bought several thousand dollars worth of juice from a Cypriot company but could not find a way to transport it.

He explained multiple trips to the airport at Larnaca, which authorities said were for surveillance, as a result of a rental car with faulty air-conditioning that had to be returned. “I have no accomplices and I am not hiding weapons,” he said.

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Sony set to make pre-emptive strike on Microsoft with PS4

TOKYO (Reuters) - Sony Corp is expected to showcase a new PlayStation console on Wednesday in a pre-emptive strike against Microsoft Corp's bid to make its Xbox the world's leading hub for household entertainment.

The rare PlayStation event in New York comes amid industry speculation that Microsoft is set to unveil the successor to its Xbox 360, which beats the seven-year-old PlayStation 3's online network with features such as voice commands on interactive gaming and superior connectivity to smartphones and tablets.

"Their focus is on establishing a beachhead for the next generation of consoles, and that's what February 20 is all about," said P.J. McNealy, CEO and founder of Digital World Research. "The reality is they have been playing catch-up."

Pushing ahead of Microsoft's Xbox and Nintendo Co Ltd's new Wii U could help Sony revive an electronics business hurt by a dearth of hit gadgets, a collapse in TV sales and the convergence of consumer interest around tablets and smartphones built by rivals Apple Inc and Samsung Electronics Co Ltd.

Tablets and smartphones already account for around 10 percent of the $80 billion gaming market. Those mobile devices, analysts predict, will within a few years be as powerful as the current slew of game-only consoles.

After six years, Sony PlayStation sales are just shy of Xbox's 67 million installed base and well behind the 100-million selling Wii, analysts said.

A lackluster launch in November of the Wii successor, the Wii U, gives Sony a chance to focus on toppling Microsoft as all three battle the encroachment of casual gaming on tablets and smartphones. Nintendo cut its sales target to 4 million machines from 5.5 million for the year ending March 31.

STREAMING

Microsoft's answer to the casual gaming threat has been software that gives users extra content and allows them to surf the Internet from their mobile devices. The Xbox already streams Netflix and ESPN and links to tablets and smartphones using Windows or Apple's iOS and Google Inc's Android. Sony's PS3 online network has lagged.

"For Sony, they have to come out and make this PlayStation event the definitive statement of why gamers need to adopt the PlayStation 4 or PlayStation Orbis or whatever they end up calling it," said Greg Miller, PlayStation executive editor at video game site IGN.com.

Sony's purchase in July of U.S. cloud-based gaming company Gaikai for $380 million hints that the Japanese company will pursue a similar streaming strategy to Microsoft. Sony, industry watchers say, may also offer an expanded range of free games to counter the threat from casual gaming.

Sony, which under its CEO Kazuo Hirai is focusing on gaming, mobile devices and cameras, needs a hit product. But by betting on a PS3 successor, Hirai, whose most profitable business is life insurance, risks deepening consumer electronic losses as he will have to sell consoles at below the manufacturing cost to gain market traction.

That choice is made harder because the other two pillars of Hirai's new Sony - cameras and mobile - are losing money.

Sony expects to post a $1.4 billion operating profit in the current fiscal year. Yet, much of that rebound is gains from offloading real estate, including $1.1 billion for its New York headquarters.

The PlayStation event in New York starts at 2300 GMT (1800 EST).

($1 = 93.5200 Japanese yen)

(Additional reporting by Reiji Murai; Editing by Ryan Woo)

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Autopsy confirms Mindy McCready's death as suicide

HEBER SPRINGS, Ark. (AP) — Authorities in Arkansas say preliminary autopsy results confirm country music singer Mindy McCready's death was a suicide.

The Cleburne County sheriff said in a statement Wednesday that preliminary autopsy results from Arkansas' state crime lab show McCready's death was a suicide from a single gunshot wound to the head.

Investigators have said McCready apparently shot and killed her late boyfriend's dog before she turned the gun on herself Sunday at her home in Heber Springs, Ark. Authorities found McCready's body and the dog on the front porch where her longtime boyfriend, musician David Wilson, died last month of a gunshot wound to the head.

Authorities are investigating Wilson's death as a suicide but haven't determined an official cause of death yet.

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Well: Caffeine Linked to Low Birth Weight Babies

New research suggests that drinking caffeinated drinks during pregnancy raises the risk of having a low birth weight baby.

Caffeine has long been linked to adverse effects in pregnant women, prompting many expectant mothers to give up coffee and tea. But for those who cannot do without their morning coffee, health officials over the years have offered conflicting guidelines on safe amounts during pregnancy.

The World Health Organization recommends a limit of 300 milligrams of caffeine a day, equivalent to about three eight-ounce cups of regular brewed coffee. The American College of Obstetricians and Gynecologists stated in 2010 that pregnant women could consume up to 200 milligrams a day without increasing their risk of miscarriage or preterm birth.

In the latest study, published in the journal BMC Medicine, researchers collected data on almost 60,000 pregnancies over a 10-year period. After excluding women with potentially problematic medical conditions, they found no link between caffeine consumption – from food or drinks – and the risk of preterm birth. But there was an association with low birth weight.

For a child expected to weigh about eight pounds at birth, each day that the mother consumed 100 milligrams of caffeine from any source equated to a loss of between three-quarters of an ounce to an ounce in birth weight. Even after the researchers excluded from their analysis smokers, a group that is at higher risk for complications and also includes many coffee drinkers, the link remained.

One study author, Dr. Verena Sengpiel of the Sahlgrenska University Hospital in Sweden, said the findings were not definitive because the study was observational, and correlation does not equal causation. But they do suggest that women might put their caffeine consumption “on pause” while pregnant, she said, or at least stay below two cups of coffee per day.

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State of the Art: Sony’s RX1 Camera: Compact, Full-Framed and Expensive, Too

When you’re shopping for a camera, you have a million specs and features to consider. Size, weight, battery life, megapixels, zoom power. ... Can you guess which aspect consumers consider most important?

The color of the body. (“Ooh, I like the shiny red one!”)

The camera buyer for a national electronics chain told me that. We both slapped our foreheads.

Please. If you’re buying a camera, shouldn’t picture quality be the most important detail?

If so, what you should care most about is the flat, rectangular light sensor inside the “film.” In general, the bigger the sensor, the happier you’ll be with the results and the more you’ll pay.

At the low end, snapshot cameras with tiny sensors (0.4 inches diagonal) cost $150 but give you blurry, grainy low-light shots. At the high end, those professional, big, black S.L.R. cameras cost $2,000 to $6,000 but come with full-frame sensors. That is, these sensors are as big as an old piece of 35-millimeter film (1.7 inches). They deliver unparalleled low-light quality, richness of color, detail and soft-focused backgrounds.

(You can buy cameras with even bigger sensors — medium-format cameras that cost $20,000 and military cameras that cost millions — but let’s say you live in the real world.)

All of this explains why Sony’s 2013 camera/camcorder lineup is so startling. The company has put full-frame sensors into three new cameras, at prices and body sizes that nobody has ever attained.

For example, there’s the A99, which Sony says is the world’s smallest and lightest full-frame S.L.R. It’s meant to compete with professional cameras like the Canon 5D Mark III ($3,200) and Nikon D800 ($3,000) — for $2,800. (These prices are for the bodies only.)

The A99 is sort of homely, but it has a long list of distinguishing features: fast, continuous focusing, even while filming or shooting something running at you; two memory-card slots; built-in GPS function that stamps every photo with your location; 1080p, 60-frames-a-second high-definition video; microphone and headphone jacks; and an electronic viewfinder whose video shows you the results of your adjustments in real time.

Sony says the A99 is also the only full-frame camera with a screen that flips out and tilts.

Then there’s the VG900, Sony’s first full-frame camcorder. It costs $3,300 — about $10,000 less than any other full-frame camcorder, Sony says. And its sensor is about 45 times as big as a standard camcorder’s sensor.

Now, a huge sensor may not seem to make sense in a camcorder. One frame of hi-def video has only about two megapixels of resolution; what’s the point of stuffing a 24-megapixel sensor into the camcorder?

Answer: It’s about picture quality. A big sensor gives you amazing low-light video, gorgeous blurry backgrounds, greater dynamic range and better color.

Thousands of filmmakers use full-frame S.L.R. still cameras to shoot video, because of the superior quality and because they can use different lenses for different video effects. S.L.R-based camcorders like Sony’s VG900 offer the same features in a camcorder shape. They’re much more comfortable to hold, and their buttons are better placed for video operation.

The VG900 accepts Sony’s E-mount camera lenses, of which there are 13; they don’t quite exploit the full area of that jumbo sensor. But the camera comes with an adapter for the older, more plentiful A-mount lenses. Alas, those lenses don’t autofocus with that adapter.

The most astonishing new full-frame Sony, though, is the RX1. It’s the world’s first compact full-frame camera.

Now, you’re forgiven if you just spewed your coffee. “Compact” and “full-frame” have never gone together before. Everyone knows why: a big sensor requires a big lens, meaning a big camera. You can’t change the laws of physics, no matter how much photographers would love it.

E-mail: pogue @nytimes.com

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Syrian Army Rocket Kills 19 and Levels Buildings in Aleppo, Rebels Say

BEIRUT, Lebanon — Syrian antigovernment activists said Tuesday that an army rocket had leveled several buildings in a rebel-held neighborhood of Aleppo, killing at least 19 people and possibly leaving dozens more buried under rubble. The attack appeared to cause one of the worst civilian tolls in the embattled city since its university was hit in a multiple bombing a month ago.

News of the Aleppo rocket attack came as activists also reported that at least two mortar rounds had exploded near President Bashar al-Assad’s Tishreen Palace in Damascus. There were no immediate reports of casualties or damage, and it was not known if Mr. Assad had been there at the time. The palace, surrounded by a park, is in an upscale area that has largely been insulated from the insurgency and is situated less than a mile from the main presidential palace, on a plateau overlooking the city.

The Syrian Observatory for Human Rights, a Britain-based anti-Assad group with a network of sources inside Syria, described the Aleppo rocket as a “surface-to-surface missile” that slammed into the Jabal Badro neighborhood late on Monday, and said at least six children and three women were among the victims. A witness in Aleppo was quoted by Reuters as saying that the attack felled three buildings and that survivors were digging up bodies.

Syria’s state-run news media did not immediately report the rocket attack, and it was impossible to independently corroborate the details provided by the anti-Assad activists. But the attack appeared to be one of the deadliest in the city since more than 80 people were killed and hundreds were wounded on Jan. 15 in a multiple bombing of Aleppo University as students were taking exams. Although rebels and the government accused each other of responsibility for the university attack, video footage of the immediate aftermath suggested that it had involved a missile or missiles fired by the Syrian military.

The United Nations has estimated that nearly 70,000 people have died in the Syrian conflict, which began as a peaceful uprising against Mr. Assad in March 2011. The alliance of rebel groups fighting to oust Mr. Assad has claimed a series of strategic advances in recent weeks, but Mr. Assad contends that his side is winning.

On Monday, United Nations human rights investigators reported that violence in the country had worsened in the six-month period ending in mid-January. Carla del Ponte, a former war crimes prosecutor and a member of the panel responsible for chronicling rights violations in Syria, called on the Security Council to refer Syria to the International Criminal Court so that those responsible for atrocities in the conflict, from the government and from the insurgent side, could be held to account.

Anne Barnard reported from Beirut, and Rick Gladstone from New York. Hwaida Saad and Hania Mourtada contributed reporting from Beirut.

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Google risks huge fine under new EU data rules: top official

BRUSSELS (Reuters) - Google's latest privacy policy could land it with a fine of upto $1 billion under a new law allowing Europe-wide challenges to U.S.-based Internet giants, Europe's top justice official said on Tuesday.

Viviane Reding, the European Union's commissioner for justice, said rules being finalized by the European parliament and EU countries would allow a single EU data regulator to fine companies on behalf of all national watchdogs.

"The one-stop-shop regulator could threaten a company which does not obey the rules with a fine of up to two percent of global turnover," Reding told journalists.

Asked what kind of offence would receive the full two percent fine Reding pointed to Google. "The test case (Google) is a clear one."

The overhaul of the existing EU data protection regime could come into effect next year and would allow for bigger single fines.

It would also require all countries to have fines. Some states do not now levy penalties.

Google's total revenue in 2012 amounted to $50 billion which would make a two percent fine $1 billion.

Under current European rules, only individual countries can levy fines against companies that violate data privacy laws. Fines range from 300,000 euros to 600,000 euros.

Reding said that the ongoing dispute between EU data protection regulators and search engine Google showed the weaknesses of the current system, which relies on each country identifying and punishing privacy breaches.

She added that Google's decision to ignore a warning by regulators in October to change its privacy policy was a clear-cut case for a fine.

Google said it had not ignored warnings and had since amended its privacy policy.

European data watchdogs have said they plan to take "repressive" action against Google by this summer for its privacy policy, which took effect last March and allows the search engine to pool user data from across all its services ranging from YouTube to Gmail.

While regulators say Google's policy infringes users' privacy, the company said it is not breaking any laws.

The new law now would place greater responsibility on companies such as Facebook to protect users' information and threaten those who breach the code with fines.

U.S. companies have been lobbying heavily against the regulation which forces them to seek water-tight permission from users for collecting their data and also gives users more rights to obtain and delete their own data from services like Facebook.

The European Parliament is currently reviewing the rules drafted by the European Commission. They will then need the consent of EU member nations before becoming law, a process that could take up to a year.

(Editing by David Cowell)

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Clive Davis reveals in memoir that he's bisexual

NEW YORK (AP) — Record executive Clive Davis says he's bisexual.

In his new memoir, out Tuesday, the 80-year-old, who is twice divorced, reveals that he had sex with a man in the 1970s. Davis writes in "The Soundtrack of My Life" that he hadn't been repressed or confused during his marriages and that sex with a man "provided welcome relief."

He also writes that he started dating a man from 1990 to 2004, which he says was a "tough adjustment" for his son Mitchell. He says after "one trying year," he and his son worked things out. Davis is the father of three children.

Davis is the chief creative officer of Sony Music Entertainment. He writes that he's been in a "strong monogamous relationship" with a man for the last seven years.

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Ask Well: Coaxing Parents to Take Better Care of Themselves

Dear Reader,

Your dilemma of wanting to get your parents to change their ways to eat better and exercise reminds me of an old joke:

How many psychologists does it take to change a light bulb? Answer: Only one, but the light bulb has to really want to change.

Sounds like your parents may be about as motivated as the light bulb right now. Still, there are things you can do to encourage them to move in a healthier direction. But the first step should not be to hand them a book. Unless you lay some prior groundwork, that gesture may seem almost as patronizing as an impatient tone of voice – and probably as likely to backfire.

Instead, start a conversation in a caring, nonjudgmental way. Ask, don’t tell. “Say, ‘You know, I might not know what I am talking about, but I am really concerned about you,” suggested Kevin Leman, a psychologist in Tucson, Ariz., and author of 42 books on changing behavior in families and relationships. Ask simply if there is anything you can do to help.

Leading by example is also more effective than lecturing. “The son can role-model health by inviting his parents to dinner and serving healthful items that he is fairly certain they will find acceptable, or ask them if they are interested in going out dancing with him and his wife,” suggested Ann Constance, director of the Upper Peninsula Diabetes Outreach Network in Michigan.

Pleasure is a better motivator for change than pain or threats. Use the grandchildren as bait. Ask if they want to take the grandchildren to the zoo or a park that would require a good bit of walking around for everyone. Or the grandchildren could ask them to come along on one of those 2K fund-raiser-walks that many schools hold. After all, a day with the grandchildren is always a pleasure in itself. (O.K., usually a pleasure.)

Tempted to give them the gift of a health club membership? “Save your money,” Dr. Leman said. Try a more indirect (and cheaper) approach. Create a mixed-tape of up-tempo music from their era. (“Songs they listened to from the ages of 12-to-17, which is what we all listen to for the rest of our lives,” said Dr. Leman) They will enjoy it any time — maybe even while walking.

If you really want someone you love to make a change, the key is to ask them to do something small and easy first because that increases the chances they will do something larger later. Psychologists call that “the foot in the door technique,” said Adam Davey, associate professor of public health at Temple University in Philadelphia, referring to a classic 1966 experiment called “Compliance Without Pressure.” In the study, which has been duplicated by others in many forms, researchers asked people to sign a petition or place a small card in a window in their home or car about keeping California beautiful or supporting safe driving. About two weeks later, the same people were asked to put a huge sign that practically covered their entire front lawn advocating the same cause.

“A surprisingly large number of those who agreed to the small sign agreed to the billboard,” because agreeing to the first small task built a bond between asker and askee “that increases the likelihood of complying with a subsequent larger request,” Dr. Davey explained.

Any plan for behavioral change is most likely to succeed if it is very specific, measurable and achievable, according to Ms.Constance.

And the new behavior should also be integrated into daily life — and repeated until it becomes a habit. For example, if you want to walk more, start with a 10-minute walk after dinner on Monday, Wednesday and Friday, Ms. Constance suggested. The next week, bump it up to 12 minutes.

Don’t give up, even if you meet initial resistance — it is never too late for your parents or you or any of us to change. “Taking up an exercise program into one’s 80s and 90s to build strength and flexibility can result in very tangible and enduring benefits in a surprisingly short time,” insisted Dr Davey.

As for instructive reading, Dr. Leman is partial to one of his own books, “Have a New You by Friday,” and Dr. Davey recommends “Biomarkers: The 10 Keys to Prolonging Vitality,” by William Evans. Ms. Constance recommends the Centers for Disease Control and Prevention’s Web site on physical activity and exercise tips for the elderly, as well as the National Institute of Health’s site on the DASH diet.

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