Apple developing wristwatch device that runs on iOS, reports say

The cycle of speculation that Apple plans to build some kind of wristwatch or other wearable computing device kicked into high gear this weekend after a pair of reports claimed to confirm that such a device was under development. 

First, the New York Times reported that it had confirmed with multiple sources that Apple "is experimenting with wristwatch-like devices made of curved glass."

That story was followed by another report from the Wall Street Journal saying it had also confirmed that Apple "is experimenting with designs for a watch-like device that would perform some functions of a smartphone."

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There were no additional confirmed details about what such a gadget might do, what features it would specifically offer, how much it would cost, or even when it might hit the market. 

Speculation about a possible iWatch has been ebbing and flowing for several years now. In December, a Chinese blog claimed it had confirmation that such a device was under development. And this week, former Apple designer Bruce Tognazzini wrote an expansive blog post suggesting what such a device might do. 

He believed Apple was the perfect company to address the numerous design flaws, such as bulkiness and short battery life, that have made adoption of other such devices slow. 

"The first thing Apple has to do is address traditional drawbacks in smartwatch design, something they are qualified to do," he wrote. 

One other notable nugget from the New York Times story: Steve Jobs had told another reporter that he had very much wanted Apple to build a car:

"In a meeting in his office before he died, Steven P. Jobs, Apple’s co-founder and former chief executive, told John Markoff of The New York Times that if he had more energy, he would have liked to take on Detroit with an Apple car."

The idea of dueling Apple and Google cars battling it out for the future of our roadways may be the stuff nerd dreams are made of. 

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Boeing 787 Dreamliner takes test flight to assess batteries

SEATTLE — Aerospace giant Boeing Co. sent a 787 Dreamliner passenger jet on a test flight Saturday, the first since the new airliner was grounded three weeks ago because of a battery fire.

The aircraft took off from Boeing Field in Seattle and spent more than two hours flying back and forth over the inland Columbia Plateau. It landed at Boeing Field shortly before 3 p.m. Pacific Time. According to flight-tracking website FlightAware, the aircraft flew 1,131 miles, slightly more than the 919 planned.

The Federal Aviation Administration granted permission for test flights Thursday.

The 787 is the first commercial airliner to rely heavily on lithium-ion batteries, the same kind used in cellphones. Each plane has two of the 63-pound blue power bricks, one near the front to provide power to the cockpit if the engines stop and one near the back to start up the auxiliary power unit, which is essentially a backup generator.

On Jan. 7, a battery on a plane that had recently landed in Boston short-circuited and caught fire. Nine days later, a battery on an All Nippon Airways plane started smoking, leading to an emergency landing in Japan.

Boeing said Saturday's flight was to assess the in-flight performance of the batteries. Data would be used to support continuing investigations of the recent incidents.

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U.S. trade picture brightens at end of 2012

WASHINGTON — The U.S. trade picture brightened at the close of last year as exports rose at a solid pace and imports of oil and other goods shrank in December, dropping the monthly trade deficit sharply and probably lifting fourth-quarter economic growth.

The trade data Friday from the Commerce Department could be another sign of strengthening global growth. Chinese exports have surged in the last two months, and some major European nations also have seen a recent pickup in trade.

For all of last year, the U.S. trade deficit fell 3.5% to $540.4 billion, reversing two straight years of double-digit increases.

After the release of the December trade numbers, which showed that the deficit narrowed to $38.5 billion from $48.6 billion in November, some leading analysts said it appeared that U.S. economic output in the fourth quarter was a little above zero instead of the negative 0.1% annual rate reported in the government's initial estimate last week.

Obama administration officials said U.S. exports of goods and services reached a record high of $2.2 trillion last year. That was led by strong gains in automotive and capital goods, such as passenger jets and telecommunications equipment. But imports also rose to a record high of $2.74 trillion last year.

Significantly, American shipments of fuel oil hit an all-time high last year, reflecting greater domestic production of crude and natural gas. That means there was a little less reliance on foreign oil, which along with consumer goods made abroad has been the primary reason for America's perennially large trade deficit.

The U.S. goods trade shortfall with members of the Organization of the Petroleum Exporting Countries fell to $98.9 billion last year from $126.9 billion in 2011.

"I think that has a huge potential to help us get to more balanced trade," said Edward Gerwin Jr., a senior fellow at the centrist Democratic think tank Third Way, referring to greater energy independence.

Still, President Obama will need a lot of help if he is to fulfill his pledge of doubling exports in five years.

After sizzling growth in 2010 and 2011, the value of U.S. exports of goods and services rose just 4.4% last year, Commerce Department figures show. That leaves the president less than halfway to his goal with two years to go and some stumbling blocks for U.S. exporters, including weakening currencies in nations like Japan and still-weak demand in key markets such as Europe.

Obama announced his goal in his 2010 State of the Union address. Exports surged 17% that year and then jumped 14% more in 2011, putting the administration well on pace to hit its target. But those huge gains were in good part a kind of bungee-like swing up after a steep fall in trade during the recession.

Some trade experts viewed the goal as farfetched, although the U.S. previously doubled exports in the five years between 1976 and 1981.

Other analysts said it was not enough just to grow exports if imports increased as fast or faster, which would leave the trade deficit flat or rising.

Rising imports can signal growing domestic demand, and some imports are components for products that are made in the U.S. and exported. But an increase in deficits is generally seen as a drag on domestic economic output and job growth.

Dan Ikenson, a trade expert at the Cato Institute, a libertarian think tank, wasn't critical of the likelihood of Obama falling short of his goal of reaching $3.16 billion in exports in 2014.

"At least we're moving in the right direction; that's fine," he said, noting that U.S. exports depend largely on what happens in other economies that are mostly out of the president's hands.

The U.S. trade deficit of goods and services hit a peak of $753.3 billion in 2006, and it fell to $379.2 billion in 2009 when the economy was still in recession, according to Commerce Department figures.

Among major trading partners, the U.S. trade shortfall with China reached a new high of $315 billion last year, up from $295.4 billion in 2011. America's trade gap with Europe also widened, to $125.9 billion from $119.7 billion the previous year.

don.lee@latimes.com

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South Korea firm aims for the sky in L.A.

Ambitious South Korean enterprises continue to make noise on the global economic stage.

Electronics giant Samsung is giving Apple fits in markets across the globe with its hot-selling smartphones and tablets. Seoul-based Hyundai and Kia have been among the world's fastest-growing automakers in recent years. Portly singer Psy put South Korea on the pop culture map with his monster hit “Gangnam Style,” which has become the most popular video of all time on YouTube with nearly 1.3 billion views.

So it was only natural that South Korea's top airline, Korean Air, on Thursday took the wraps off its design for a dramatic, skyline-changing tower for downtown Los Angeles. The $1-billion skyscraper is to become the tallest building west of the Mississippi River — and a symbol of South Korea's status as an up-and-coming economic powerhouse.

The 73-story hotel and office building will include 900 guest rooms, double-decker elevators and an observation deck that will afford views of the Pacific Ocean. Slated to replace the old Wilshire Grand Hotel at Wilshire Boulevard at Figueroa Street, the new building will be slightly taller than the nearby U.S. Bank Tower, which has held the title of tallest building west of Chicago since 1989.

Originally planned as two smaller towers when it was announced four years ago, the Korean Air plan has morphed into a single tower that will give the Seoul company bragging rights to the highest skyscraper on the West Coast.

Experts said that's in keeping with South Korea's hard-charging business ethos. The skyscraper, currently dubbed the Wilshire Grand, is an outgrowth of a competitive corporate culture that has come to dominate the South Korean economy over the last 30 years, according to UC Riverside Ethnic Studies professor Edward Taehan Chang.

After the nation endured poverty, dictatorship and political unrest during much of the 20th century, attaining superlatives has become part of the country's fabric, Chang said. Corporations strive to dominate their industries, while younger generations take pride in the near universality of South Korea's popular culture.

“They always want to reach for No. 1 status,” Chang said. “The rapid economic growth has been about striving for the top spot.”

Korean Air is already at work dismantling the closed 1950s-era Wilshire Grand Hotel to make way for the glass-clad tower, which is expected to be completed in 2017. Korean Air has provided airline service to Los Angeles for more than 40 years and has owned the Wilshire Grand since 1989.

Korean Air is the flagship company of Hanjin Group, one of South Korea's largest conglomerates. Hanjin has interests in land, sea and air transportation as well as construction, heavy industry, finance and information services. A high-end hotel fits well with Korean Air's operations in Los Angeles: The company makes parts for airplanes, flies the planes here as the busiest Asian carrier at Los Angeles International Airport, runs travel agencies that book the tickets and operates a catering business that serves the food on the planes.

“The new Wilshire Grand is an investment that makes sense, and we are excited to continue our relationship with this great city,” Korean Air Chairman Y.H. Cho said Thursday at the offices of AC Martin Partners, the project's architect.

The sail-shaped skyscraper will light up at night and dwarf many of its neighbors. Most of the building will be devoted to a hotel, though an operator has yet to be named. Arriving guests would be whisked by high-speed elevators to the “sky lobby” on the 70th floor for check-in.

According to the plan, the 71st floor will be a restaurant. The floor above that will house window-washing gear and engineering equipment, clearing the top floor for an infinity swimming pool and observation deck.

Near street level will be about three floors of restaurants and shops, topped by 30 floors of offices for rent. Elevators will be double-decked, carrying two stacked cabs of passengers for additional capacity during peak hours.

Perched at the very top of the building will be a decorative “crown” and a mast-like spire that will have embedded LED lighting that can change colors. The display will be eye-catching and visible for miles, but it will not be used for advertising, said Christopher Martin, chief executive of AC Martin.

“It's not Coke bottles, it's art,” he said.

With the spire reaching to 1,100 feet, the Wilshire Grand would become one of the tallest structures in the country, surpassing the 1,046-foot Chrysler Building in New York, which has 77 stories.

The contemporary design of the Wilshire Grand, with its floor-to-ceiling windows, is intended to set it apart from surrounding granite-clad office towers, said architect David Martin, who is Christopher Martin's cousin.

He hopes the building, which is to include 400,000 square feet of office space, will reflect the city better than the last generation of skyscrapers does. The Wilshire Grand, for instance, will have operable windows in its guest rooms and offices.

“This is about the culture and climate of L.A.,” Martin said. “We are creating a sense of place, only it's 1,000 feet up in the air.”

AC Martin also designed the Figueroa-at-Wilshire high-rise across the street from the Wilshire Grand in 1990. The family firm was the primary architect of Los Angles City Hall in the 1920s.

Work on the new skyscraper will create 11,000 union construction jobs, Korean Air's Cho said, and employ 1,700 workers when it opens in four years. The project has obtained most development approvals from L.A. city officials.

Cho, who lives in Seoul and has a home in Newport Beach, is on the board of trustees at USC, where his children attended college and where he obtained his MBA.

“L.A. is like a second home,” Cho said.

The 936-room Wilshire Grand, built in 1952, was originally a Hotel Statler and later a Hilton. Once one of the city's best hotels, it was most recently a mid-market inn catering to conventioneers and tour groups from overseas before it closed at the end of 2011.

The property is a few blocks north of Staples Center.

roger.vincent@latimes.com

Times staff writer Frank Shyong contributed to this story.

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Pitfalls seen in growth of part-time work

Although the state's unemployment rate is at its lowest level in almost four years and the number of employed Californians is growing, labor experts see a different reality: Full-time work has faded in many industries.

Nubia Calderón Barillas, 32, left a job in retail in May for a housekeeping job at the Holiday Inn LAX that promised better pay and steady work.

But nearly nine months later, the mother of three said, she rarely works more than two days a week. She has asked for more hours, she said, but to no avail, even in an industry that set a new peak employment level last year.

"It's been difficult lately," she said. "I practically didn't work all of December except for the holidays."

California employers picked up the rate of hiring during 2012 — at times at nearly twice the rate of the country as a whole. But a significant portion of those jobs are less than full time, according to federal data released last week.

The number of people involuntarily working part time nationwide has grown to 7.9 million, an 80% increase from 2006, data from the Bureau of Labor Statistics show.

That trend is particularly pronounced in the Golden State, which saw the number of involuntary part-time workers swell to 1.3 million, up 126% from 585,100 in 2006. Only four other states, Nevada and Florida among them, had higher rates of involuntary part-time workers.

Various industries are increasingly relying on part-time workers and other contingent employees, such as temporary workers, to save money, said Michael Bernick, a Milken Institute fellow who studies labor markets.

"As you have more and more costs associated with full-time workers in terms of healthcare or other costs, employers look for alternative ways to reduce costs," Bernick said. "One way is on-demand and part-time work."

The increase isn't limited to industries that typically employ part-time workers, such as leisure and hospitality. Other sectors with strong job growth, such as professional and business services, have also seen a rise in part-time workers as employers aim to keep payroll costs down, Bernick said.

Nationwide, the number of involuntary part-time workers in professional and business services, which includes white-collar occupations such as accountants and lawyers, nearly doubled to 711,000 last year from 367,000 in 2007. A sector-by-sector breakdown is unavailable for California because the sample size of the household survey that the federal data rely on is too small.

Part-time work is common in California's leisure and hospitality sector, which added almost 61,000 jobs since December 2011, accounting for more than a quarter of the state's net jobs created in that time period.

Growth of low-wage industries such as hospitality provides work opportunities for people with limited education, even if the work is only part time, said Jerry Nickelsburg, senior economist at the UCLA Anderson Forecast.

"We shouldn't look with dismay" on the rapid growth of a sector that is so dependent on part-time work, he said. "If that were the only sector we were growing, then that would be worrisome."

Tom Walsh, president of Unite Here Local 11, a union representing hospitality workers in Los Angeles and Orange counties, said in negotiations with employers, his group has pushed for workers' hours to be maximized.

Although full-time work sometimes isn't ensured, Walsh said, employers are urged to give part-time workers as many hours as possible.

"I think it's an example of certain employers being penny wise but pound foolish," he said. "They figure they can save money by having more part-time workers and having low pay. If they don't change that, folks are going to take jobs somewhere else the first chance they get."

The long-term implication of part-time work, economists said, is growing wage disparities and the risk of dampening consumer spending, a major driver of the economy. Part-time workers also are more likely to rely on state aid, such as food stamps, to make ends meet.

Kellie Flowers moved to Los Angeles late last year hoping to find work as an event coordinator or wardrobe stylist.

But full-time work has been elusive, even with a college degree.

The 30-year-old Virginia native managed to land two part-time jobs when she first relocated, one at a Manhattan Beach boutique and the other at a running store.

She earned $10 per hour at both jobs but didn't have benefits or health insurance.

"It was very hard working two jobs," she said. "You definitely don't have any spending money."

Flowers recently started a new job, selling spa packages, on commission. She sells between six to 10 a day, earning $15 for each.

"I'm going to look for other jobs that make me happier. Until then I just need to make money," she said.

Meanwhile, Barillas, the Holiday Inn housekeeper, said she hopes she'll eventually work more hours.

She and her husband are falling behind on utility bills at the one-bedroom Koreatown apartment they share with their three children. She recently applied for food stamps, a decision she said was embarrassing.

"I've always had work," she said. "I used to think people on food stamps just didn't want to work, but now I find myself with the need to ask for help."

ricardo.lopez2@latimes.com

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Dell founder to take PC maker private in $24.4-billion buyout

Once-mighty Dell Inc., which has struggled for years in a competitive and increasingly mobile device-driven industry, will try to transform itself as a private company in a $24.4-billion buyout led by founder Michael Dell.

Away from the scrutiny and glare of Wall Street, Dell is hoping the company will stand a better chance reinventing itself for the long term. But many of the fundamental challenges that have toppled the company from its perch as the world's biggest PC maker won't go away once it becomes privately held, analysts say.

"The PC guys really miscalculated the disruptive nature of tablets and the way they've cannibalized the PC business," said Tim Bajarin, president of industry analysis firm Creative Strategies Inc. "And the result is that all of them are really struggling with a shrinking market. That means that they have to find other ways to shore up their business."

In the coming years, analysts project, almost all growth in consumer electronics will come from tablets and smartphones while sales of PCs will decline.

Computing giants have taken different roads to adapt. Microsoft has launched the touch-based Windows 8 that works across traditional and mobile platforms. Intel is focusing on making chips. HP has announced a five-year turnaround plan to make the company a leader in business computing and cloud-based services.

Dell, now the world's third-largest PC maker, wants to pursue a strategy similar to HP's.

"Dell has made solid progress executing this strategy over the past four years," CEO Michael Dell said in a statement. "But we recognize that it will still take more time, investment and patience."

And so, after weeks of rumors, Dell confirmed the biggest leveraged buyout since the Great Recession. Under the terms of the agreement, the Round Rock, Texas, company will be acquired by Michael Dell and global technology investment firm Silver Lake, with a $2-billion investment from Microsoft Corp.

Michael Dell — who currently holds about a 16% stake in the company — said the going-private transaction would "open an exciting new chapter for Dell, our customers and team members."

"We can deliver immediate value to stockholders, while we continue the execution of our long-term strategy and focus on delivering best-in-class solutions to our customers as a private enterprise," he said.

Dell stockholders will receive $13.65 in cash for each share of Dell common stock they hold, representing a 25% premium over Dell's closing share price of $10.88 on Jan. 11, the last trading day before rumors of a possible sale began. The company currently has a $23.3-billion market value. Dell shares rose 15 cents, or 1%, to $13.42.

Dell wants to complete the transaction by the end of July. The company said it would solicit competing offers for 45 days, although analysts said they didn't expect a counteroffer to emerge.

Despite the advantages of being a private company, Dell will be saddled with huge debt as part of the deal that may make it difficult to make large acquisitions. Already, Dell had been outbid on deals by rivals such as HP.

"I think they have some real structural issues that can't be fixed by going private," said Bill Kreher, an analyst at Edward Jones, pointing to Dell's continued dependence on traditional PC sales.

Many of the industry's tech stalwarts have struggled with PC sales. IBM sold its PC business in 2004 to Lenovo. HP briefly considered exiting the business two years ago, but then quickly backed down amid controversy.

The Dell deal quickly sent waves across the personal computer industry, with some big rivals — perhaps seeking to take advantage of the turmoil that the transition may cause Dell — slamming the company and its prospects.

"Dell has a very tough road ahead," HP said in a statement. "The company faces an extended period of uncertainty and transition that will not be good for its customers."

It added: "Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell's customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity."

Lenovo, meanwhile, said that it was focused on its products and customers "rather than distracting financial maneuvers and major strategic shifts."

Redmond, Wash.-based Microsoft didn't detail why it was making the investment in Dell other than to say it wanted to help support "the long-term success of the entire PC ecosystem."

With Dell a "key channel" for Microsoft products, the software giant probably wants to keep an eye on Dell as it reinvents itself, said Jayson Noland, a senior analyst at Robert W. Baird & Co.

"Microsoft is going to be there, talking in their ear," Noland said. "It's to keep the ecosystem healthy; it's to influence a key supplier relationship."

The buyout marks the start of a new chapter in what is already one of technology's most remarkable entrepreneurial stories. In 1984, when he was 19, Michael Dell started PC's Ltd. in his University of Texas at Austin dorm room with $1,000. The company would go on to become Dell.

With its hyper-efficient supply chain, Dell became a PC-selling juggernaut. In 2000, at the height of the dot-com boom, Dell was the world's largest PC maker with a market value of more than $100 billion. The founder left in 2004 when the company seemed unstoppable but returned as CEO three years later to a company that had lost its title as leading seller of PCs and was facing an accounting scandal.

The private equity buyout is Michael Dell's biggest gamble yet to revive the fortunes of the company that bears his name.

"To make this transition is not something you can do overnight," Bajarin said. "One of the things you need is time. And one of the things that Wall Street is not good at is giving you time."

andrea.chang@latimes.com

chris.obrien@latimes.com

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California high court backs online retailers in privacy battle

Internet retailers of music and other downloadable products may seek personal identifying information from consumers that ordinary stores in California are barred from asking for, the California Supreme Court ruled Monday.

By a 4-3 vote, the state high court said Apple Inc., which sells music on its iTunes site, and similar retailers were not covered by a chttps://content.p2p.tribuneinteractive.com/content_items/edit/74291262onsumer law that prevents California businesses from collecting personal information from credit card users.

"While it is clear that the Legislature enacted the Credit Card Act to protect consumer privacy, it is also clear that the Legislature did not intend to achieve privacy protection without regard to exposing consumers and retailers to undue risk of fraud," Justice Goodwin Liu wrote for the majority.

The Credit Card Act prevents California retailers from recording any personal identifying information as a condition of accepting a credit card. In exempting Apple and similar online businesses from the law, the court said Internet retailers do not have the same safeguards against fraud as traditional stores.

"Unlike a brick-and-mortar retailer, an online retailer cannot visually inspect the credit card, the signature on the back of the card or the customer's photo identification," Liu wrote.

The ruling stemmed from a lawsuit, intended as a class action, by an Apple customer who was asked to provide his address and telephone number before buying items for download. A trial judge, noting the law did not specifically exempt Internet retailers, ruled for the customer, and a state appeals court declined to hear an appeal.

In overturning the lower-court decision, the state Supreme Court majority noted that the consumer privacy law was first enacted in 1990, nearly a decade before online shopping became widespread. The Legislature amended the law in 2011 to allow gas stations to require ZIP Codes when credit cards were used at the pump.

"It seems counterintuitive to posit that the Legislature created a fraud prevention exemption only for pay-at-the-pump retailers while leaving online retailers unprotected, when online retailers — a multibillion-dollar industry by the year 2011 — have at least as much if not more need for an exemption to protect themselves and consumers from fraud," Liu wrote.

Justice Joyce L. Kennard contended in a dissent that the decision would leave "Internet retailers free to demand personal identification information from their credit-card-using customers and to resell that information to others."

"The majority's decision is a major win for these sellers, but a major loss for consumers, who in their online activities already face an ever-increasing encroachment upon their privacy," Kennard wrote.

She said the state privacy law applies to purchases made over a telephone and likened them to transactions made on the Internet. Telephone retailers, like those selling downloadable products on the Internet, may not ask for a consumer's personal information even if the product is a gift being sent to a third party, she wrote.

Justice Marvin R. Baxter, also dissenting, complained the majority relied "on speculation and debatable factually assumptions to wholly strip online credit car users" of an important consumer protection.

The attorney for Apple in the case and a company spokeswoman declined to comment. An attorney for the consumer could not be reached.

maura.dolan@latimes.com

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Love, money and the online dating industry

At the heart of the new book "Love in the Time of Algorithms" is a philosophical question: does the billion-dollar dating industry, whose currency is the perpetual promise of new relationships, signal the death of commitment?

It is the question posed to Sam Yagan, chief executive of free dating website OkCupid, by the book's author, Dan Slater. "That's really a point about market liquidity," replies Yagan, a graduate of Harvard University and Stanford Business School, and a self-confessed "math guy" who says he knows nothing about dating.

Justin Parfitt, a British dating entrepreneur, answers the question more bluntly. The industry is thinking: Let's keep this customer coming back to the site as often as we can, he said, "and let's not worry about whether he's successful. There's this massive tension between what would actually work for you, the user, and what works for us, the shareholders. It's amazing, when you think about it. In what other industry is a happy customer bad for business?"

These responses represent the dissonance between the romantic ideal of love held by many customers and the approach of the entrepreneurial nerds who set up the match­making sites. The disparity is well drawn in this lively book by Slater, a former legal affairs reporter for the Wall Street Journal, who had racked up quite a few of his own cyber dates by age 31, following the demise of a long-term relationship.

A book on the dating industry would be soulless without tales of the customers — the cyber daters. Published by Current, "Love in the Time of Algorithms: What Technology Does to Meeting and Mating" is strewn with stories of blossoming romances, bed-hoppers and borderline sociopaths.

There is Carrie, a single mom in New York, who clicks the box for "full figured," saying that while she is bigger than Kim Kardashian, she is not as big as "big and beautiful." (In the search for love, these things matter.) After several false starts with men who find the "kid thing" a sticking point, Carrie meets her match in a Puerto Rican computer technician who's an atheist.

There is also Jacob in Oregon, who knows he can afford to take things slow with the pharmacist because he can always have sex with another online date. Or, as he likes to think of it: "There's always a pepperoni pizza in the trunk."

The writer delves into his own personal history — his parents met in the 1960s through a pioneering computer dating service. His father's comments, that "these days they're all over the Internet. I think they're mostly for desperate people, though," indicate the stigma that has dogged the industry.

Slater's account of the history of the cyber dating industry — from huge clunky old computers to modern complex computer algorithms — is well detailed. And he brings out the fierce rivalry between free and paid-for sites and the new possibilities for finding a date across the street using smartphones and innovative "freemium" sites.

The stated aim of this book is how online dating is "remaking the landscape of modern relationships," which is an ambitious goal for 240 pages. The sweep is huge: Nigerian scammers preying on the lonely; paunchy middle-aged men trafficking poor young South American and Russian women; math geeks competing for a share of the love market; and adult babies seeking matronly diaper-changers.

The author also brandishes so many ideas — a bit of behavioral economics here, a bit of biological determinism there — that it is hard to focus when so much is competing for the reader's attention. It is a dizzying attempt to demonstrate the author's mastery of the zeitgeist.

In the final chapter, Slater writes that he has tried to avoid "passing judgment on all the many behaviors, new and old, facilitated by the date-o-sphere". Yet this well-reported romp through the digital love marketplace would have benefited from a slightly more domineering author.

Emma Jacobs is a columnist for the Financial Times of London, in which this review first appeared.

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Deering Banjo in a groove

It all started with the Kingston Trio.

One day in 1963, a San Diego kid and his friends got their hands on an album by the popular folk group. Greg Deering, 12 at the time, recalls studying the musicians on the cover and thinking, "I've got to get a banjo" — not out of love for the twangy instrument but mainly because his pal already had a guitar.

Fifty years later, Greg, his wife, Janet, and daughter Jamie preside over the bestselling banjo-making business in the U.S.

From a small Spring Valley factory, the Deering Banjo Co. is having its best year ever, defying the U.S. skills gap and California's manufacturing doldrums. It has expanded and trained its own workforce and expects to top $4 million in sales for the year ending June 30.

Greg Deering, 62, is the creative force behind the banjo design and the machinery used to build them. Janet Deering, 58, handles operations. Daughter Jamie Deering, 34, might have the most fun job: liaison with the company's big-name roster of professional musician customers.

Over the company's 38-year history, it has developed a loyal following from the likes of Taylor Swift, Keith Urban, the Dixie Chicks, Steve Martin and Mumford & Sons. Artists who play Deering banjos rolled up 13 Grammy nominations this year.

Two of Deering's fans illustrate how the company has managed to ride the banjo's renaissance as an instrument that crosses several musical genres as varied as country, reggae and indie rock.

"It's great working with a family company, an American company that really cares about the artist and making top-quality banjos," said Jeff DaRosa, singer, bassist and banjo player for the Dropkick Murphys, the Boston-based Celtic punk band.

Scotty Morris, lead vocalist of the contemporary swing revival band Big Bad Voodoo Daddy, called Deering Banjo "the quintessential American instrument builder."

"When I call Deering, I talk to a Deering, and I like that almost as much as I love the instruments they build," Morris said.

That kind of reputation combined with specially crafted manufacturing tools and a skilled, veteran workforce has helped the company weather the recession and cheap competition from China. Deering has been able to expand its workforce in a way that other companies have not, growing to 42 workers from 30 a year ago.

Although the nation as a whole has been adding manufacturing jobs, all California has done is reduce the rate of decline, said John Husing, principal of Redlands-based Economics and Politics Inc.

The most recent statistics available show that California ended 2012 with 1.23 million manufacturing jobs, down sharply from nearly 1.9 million in 2000 and marginally below the nearly 1.24 million in December 2011.

If you ask the Deerings what their greatest challenge has been, the answer has been running the business in California, particularly during a run-up in workers' compensation insurance premiums that began under Gov. Gray Davis.

"That nearly put us out of business. We're still paying off some of those debts," Greg Deering said, adding that the company has remained in California mostly because the family considers it home.

"And because we are stubborn. We are so stubborn," Janet Deering said.

Greg Deering credits his father, who worked in the Southern California aerospace industry, for developing his eye for design.

"He started me out on model airplanes when I was 2," Deering said. "He turned me loose on my own, making models when I was 5. At age 7, he bought me my first set of drafting tools."

But it wasn't until he was a student at San Diego State that he realized just what his father had done for him. There was an assignment to cut a board of certain dimensions from a rough block of wood. He was done with the assignment quickly and began working on a banjo. Weeks later, he realized the other students were still working on the block of wood.

"That was when it clicked for me," he said, later adding, "my father was a very intense mentor for me. He was teaching me how to be a craftsman."

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Dow Jones index closes above 14,000

Americans are doing something they haven't done in years — they're buying stocks.

Individual investors are pouring money into the stock market this year. They've been drawn by the powerful rally in share prices and are desperate for better returns than the minuscule yields available from bonds and bank accounts.

This renewed enthusiasm helped the Dow Jones industrial average achieve a milestone Friday, surging above 14,000 points for the first time since the financial crisis struck.

The world's best-known stock index has more than doubled from its crisis-era low and is nearing an even more impressive mark — a new all-time high. After closing at 14,009.79 points on Friday, the Dow is less than 155 points from its October 2007 peak.

"We've come a long way," said Seth Masters, chief investment officer at Bernstein Wealth Management Group in New York. "There was a great financial crisis five years ago and there was a lot of repair that had to happen in the corporate world and for consumers."

The surge in the Dow is part of a broader rebound in stock markets around the world, many of which are up 6% or more this year.

The rally is a measure of the recovery from the debilitating financial crisis that lashed the economy. And the improved optimism among investors stands in sharp contrast to the anxiety that pervaded financial centers and world capitals during the crisis.

Investors at the time feared a cataclysmic meltdown after the historic collapse of Lehman Bros. and the seizing up of capital markets throughout the world. The Federal Reserve took a series of emergency measures, including dramatically lowering interest rates and introducing unprecedented stimulus programs to revive growth.

Now investors are hoping that the gruelingly slow convalescence in the U.S. economy and job market will quicken as the year progresses.

"Investors are perceiving that the economy is doing better — that the worst days are behind us," said Paul Zemsky, chief investment officer of multi-asset strategies at ING Investment Management in New York.

On Friday, the Labor Department reported that the U.S. economy added 157,000 jobs in January. The report pushed stocks higher, sending the Dow up nearly 150 points.

That was fewer jobs than economists predicted, but the report also showed that employment growth was faster than thought in 2012, with 127,000 more jobs added in November and December than the government's previous estimates.

Small investors' renewed interest in stocks has been driven by their search for an alternative to the maddeningly low interest rates on fixed-income investments.

Joe Mills had long invested in stock mutual funds in his 401(k) retirement account. But he was earning next to nothing in a money-market mutual fund, so he bought his very first stock in August 2011.

He now has stakes in four companies, including Apple Inc. and Procter & Gamble.

"I feel like the risk of having zero return [in bonds] over the next 20 years is greater than the risk of selecting some stocks," said Mills, a 44-year-old structural engineer from Beckley, W.Va.

The rush into stocks is a mixed blessing, experts say.

Stocks have offered the best returns historically, and aging baby boomers deeply behind in retirement savings need all the help they can get.

But their renewed interest underscores how many people missed the rally for fear of getting scorched by another bear market.

"People by and large over the last five or six years have been deeply seared by the experience of 2008 and the ups and downs in stocks since then," said Masters of Bernstein Wealth Management. "There has actually been a bull market since March 2009, but they really don't feel at all like they've been in a bull market."

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Are razor blade makers just ensuring a big cut?

We can put men on the moon. We can make computers small enough to carry around in our pockets. But we can't make a razor blade that stays sharp longer than a week?

It sounds trivial. But the utter lack of progress on the razor front raises fundamental questions about America's industrial might.

Has the sun set on the age of innovation in this country? Is it possible that American ingenuity has met its match in a relatively modest personal-hygiene product used by millions of consumers?

Or are the likes of Gillette and Schick, which account for about 90% of the replacement-blade market, conspiring to keep razor advances off the shelf to deliberately fleece customers and maintain multibillion-dollar revenue streams?

Either way you look at it, it's not a terribly flattering portrayal of U.S. business.

The global market for all shaving products is forecast to top $33 billion by 2015, according to Global Industry Analysts, a market researcher.

Procter & Gamble's Gillette, the market leader, estimates that about two-thirds of American guys age 15 and older shave with a razor, representing a U.S. market for razors and blades worth more than $2.4 billion a year. Worldwide, that market is more than $14 billion.

Schick says most men shave at least three times a week. Razor-Gator.com, a shaving-related website, figures that a man devotes roughly 3,300 hours of his life to shaving.

With those numbers in mind, you'd think teams of engineers would be busy improving the ways and means of a good shave. For example, water causes corrosion on blades, which contributes to making them dull. Isn't there an alloy, or a coating, to address that?

Moore's Law famously predicted that computer chips will double in processing power every couple of years or so. The result has been breakneck advances in the technology field. The first iPhone was introduced just six years ago, for instance, and we're already up to the iPhone 5.

Oh sure, Gillette and Schick keep adding more features. Gillette says its battery-operated Fusion ProGlide razor "delivers soothing micropulses." Schick says its Hydro Power Select boasts "three vibration settings, easy-to-read indicators and a one-touch control button, allowing men to interact with their razor in a new way."

Micropulses, vibration settings — this they can do. But they can't come up with a blade that stays sharp more than a few days?

"Sure they can," said Jeff Grant, president of Coating Services Group, a Lakeside company that makes scalpels for medical use and thus knows a thing or two about sharp edges. "They could make a ceramic blade that maybe costs $100 and lasts for years."

Well, that sounds good. An eight-pack of Gillette Mach3 Turbo shaving cartridges — one of the more popular razors — runs $24 at Walgreens. If you figure on changing the cartridge once a week, that would mean spending $156 each year on razor blades.

So, yeah, I'd spend $100 for a blade that lasts for two, three or more years.

And that, Grant told me, is exactly why we'll never be offered such a chance by Gillette or Schick.

"They'd sell you one blade and they'd be done," he said. "It's a business decision."

Susan Baba, a Gillette spokeswoman, told me she hadn't heard about any research into ceramic razor blades. But she said the company is dedicated to "figuring out the next stage of razors."

As for the longevity of current blades, Baba said you can't generalize. Some people make a blade last a few days, others can go months without changing cartridges.

"It all depends on the length of your hair, how often you shave, how many strokes you use," Baba said.

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Avery Dennison to sell business units for $500 million

Avery Dennison Corp. has agreed to sell two of its businesses for $500 million in cash to CCL Industries Inc., a Canadian maker of specialty packaging, the Pasadena company said.

The proposed sale announced Wednesday comes three months after Minnesota-based 3M abandoned its plans to purchase Avery Dennison's office and consumer products unit. The U.S. Department of Justice had opposed that deal because of antitrust concerns.

Now, Toronto-based CCL has agreed to acquire the unit, which had sales of $730 million in 2012. The division's products include Hi-Liters and Marks-A-Lot markers as well as binders. CCL also agreed to acquire Avery's designed and engineered solutions division, which makes pressure-sensitive labels for packaging and posted 2012 sales of $180 million.

"CCL is one of our largest customers, and we have a long-standing relationship with them," said Avery Dennison Chief Executive Dean A. Scarborough. "We are pleased that they will become the steward of the Avery brand for office products."

Quiz: How much do you know about California's economy?

The transaction, expected to close this year if approved by regulators, would be CCL's largest acquisition.

"This acquisition has the potential to transform our company at many levels," said Geoffrey Martin, chief executive of CCL.

Avery Dennison on Wednesday also reported fourth-quarter net income of $49 million, or 48 cents a share, up from $22.2 million, or 21 cents, a year earlier. Excluding certain items, earnings were 54 cents a share compared with the 48 cents expected by analysts. Sales rose 5.3% to $1.53 billion.

Avery Dennison shares rose $2.30, or 6.4%, to $38.44.

ricardo.lopez2@latimes.com

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Amazon.com sales jump 22% but profit drops 45% in fourth quarter

Amazon.com Inc. saw big sales during the holiday season, reporting Tuesday that fourth-quarter revenue rose 22% to $21.27 billion from a year earlier.

But the Internet retail giant's sales and earnings missed Wall Street's estimates. Profit for the three months that ended Dec. 31 declined 45% to $97 million, or 21 cents a share, compared with $177 million, or 38 cents, in the same quarter of 2011.

Analysts had expected the e-commerce company to post revenue of $22.26 billion and earnings of 27 cents a share.

Nonetheless, Amazon's stock surged in after-hours trading, rising more than 9% on signs the company's operating margins were improving. During regular trading before earnings were released, shares closed down $15.69, or 5.7%, at $260.35.

Operating income was a highlight of the company's quarterly results, increasing 56% to $405 million in the fourth quarter, compared with $260 million a year earlier.

For the current quarter, Amazon expects sales of $15 billion to $16.6 billion, a 14% to 26% growth from the first quarter of 2012.

It was a good Christmas for Amazon's Kindle family. The company said that for the second year in a row, its tablet was the most popular item for customers, with the Kindle Fire HD the "No. 1 bestselling, most gifted and most wished-for product" across the company's merchandise lineup.

"At year-end, Kindle Fire HD, Kindle Fire, Kindle Paperwhite and Kindle held the top four spots on the Amazon worldwide bestseller charts since launch," the company said.

As is typical for Amazon, it did not break out sales figures for its tablets and e-readers.

Jeff Bezos, founder and chief executive of Amazon, said the company had seen huge growth in its electronic book business as consumers shift to digital texts.

"We're now seeing the transition we've been expecting," he said in a statement. "After five years, eBooks is a multibillion-dollar category for us and growing fast — up approximately 70% last year. In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5%. We're excited and very grateful to our customers for their response to Kindle."

Amazon also said its digital media selection grew to more 23 million movies, TV shows, songs, magazines, books, audio books, apps and games in 2012, an increase from 19 million at the end of 2011.

andrea.chang@latimes.com

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Housing advocates push for new type of subprime loan

With home prices rising, interest rates falling and builders building, some prominent housing advocates are calling for a new kind of loan for buyers with lower incomes or bad credit.

They'd like to call it the Dignity Mortgage, but it has another name — one that's become more of an epithet since the housing crash: subprime.

Applicants might include people caught in the early stages of the mortgage meltdown who have since rebuilt their finances, said Faith Bautista, who heads the National Asian American Coalition.

"They lost their work, their homes and their credit scores four or five years ago," Bautista said.

Since then, she said, many have found new jobs and saved up enough for a 10% down payment. But they can't get a loan because lending standards remain tight — even for the Federal Housing Administration mortgages designed to help lower-income borrowers, Bautista said.

Quiz: How much do you know about mortgages?

The proposal starts with the classic subprime trade-off: a higher rate for a higher-risk clientele. Borrowers would pay 1.25 percentage points above the going interest rate, maybe 4.75% if more creditworthy borrowers were paying 3.5%.

But the deal would get better if borrowers made timely payments for five years. At that point, the extra money they had paid in interest would be used to reduce the mortgage balance, and their rate would be cut to whatever borrowers with sterling credit and 20% down payments were charged at the time the loan was made.

Pattie Sibug of San Diego is among those who got caught short by the housing crash. By early 2010, the property improvement company she and her husband had owned for a dozen years had already seen its business fall off. Then a stream of work repairing foreclosed homes for a big bank dried up.

BID Construction wound up owing suppliers about $60,000 it could never fully repay, which ultimately ruined the couple's personal and business credit scores. "It was 585 the last time I checked," Sibug said of her score.

Sibug and her husband, Ollie, would like to buy the Scripps Ranch town house they are renting for $1,750 a month, and could come up with a 10% down payment. But they had to decline the owner's recent offer to sell because they knew they couldn't get financing.

"There's got to be some kind of program to help you reestablish yourself," Sibug said. "I'd be the first person in line if there was."

Situations like hers are why Bautista and other activists have been talking to bankers and regulators, proposing the new type of loan. Those activists include Bob Gnaizda, a longtime minority rights attorney who co-founded Berkeley's Greenlining Institute, and financial literacy activist John Bryant, whose Operation Hope — founded in South Los Angeles after the 1992 riots — now operates nationally and in South Africa and Haiti.

The proposal comes as home lenders remain besieged by demands that they pay billions of dollars in damages for defaulted housing-boom loans. Regulators have required banks to increase reserves against losses.

And the lenders also are evaluating new mortgage rules from the Consumer Financial Protection Bureau, which they say will determine how freely they can lend.

In reaction, many banks have imposed higher standards for writing new home loans than those required by the FHA or by Freddie Mac and Fannie Mae, the finance outfits that have kept the mortgage market afloat since the financial crisis — thanks to $137 billion in taxpayer assistance.

Edward J. Pinto, a former Fannie Mae chief credit officer who argues that lax FHA lending helped feed the foreclosure crisis in low-income neighborhoods, said the Dignity Mortgage proposal "is a stupid and crazy idea — a poison pill."

"Haven't we learned anything from the cratering of our housing finance market?" said Pinto, a resident fellow at the American Enterprise Institute, a free-market think tank.

Bank officials continue their soul-searching over the mortgage misdeeds of the past and the prospects of the business.

"By being overly aggressive, the entire housing system caused a great deal of damage to the very people we were trying to help attain homeownership," said Brian T. Moynihan, chief executive of Bank of America Corp.

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Rules to simplifying life come up short

Los Angeles-area author Matthew E. May has hit upon an attractive theme in his recent book, "The Law of Subtraction: 6 Simple Rules for Winning in the Age of Excess Everything" published by McGraw-Hill.

Who does not yearn for a guide to simplifying, synthesizing and subtracting some of the clutter, overload and demands of the "Age of Excess Everything"?

He has also cleverly subtracted from his own workload by inviting others, mostly authors and consultants like him, to contribute about a third of the material for his six laws for doing more with less in the form of summaries of their views.

Mind you, it took fellow author Daniel Pink to point out the appeal of the subject. "Subtraction is your meme. It's out there; it's growing," he told May just before he took the stage at a corporate conference, urging him to "own" it. "Best. Advice. Ever," writes May.

This exchange is itself a little guide to what the book is like. Not only is it full of people talking in a slightly artificial, visionary way about common sense objectives, it is also filled with contradictions. "Subtraction is growing" is only the first.

The book does contain good examples of the less-is-more theme, some well-known, some less so. May's opener (illustrating Law No. 1: "What isn't there can often trump what is") is the FedEx logo, featuring an arrow created by the blank space between the E and X. Lindon Leader, its designer, explains how he "didn't overplay it, didn't mention it" when pitching the idea. (He makes up for that here.)

May, who lives in Westlake Village, also provides a brief history of how Lockheed Corp. put a team of design engineers in a circus tent next to a foul-smelling plastics factory to design a jet fighter: the secret Skunk Works became a byword for how to foster innovation. (Law No. 5: "Break is the important part of breakthrough.")

He cites J.K. Rowling, who was inspired for the idea for Harry Potter on a long, boring train journey, in support of Law No. 6. ("Doing something isn't always better than doing nothing.").

My favorite came from contributor Bob Harrison, a retired police chief, who introduced an "unplan" to withdraw officers directing traffic after a July 4 fireworks display and discovered everyone got home more quickly. (Law No. 2: "The simplest rules create the most effective experience.")

But I find every subtractive success story has an additive counterweight, some of which are explicit in May's examples.

It is true that "creativity thrives under intelligent constraints" (Law No. 4), but Michelangelo — ordered to work on a fresco for the Sistine Chapel, not a sculpture, his preferred medium — then "expanded the job's scope," covering the walls as well as the ceiling.

Steve Jobs was a great simplifier, who "handed control to us" as users of Apple devices. But he was also a control freak when it came to designing the same artifacts, supervising fine detail, adding features and forcing his team to work all hours, rather than giving them time for "purposeful daydreaming," as May advocates elsewhere in his book.

"The Artist," the silent, black-and-white film that provides May with the book's coda, was a worthy Oscar winner — but so was 2008's "Slumdog Millionaire," with its cast of thousands and Bollywood-style excess.

May does not avoid these contradictions, but he does not really address them, either. He prefers to list examples of his six laws rather than explore how employers or their staff could reconcile the daily conflict between constraints and freedom, perspiration and inspiration.

In the interests of "owning" his Zen-inspired meme, May subtracts these complexities. Instead he offers tips, such as his invitation to take "long, languid showers" — No. 8 on a list of ways to relax the mind. This point "needs no explanation," May writes, "which is good, because I could find no research on the subject."

For most people at most companies, where the pressure to add customers, revenue and value is intense, it is as difficult to "subtract" as it is for most grown-ups to follow the advice of one of the book's contributors and live out of a suitcase in a near-empty apartment.

It is a pity, given the need to simplify many business processes, that May adds so little to the sum of knowledge about how to do it.

Hill is the management editor of the Financial Times of London, in which this review first appeared.

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Hackers take over sentencing commission website

The hacker-activist group Anonymous says it hijacked the website of the U.S. Sentencing Commission to avenge the death of Aaron Swartz, an Internet activist who committed suicide. The FBI is investigating.

The website of the commission, an independent agency of the judicial branch, was taken over early Saturday and replaced with a message warning that when Swartz killed himself two weeks ago “a line was crossed.”

The hackers say they've infiltrated several government computer systems and copied secret information that they now threaten to make public.

Family and friends of Swartz, who helped create Reddit and RSS, say he killed himself after he was hounded by federal prosecutors. Officials say he helped post millions of court documents for free online and that he illegally downloaded millions of academic articles from an online clearinghouse.

The FBI's Richard McFeely, executive assistant director of the Criminal, Cyber, Response, and Services Branch, said in a statement that “we were aware as soon as it happened and are handling it as a criminal investigation. We are always concerned when someone illegally accesses another person's or government agency's network.”

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Sandy and drought propel U.S. insurance losses

The U.S. share of insurance losses from worldwide catastrophes more than doubled in 2012 as Superstorm Sandy lashed the Northeast and the nation suffered its worst drought since the 1930s.

The U.S. accounted for about 90%, or $65 billion, of $72 billion in global losses, according to the Impact Forecasting unit of Aon, the London insurance broker.

That compares with 40% in 2011, when Japan had higher-than-usual costs because of an earthquake and tsunami.

The location and climate of the U.S. make the country more vulnerable than most developed nations to hurricanes, tornadoes, wildfires and drought. U.S. commercial buildings and homes are more likely to have coverage than property in less wealthy nations facing storm risk, such as Nicaragua and Haiti.

"The United States has typically been the main driver of global loss," said Steve Bowen, senior scientist and meteorologist at Impact Forecasting. Bowen said the U.S. typically accounts for about 64% of global insured losses.

The last time the U.S. incurred more than 90% of losses was in 2005, when the country was pummeled by hurricanes including Katrina, Rita and Wilma, he said.

Sandy cost insurers about $28.2 billion, compared with $78.2 billion for Katrina when adjusted to 2012 dollars, Impact said. Additionally, crop insurance claims climbed to a record, with farmers collecting more than $11.5 billion for damage in 2012, according to a Risk Management Agency report published on the U.S. Department of Agriculture website.

Travelers Cos., the lone insurer in the Dow Jones industrial average, said this week that fourth-quarter profit fell 51% on claims from Sandy.

The KBW Insurance Index of 24 U.S.-listed companies gained 16% in the past 12 months, compared with the 20% rally in the 75-company Bloomberg World Insurance Index.

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Lawmaker questions Disney's plan for wristband data

A congressman from Massachusetts raised questions Thursday about how Walt Disney Co. will use information it collects when it gives parkgoers new wristbands embedded with computer chips.

Edward J. Markey (D-Mass), who co-chairs a congressional panel on privacy, asked Walt Disney Co. Chairman and Chief Executive Robert A. Iger in a letter what information the park will collect with the so-called MagicBand and how it will be used.

"Widespread use of MagicBand bracelets by park guests could dramatically increase the personal data Disney can collect about its guests," he said, adding that he is particularly concerned at the prospects of Disney collecting information about children.

Disney announced recently that it plans to unveil this spring at Walt Disney World in Florida a wristband embedded with radio frequency identification chips. A unique code in each chip lets parkgoers pay to enter the park, check into Disney hotels and buy food and souvenirs, among other things.

Disney officials promoted the wristbands as a way to make visiting the park easier. The wristbands will let Disney use the data to customize future offerings and marketing pitches.

Disney officials say they have no plans yet to introduce the wristbands at Disneyland or Disney California Adventure Park in Anaheim.

In a three-page letter, Markey said he is "deeply concerned that Disney's proposal could potentially have a harmful impact on our children." He asked whether parkgoers will have a chance to opt out of sharing their information and, if not, whether Disney will share the data with other companies.

A spokesman for Markey said his office had not received a response from Disney on Thursday, but in a statement to The Times, the company said participation in the wristband program was optional.

"In addition, guests control whether their personal information is used for promotional purposes, and no data collected is ever used to market to children," the statement said.

If parkgoers agree to release such information it can be used for marketing, Disney officials confirmed.

hugo.martin@latimes.com

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'Gozi' computer virus hit bank accounts, officials say; 3 charged

NEW YORK — Federal prosecutors said they had foiled an international cyber-crime ring that targeted bank accounts in the U.S. and around the globe.

The criminal charges, disclosed Wednesday, highlight the vulnerabilities of online consumer banking, which has become more popular in the digital age. It also comes just months after most every major U.S. bank suffered a relentless round of online attacks by Middle Eastern hackers.

In the case unveiled Wednesday, three men — a Russian, a Latvian and a Romanian — allegedly created and spread a virus they called "Gozi" that infected more than 1 million computers around the globe, including at least 40,000 in the United States.

The virus and other malicious software infected individuals' and businesses' computers, and then stole log-in information for online banking and other accounts. One program even imitated a bank's website, tricking users into giving away their PINs and personal information, such as their mothers' maiden names.

"Their bank heists required neither a mask nor a gun, but a clever computer program and an Internet connection," Preet Bharara, the U.S. attorney in Manhattan, told reporters Wednesday.

Referencing a quotation often attributed to the notorious bank robber Willie Sutton, Bharara said, "Cyber criminals target banks too because that's where the money still is."

Although the Gozi virus' reach spanned the globe — infecting computers in Turkey, Poland and Finland, among other countries — Bharara could not say how many U.S. customers' accounts had been breached. Nor could he say how much was stolen from the accounts, aside from alleging "tens of millions" of dollars in losses globally. He said the investigation was continuing.

NASA also fell victim to the virus. About 190 of the space agency's computers came down with the bug between 2007 and 2012, according to court documents. Extracted data allegedly included log-in information for a NASA email account, Web browsing histories and Google chat messages.

Gozi's mastermind was Nikita Kuzmin, a Russian programmer who created the virus in 2005, authorities said. The virus infiltrated computers through spam email or seemingly innocuous .pdf document files.

Prosecutors said Deniss Calovskis, a Latvian who went by the nickname Miami, allegedly helped develop "Web injects," such as the phony bank site. Mihai Paunescu, a Romanian known by his online handle Virus, ran what authorities said was essentially an online bazaar for cyber criminals who bought or leased the virus and helped spread it around the world.

Kuzmin was earlier arrested while in the U.S. and has pleaded guilty. He has been cooperating with authorities, Bharara said. Kuzmin's attorney, David Gordon of New York, did not respond to a phone message Wednesday.

Calovskis was arrested in Latvia in December; Paunescu was arrested in Romania in November. Both have been indicted and are awaiting extradition to the U.S.

Bharara, who in interviews and speeches has been increasingly sounding the alarm over cyber threats, said his office would bring similar cases later this year.

"This case should serve as a wake-up call to banks and consumers alike, because cyber crime remains one of the greatest threats we face, and it is not going away any time soon," Bharara said. "It threatens our financial security and our national security."

The alleged scheme is separate from an onslaught of cyber attacks last year against U.S. banking websites that were believed to have been orchestrated by a hacking group based in the Middle East. Those were "distributed denial of service" attacks, which aim to shut down websites. Banks such as Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. were victims of the attacks. Although the banks said the attacks did not breach customer accounts, they found their customer-facing websites slowed or briefly crippled.

Marcus Asner, a former federal prosecutor now at the New York law firm Arnold & Porter, said the alleged Gozi ring showed "astonishing sophistication" and highlighted an emerging high-tech challenge for law enforcement and the banking industry.

"It's hard to say who is ahead in the game," Asner said. "It's much more of a Wild West still."

andrew.tangel@latimes.com

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Super Bowl spots and Web ads aid surge in L.A. commercial shoots

At the Apache Stages in North Hollywood this month, the Wonderful Pistachios brand filmed South Korean pop star Psy shooting its first Super Bowl commercial, with a riff on Psy's massive "Gangnam Style" YouTube video.

The ad was part of Wonderful Pistachios' "Get Crackin" campaign, which has also featured boxer Manny Pacquiao, rapper Snoop Dogg and other celebrities in various nutty commercials — all of them filmed in Los Angeles.

The flurry of high-profile Super Bowl spots in recent months, along with the proliferation of Web-based commercials, is helping power a surge in commercial shoots in Los Angeles, where the industry is concentrated.

PHOTOS: Hollywood Backlot moments

On-location filming for commercial production reached the highest level on record last year, climbing 25% in the fourth quarter and 14% for the year, according to a recent report from FilmL.A. Inc., the nonprofit group that handles film permits for the city and the county.

In fact, the commercial sector was the single fastest-growing major production category in a year that saw a historic falloff in TV drama production because of competition from other states and Canada.

Brands as varied as Purina, Chevy and Tide are shelling out more money on ad campaigns to promote their products.

That may signal an overall improvement in the economy.

"Commercial production is a really good indicator of where things are going," said Paul Audley, president of FilmL.A. "We're seeing more confidence in the advertising world and the corporate world that things are looking up."

Audley also noted the growth in the number of locally produced Web-based commercials, which accounted for about 8% of all commercial production days in L.A. in 2012, up from just 2% in 2008.

TIMELINE: Best Super Bowl commercials

The increased activity has been a boon to local advertising agencies and producers who are reporting some of their strongest business levels in years.

"With the economy turning around, production has just exploded," said Mike Sheldon, chief executive of ad agency Deutsch LA, adding that his company's revenue climbed 20% last year from a year earlier.

Deutsch this month created locally produced Super Bowl commercials for Volkswagen and a 60-second "Viva Young" spot for Taco Bell, which features a group of retirees acting like teenagers. The ad was shot at various locations in L.A., including Circus Disco in Hollywood and a retirement home in Santa Monica.

The Super Bowl traditionally is a big driver of commercial production in the fourth quarter. As the Los Angeles Times reported Tuesday, advertisers are spending record sums for 30-second spots, which have sold for an average of $3.8 million, up 7% from last year. Some are spending more than $7.5 million to run 60-second commercials during the Feb. 3 NFL championship.

"It was probably our busiest year ever for making television commercials," said Frank Scherma, president of Radical Media, which has offices in New York and Los Angeles and has produced spots for Honda, Chevrolet and Jack in the Box. That partly reflects the improved fortunes of automakers and the spread of Web commercials, he said. "There are so many screens now to reach people.... There is so much content that needs to be made across the board."

SPECIAL SECTION: Movie Sneaks 2013

Camille Taylor, president and owner of Crossroads Films, has been busy filming commercials in L.A. for clients including Purina and Tide, and has one coming up for Head & Shoulders. Some work may be flowing back to L.A. because some popular foreign locales such as Cape Town, South Africa and Buenos Aires in Argentina are becoming more expensive to film in.

"Globally, everyone caught on to the fact that they can charge more, so the savings that were once there have been somewhat compromised," Taylor said.

Indeed, L.A. remains the biggest center for commercial production, accounting for 49% of all commercial shoot days by U.S. companies in 2011, down from 54% in 2007, according to a report by the Assn. of Independent Commercial Producers, which has 151 members in the L.A. region.

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