DealBook: Buffett’s Annual Letter Plays Up Newspapers’ Value

Over the last half-century, Warren E. Buffett has built a reputation as a contrarian investor, betting against the crowd to amass a fortune estimated at $54 billion.

Mr. Buffett underscored that contrarian instinct in his annual letter to shareholders published on Friday. In a year when Mr. Buffett did not make any large acquisitions, he bought dozens of newspapers, a business others have shunned. His company, Berkshire Hathaway, has bought 28 dailies in the last 15 months.

“There is no substitute for a local newspaper that is doing its job,” he wrote.

Those purchases, which cost Mr. Buffett a total of $344 million, are relatively minor deals for Berkshire, and just a small part of the giant conglomerate. Mr. Buffett bemoaned his inability to do a major deal in 2012. “I pursued a couple of elephants, but came up empty-handed,” he said. “Our luck, however, changed earlier this year.”

Mr. Buffett was making a reference to one of his largest-ever deals. Last month, Berkshire, along with a Brazilian investment group, announced a $23.6 billion takeover,of the ketchup maker H. J. Heinz.

Written in accessible prose largely free of financial jargon, Berkshire’s annual letter holds appeal far beyond Wall Street. This year’s dispatch contained plenty of Mr. Buffett’s folksy observations about investing and business that his devotees relish.

“More than 50 years ago, Charlie told me that it was far better to buy a wonderful business at a fair price than to buy a fair business at a wonderful price,” Mr. Buffett wrote, referring to his longtime partner at Berkshire, Charlie Munger.

Mr. Buffett also struck a patriotic tone, directly appealing to his fellow chief executives “that opportunities abound in America.” He noted that the United States gross domestic product, on an inflation-adjusted basis, had more than quadrupled over the last six decades.

“Throughout that period, every tomorrow has been uncertain,” he wrote. “America’s destiny, however, has always been clear: ever-increasing abundance.”

The letter provides more than entertainment value and patriotic stirrings, delivering to Berkshire shareholders an update on the company’s vast collection of businesses. With a market capitalization of $250 billion, Berkshire ranks among the largest companies in the United States.

Its holdings vary, with big companies like the railroad operator Burlington Northern Santa Fe and the electric utility MidAmerican Energy, and smaller ones like the running-shoe outfit Brooks Sports and the chocolatier See’s Candies. All told, Berkshire employs about 288,000 people.

The letter, once again, did not answer a question that has vexed Berkshire shareholders and Buffett-ologists: Who will succeed Mr. Buffett, who is 82, as chief executive?

Last year, he acknowledged that he had chosen a successor, but he did not name the candidate.

He has said that upon his death, Berkshire will split his job in three, naming a chief executive, a nonexecutive chairman and several investment managers of its publicly traded holdings.

In 2010, he said that his son, Howard Buffett, would succeed him as nonexecutive chairman.

Berkshire’s share price recently traded at a record high, surpassing its prefinancial crisis peak reached in 2007 and rising about 22 percent over the last year.

The company reported net income last year of about $14.8 billion, up about 45 percent from 2011. Yet the company’s book value, or net worth — Mr. Buffett’s preferred performance measure — lagged the broader stock market, increasing 14.4 percent, compared with the market’s 16 percent return.

Mr. Buffett lamented that 2012 was only the ninth time in 48 years that Berkshire’s book value increase was less than the gain of the Standard & Poor’s 500-stock index. But he pointed out that in eight of those nine years, the S.& P. had a gain of 15 percent or more, suggesting that Berkshire proved to be a most valuable investment during bad market periods.

“We do better when the wind is in our face,” he wrote.

For Berkshire’s largest collection of assets, its insurance operations, the wind has been at its back. We “shot the lights out last year” in insurance, Mr. Buffett said.

He lavished praise on the auto insurer Geico, giving a special shout-out to the company’s mascot, the Gecko lizard.

Investors also keep a keen eye on changes in Berkshire’s roughly $87 billion stock portfolio. Its holdings include large positions in iconic companies like International Business Machines, Coca-Cola, American Express and Wells Fargo. He said Berkshire’s investment in each of those was likely to increase in the future.

“Mae West had it right: ‘Too much of a good thing can be wonderful,’ ” Mr. Buffett wrote.

He also complimented two relatively new hires, Todd Combs and Ted Weschler, who now each manage about $5 billion in stock portfolios for Berkshire. Both men ran unheralded, modest-size money management firms before Mr. Buffett plucked them out of obscurity and moved them to Omaha to work for him.

He called the men “a perfect cultural fit” and indicated that the two would manage Berkshire’s entire stock portfolio once he steps aside. “We hit the jackpot with these two,” Mr. Buffett said, noting that last year, each outperformed the S.& P. by double-digit margins.

Then, sheepishly, employing supertiny type, he wrote: “They left me in the dust as well.”

A former paperboy and member of the Newspaper Association of America’s carrier hall of fame, Mr. Buffett devoted nearly three out of 24 pages of his annual report to newspapers.

While Mr. Buffett has been a longtime owner of The Buffalo News and a stakeholder in The Washington Post Company, he told shareholders four years ago that he wouldn’t buy a newspaper at any price.

But his latest note reflects how much his opinion has turned. His buying spree started in November 2011, when he struck a deal to buy The Omaha World-Herald Company, this hometown paper, for a reported $200 million. By May 2012, he bought out the chain of newspapers owned by Media General, except for The Tampa Tribune. In recent months, he continued to express his interest in buying more papers “at appropriate prices — and that means a very low multiple of current earnings.”

“Papers delivering comprehensive and reliable information to tightly bound communities and having a sensible Internet strategy will remain viable for a long time,” wrote Mr. Buffett.

Mr. Buffett said in a telephone interview last month that he would consider buying The Morning Call of Allentown, Pa., a paper that the Tribune Company is considering selling. But Mr. Buffett said he had not contacted Tribune executives.

“It’s solely a question of the specifics of it and the price,” he said about the Allentown paper. “But it’s similar to the kinds of communities that we bought papers in.”

Mr. Buffett has plenty of cash to make more newspaper acquisitions. To cover his portion of the Heinz purchase, Mr. Buffett will deploy about $12 billion of Berkshire’s $42 billion cash hoard. That leaves a lot of money for Mr. Buffett to continue his shopping spree for newspapers — and more major deals like Heinz.

“Charlie and I have again donned our safari outfits,” Mr. Buffett wrote, “and resumed our search for elephants.”

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Off the Charts: Globalization, as Measured by Investment, Takes a Step Backward

A FEW years ago, capital was flying around the globe faster than it ever had. The world economy became more tightly integrated and technology contributed to making it easier for banks and investors to deploy their money on the other side of the world if prospects looked more attractive there.

Then came the financial crisis, which, the McKinsey Global Institute noted in a report issued this week, “upended many of the world’s assumptions about the inevitability of growth and globalization.”

Last year, the report estimated, world capital flows were 13 percent below the levels of the previous year. And while they were higher than during the depths of the credit crisis, they are still 61 percent below the peak levels of 2007.

“Some of the shifts under way represent a healthy correction of the excesses of the bubble years,” the report stated, but there is a risk the reversal of globalization will be overdone.

“If we move to a system where the global financial system is more balkanized, that will raise the cost of capital for more borrowers and perhaps slow economic growth,” said Susan Lund, a principal of McKinsey Global Institute and the primary author of the report.

The accompanying charts show the institute’s estimates of global capital flows, which totaled $4.6 trillion in 2012, down from $11.8 trillion in 2007. Of the 2007 total, $10.2 trillion went to developed countries, and $1.6 trillion went to developing countries. Last year, capital flows were $3.1 trillion, a decline of 69 percent, for the developed countries, and $1.5 trillion, a decline of 10 percent, for the others.

The charts break out the flows into four types. The most stable is foreign direct investment, in which a company either builds a business or acquires at least 10 percent of an existing business. By far the least stable is loans, which are often short term and can be withdrawn on short notice, creating havoc. The others are bonds and equity, meaning stock market investments.

The Asian currency crisis of the late 1990s taught developing countries the potential hazards of loans that can be here today and gone tomorrow — a lesson that some European countries ignored to their regret. The institute calculated that in 2006 and 2007, the amount of capital flowing into Ireland was more than twice as large as the country’s gross domestic product. Moreover, most of that was in loans and bonds, debt instruments that in many cases could not be repaid.

International loans and bond issuances have particularly declined in Western Europe, where the euro crisis led many to withdraw funds and caused banks to concentrate on local markets. During four years in the middle of the last decade, more than $1 trillion in Western European bonds were purchased by foreigners each year. In each of the last two years, more bonds were sold back to the issuing country than were newly sold internationally.

For a number of years, China was the largest recipient of foreign direct investment, and that continues, with as estimated $260 billion flowing in last year. But it also sent $120 billion in such investment to other countries, about the same as Japan and more than was sent by any other country except the United States, according to the estimates.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

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DealBook: As Losses Mount, R.B.S. Unveils Plan to Sell Assets

LONDON – The Royal Bank of Scotland, hammered by losses, announced plans on Thursday to sell assets and pare back its investment banking business, in an effort to appease regulators and its biggest shareholder, the British government.

R.B.S. said it planned to sell a stake in the Citizens Financial Group, the American lender it bought in 1988, through an initial public offering in two years. The bank will also continue to reduce its investment banking operations, with plans to cut risky assets and eliminate jobs.

The moves are designed to help bolster the bank’s capital levels and refocus its operations, part of a multiyear turnaround effort initiated by its chief executive, Stephen Hester. In the end, R.B.S. will emerge a much smaller bank, largely focused on Britain.

“R.B.S. is four years into its recovery plan,” Mr. Hester said in a statement, “and good progress has been made. We are a much smaller, more focused and stronger bank. Our target is for 2013 to be the last big year of restructuring.”

Like many rivals, R.B.S. is struggling with the legacy of the financial crisis and a spate of legal issues. On Thursday, it reported a bigger-than-expected loss, in part tied to its legal troubles.

The bank, in which the British government holds an 82 percent stake after a bailout in 2008, posted a net loss of £5.97 billion ($9 billion) in 2012, much larger than the £2 billion loss recorded in 2011. Analysts had been expecting a loss of £5.1 billion. For the last quarter of 2012, R.B.S. reported a £2.6 billion loss, up from a £1.8 billion loss in the period a year earlier.

The rising losses reflect the bank’s regulatory and legal problems.

R.B.S. said on Thursday that it had set aside an additional £1.1 billion to compensate clients to which it improperly sold insurance products, bringing the total provision to £2.2 billion. It also estimated it would have to pay £700 million to compensate small businesses to which it improperly sold some interest-rate hedging products.

The bank agreed this year to pay $612 million to British and American authorities to settle accusations of rate-rigging. Since then, Mr. Hester has promised to tighten controls at the bank to limit the risk of future rate manipulation.

The head of R.B.S.’s investment banking division, John Hourican, resigned at the beginning of February as a result of the scandal related to manipulating the London interbank offered rate, or Libor. The bank plans to pay its fine with money clawed back from bonuses.

‘‘Along with the rest of the banking industry we faced significant reputational challenges,’’ Mr. Hester said in the statement. ‘‘We are determined to overcome the cultural and reputational baggage of precrisis times with the same focus we have applied to the financial cleanup from that era.’’

Eager to get back some of the £45.5 billion it invested in R.B.S., the British government recently increased pressure on the bank’s management to speed up the reorganization.

Some analysts said the government could start selling parts of its investment in the bank, even at a loss, before the next general election, which is set for 2015. R.B.S.’s shares are still trading at about half what the government paid for them in 2008. Some lawmakers said they would favor handing out shares to the public instead of a possible sale of the stake on the open market.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said there were signs that Mr. Hester’s efforts to turn around the bank had started to pay off, but that “the ongoing absence of a dividend and overhang of the government stake are negatives which need to be resolved.”

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Little Movement on Wall Street

Wall Street stocks opened little changed on Wednesday as investors awaited a second round of testimony in Congress by the Federal Reserve chairman, Ben S. Bernanke, for clarity on the longevity of the Fed’s economic stimulus program.

The Standard & Poor’s 500-stock index added 0.2 percent, the Dow Jones industrial average rose 0.2 percent and the Nasdaq composite index was flat in morning trading.

“Of course, Bernanke is in the spotlight again but I don’t expect him to vary from his comments from yesterday,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

A day earlier, Mr. Bernanke strongly defended the Fed’s monetary stimulus efforts before Congress, easing financial market worries over an early retreat from the Fed’s bond buying program, which had been triggered by minutes of the Fed’s January meeting released a week ago.

His remarks, along with data showing sales of new homes hit a four and a half year high, helped Wall Street stocks rebound Tuesday from their worst decline since November.

Despite the bounce, the benchmark S.&P. 500 was unable to move back above 1,500, a closely watched level that may prove to be a resistance point.

Up 6 percent for the year, the S.&P. 500 was within reach of record highs a week ago, before the minutes from the Fed’s January meeting were released. Since then, the index has shed 1 percent.

In earnings news, Target posted a lower quarterly profit as sales of food and value-priced items only partially mitigated weakness in holiday spending. The stock fell 1.7 percent.

Dollar Tree reported a higher quarterly profit as the chain controlled costs and as consumer spending improved. The stock rose 4.5 percent.

In Europe, shares rose, steadying after the previous session’s sharp losses, though jitters over the euro zone kept a lid on gains.

Italy’s 10-year debt costs rose more than half a percentage point at the first longer-term auction since an inconclusive parliamentary election, although they remained below the psychologically important level of 5 percent.

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You're the Boss Blog: Critiquing a Web Site That Tries to Keep It Simple

It sounds easy. Sell your product online. Design it to tempt every visitor into becoming a buyer. Add an easy-to-use self-service interface that lets customers get answers without interacting with a salesclerk. Everything seems to happen magically, and everything goes smoothly, without any issues. There may be businesses that manage to accomplish this, but rarely without a few struggles. In this post, we look at one company, Recruiterbox, and its attempt to attract customers and interact with them seemlessly.

Raj Sheth and his two partners created Recruiterbox to help companies organize their recruiting and hiring processes. An entrepreneur from India, Mr. Sheth understood that at many growing companies, the résumés, interviews and internal feedback live “all over the place,” buried in any number of in-boxes, spreadsheets and side conversations. In 2011, Recruiterbox which is based in Boston and Bangalore and has a team of 12 people, introduced a Web-based tool that automates the entire process. Hiring managers can try the service for free for a single job opening; the fee jumps to $60, $120 or $200 per month for three, six or 10 openings, respectively.

When Recruiterbox was introduced, the company stayed away from outbound marketing like e-mail or telemarketing, opting instead to rely on word-of-mouth, postings to human resources and recruitment blogs and a presence in app stores (like Google Apps). This netted their first 100 or so customers (as well as a few media mentions). Still, attracting visitors to the site was slow, and customer growth, while consistent, remained humble — in the low hundreds at the end of the first year. In 2012, the customer base grew to 500.

Mr. Sheth has found that he can generate traffic by answering media queries on HelpAReporterOut.com and by crafting frequent blog and video posts that address important H.R. issues. He also has found that including a transcript with the videos helps boost Recruiterbox’s organic search rankings on Google.

Still, revenue grew only slightly after a few months, so Mr. Sheth created a paid Google AdWords campaign. While the quality of customers that came through this channel was high, larger competitors drove up the bids for popular keywords. As a result, each click cost from $7 to $15 – making AdWords an expensive customer-acquisition channel. The Recruiterbox team kept a fixed budget on their campaign and tweaked the ads, but the cost per paying customer remained high, as much as $500.

After a year, the team began analyzing customer reactions to the sign-up process and pricing structure, which resulted in the company offering more service options. Recruiterbox now handles start-ups and smaller companies — those with fewer jobs to fill — through a self-service tool. The site has found that most of the companies that try the service end up completing the 14-day free trial and electing to continue with the monthly subscription.

But Recruiterbox wants to help larger companies, too — those looking to fill as many as 50 openings. And that’s the challenge: larger clients that want to fill 10 to 25 jobs are much more likely to require an initial service walk-through over the phone to understand how the software works. That of course is a time-consuming burden for a small company.

So the questions facing Mr. Sheth and Recruiterbox are:

Does it make sense for Recruiterbox to focus more attention on one particular customer segment?

• Would concentrating on self-service customers allow Recruiterbox to stick with its original goals and get more business?

• Is that market — companies with fewer positions to fill — large enough?

• Should Recruiterbox add more inside sales people to attract and retain larger companies or is that splintering the business focus?

Some questions for readers to think about while looking at Recruiterbox.com:

• Is it easy to understand?

• Can you tell what it’s offering within 15 seconds of landing on the site?

• Would you register without contacting customer support?

• What are your thoughts on tiered service fees?

• Do those fees represent the right value for the cost?

Next week, we’ll follow up with highlights from your comments and I’ll offer my own impressions along with Mr. Sheth’s response.

Would you like to have your business’s Web site or mobile app reviewed? This is an opportunity for companies looking for an honest (and free) appraisal of their online presence and marketing efforts.

To be considered, please tell us  about your experiences — why you started your site, what works, what doesn’t and why you would like to have the site reviewed — in an e-mail to youretheboss@abesmarket.com.

Richard Demb is co-founder of Abe’s Market, an online marketplace for natural products that is based in Chicago.

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Daily Stock Market Activity

Stocks on Wall Street opened higher on Monday, suggesting that the recent rally was intact despite concerns that the Federal Reserve could curtail its stimulus for the economy sooner than many expected.

The Standard & Poor’s 500-stock index added 0.4 percent in morning trading, the Dow Jones industrial average rose 0.3 percent and the Nasdaq composite index jumped 0.5 percent.

Barnes & Noble stock jumped 13 percent after its chairman, Leonard Riggio, said he was considering a bid for the company’s bookstore business.

Stocks have been strong performers so far this year, with the S.&P. 500 up 6.2 percent to around its highest levels since 2007. That has prompted many to predict a pullback, but so far declines have been neutralized as investors use any dip as a buying opportunity. While the S.&P. fell last week, the decline was a slight 0.3 percent and was the first weekly drop after a seven-week string of gains.

“People are cautious about investing near five-year highs, especially given the pace at which we got here, but there’s still room to grow and any pullback should be shallow,” said Robert Pavlik, chief market strategist at Banyan Partners in New York.

The gains have come on strong corporate earnings. With 83 percent of the S.&P. 500 having reported results, 69 percent of beat profit expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data.

Another test for equities will come with the looming debate over massive United States budget cuts that will take effect on Friday if lawmakers fail to reach an agreement over spending and taxes. The White House issued warnings about the harm the cuts, referred to as sequester, are likely to inflict on the economy if enacted.

More government-related uncertainty came from Italy, where a close election left questions about how the country would handle its three-year debt crisis. Still, European shares were higher on Monday, rising about 1 percent after a smooth Italian debt auction.

Lowe’s Cos. reported earnings that beat expectations, helped by rebuilding efforts after Hurricane Sandy in the United States. Shares rose 0.6 percent.

Dynavax Technologies shares plunged 27 percent after the Food and Drug Administration denied approval for the company’s adult hepatitis B vaccine and sought additional data for evaluate its safety.

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Major Banks Aid in Payday Loans Banned by States

Major banks have quickly become behind-the-scenes allies of Internet-based payday lenders that offer short-term loans with interest rates sometimes exceeding 500 percent.

With 15 states banning payday loans, a growing number of the lenders have set up online operations in more hospitable states or far-flung locales like Belize, Malta and the West Indies to more easily evade statewide caps on interest rates.

While the banks, which include giants like JPMorgan Chase, Bank of America and Wells Fargo, do not make the loans, they are a critical link for the lenders, enabling the lenders to withdraw payments automatically from borrowers’ bank accounts, even in states where the loans are banned entirely. In some cases, the banks allow lenders to tap checking accounts even after the customers have begged them to stop the withdrawals.

“Without the assistance of the banks in processing and sending electronic funds, these lenders simply couldn’t operate,” said Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project, which works with community groups in New York.

The banking industry says it is simply serving customers who have authorized the lenders to withdraw money from their accounts. “The industry is not in a position to monitor customer accounts to see where their payments are going,” said Virginia O’Neill, senior counsel with the American Bankers Association.

But state and federal officials are taking aim at the banks’ role at a time when authorities are increasing their efforts to clamp down on payday lending and its practice of providing quick money to borrowers who need cash.

The Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau are examining banks’ roles in the online loans, according to several people with direct knowledge of the matter. Benjamin M. Lawsky, who heads New York State’s Department of Financial Services, is investigating how banks enable the online lenders to skirt New York law and make loans to residents of the state, where interest rates are capped at 25 percent.

For the banks, it can be a lucrative partnership. At first blush, processing automatic withdrawals hardly seems like a source of profit. But many customers are already on shaky financial footing. The withdrawals often set off a cascade of fees from problems like overdrafts. Roughly 27 percent of payday loan borrowers say that the loans caused them to overdraw their accounts, according to a report released this month by the Pew Charitable Trusts. That fee income is coveted, given that financial regulations limiting fees on debit and credit cards have cost banks billions of dollars.

Some state and federal authorities say the banks’ role in enabling the lenders has frustrated government efforts to shield people from predatory loans — an issue that gained urgency after reckless mortgage lending helped precipitate the 2008 financial crisis.

Lawmakers, led by Senator Jeff Merkley, Democrat of Oregon, introduced a bill in July aimed at reining in the lenders, in part, by forcing them to abide by the laws of the state where the borrower lives, rather than where the lender is. The legislation, pending in Congress, would also allow borrowers to cancel automatic withdrawals more easily. “Technology has taken a lot of these scams online, and it’s time to crack down,” Mr. Merkley said in a statement when the bill was introduced.

While the loans are simple to obtain — some online lenders promise approval in minutes with no credit check — they are tough to get rid of. Customers who want to repay their loan in full typically must contact the online lender at least three days before the next withdrawal. Otherwise, the lender automatically renews the loans at least monthly and withdraws only the interest owed. Under federal law, customers are allowed to stop authorized withdrawals from their account. Still, some borrowers say their banks do not heed requests to stop the loans.

Ivy Brodsky, 37, thought she had figured out a way to stop six payday lenders from taking money from her account when she visited her Chase branch in Brighton Beach in Brooklyn in March to close it. But Chase kept the account open and between April and May, the six Internet lenders tried to withdraw money from Ms. Brodsky’s account 55 times, according to bank records reviewed by The New York Times. Chase charged her $1,523 in fees — a combination of 44 insufficient fund fees, extended overdraft fees and service fees.

For Subrina Baptiste, 33, an educational assistant in Brooklyn, the overdraft fees levied by Chase cannibalized her child support income. She said she applied for a $400 loan from Loanshoponline.com and a $700 loan from Advancemetoday.com in 2011. The loans, with annual interest rates of 730 percent and 584 percent respectively, skirt New York law.

Ms. Baptiste said she asked Chase to revoke the automatic withdrawals in October 2011, but was told that she had to ask the lenders instead. In one month, her bank records show, the lenders tried to take money from her account at least six times. Chase charged her $812 in fees and deducted over $600 from her child-support payments to cover them.

“I don’t understand why my own bank just wouldn’t listen to me,” Ms. Baptiste said, adding that Chase ultimately closed her account last January, three months after she asked.

A spokeswoman for Bank of America said the bank always honored requests to stop automatic withdrawals. Wells Fargo declined to comment. Kristin Lemkau, a spokeswoman for Chase, said: “We are working with the customers to resolve these cases.” Online lenders say they work to abide by state laws.

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Wall Street Edges Ahead

Stocks rose on Wall Street Friday, bolstered by better-than-expected earnings from Hewlett-Packard.

The Standard & Poor’s 500-stock index climbed 0.4 percent, the Dow Jones industrial average rose 0.3 percent, and the Nasdaq composite index added 0.4 percent.

The S.&P. 500 has dropped 1.9 percent over the last two sessions, its worst two-day drop since early November, putting the benchmark index on pace for its first weekly decline of the year. The retreat was triggered by minutes from the Federal Reserve’s January meeting, released earlier in the week, that suggested stimulus measures may end earlier than thought.

Still, the index was up more than 5 percent for the year and has held above the 1,500-point level.

“When you get a move like that, you are bound to see a pause, and the Fed minutes is a good enough reason to at least reassess,” said Michael Marrale, head of research, sales and trading at ITG in New York.

But, he added, “ultimately, we are going to see rates go higher and, ultimately, that will take money out of bonds and into equities.”

Hewlett-Packard, the maker of personal computers and printers, climbed 5.1 percent after the company’s quarterly revenue and forecasts beat analysts’ expectations as it continued to cut costs.

Abercrombie & Fitch, the clothing retailer, dipped 1 percent after it reported a drop in fourth-quarter comparable sales, even as the latest quarterly earnings topped estimates.

The insurer American International Group posted fourth-quarter results that beat analysts’ expectations. Shares advanced 4.4 percent.

Marvell Technology Group, a chip maker, rose 5.8 percent after the company gained market share in the hard-disk drive and flash-storage businesses.

The European Commission forecast on Friday that growth in the 27-nation European Union would rise only 0.3 percent this year, while growth in the 17 members that use the euro would fall 0.1 percent for a second year of recession. Stock markets in Europe were mostly ahead in afternoon trading after a sharp pullback on Thursday.

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DealBook: Office Depot and OfficeMax Announce Plans to Merge, After Erroneous Release

9:40 a.m. | Updated

Office Depot and OfficeMax announced their plans to merge on Wednesday, just hours after an erroneous release about the deal briefly surfaced.

Under the terms of the deal, Office Depot said it would issue 2.69 new shares of common stock for each share of OfficeMax. At that level, the transaction would value OfficeMax at $13.50, or roughly $1.19 billion, a premium of more than 25 percent to the company’s closing price last week.

The deal has been anticipated, as the companies face an increasingly difficult competitive environment. Both companies, which are burdened with big real estate footprints, have struggled against lower-priced rivals like Amazon.com and Costco. By uniting, the two companies should be able to cut costs and better negotiate prices.

“In the past decade, with the growth of the internet, our industry has changed dramatically,” Neil Austrian, chairman and chief executive officer of Office Depot, said in a statement. “Combining our two companies will enhance our ability to serve customers around the world, offer new opportunities for our employees, make us a more attractive partner to our vendors, and increase stockholder value.”

While the deal has been years in the making, it was initially announced prematurely. A news release announcing the merger of the two office supply retailers was posted early Wednesday morning on Office Depot’s Web site, but it quickly disappeared.

Several news organizations reported the terms disclosed in the errant news release for Office Depot’s earnings. The details were buried on page four of the release under the header “Other Matters.”

As the details filtered through the market, shares of the companies jumped. In premarket trading, Office Depot’s stock rose more than 7 percent, while OfficeMax shares were up more than 8 percent.

The episode is reminiscent of other times that companies’ earnings releases were published prematurely. Last fall, Google’s third-quarter earnings were published three hours early, which the technology giant blamed on a mistake by R.R. Donnelley & Sons, the company’s printer.

Representatives for Office Depot and OfficeMax were not immediately available for comment on the erroneous release.

Strategically, the deal makes sense, as the companies deal with a changing competitive environment.

Combined, the companies reported about $4.4 billion in revenue for their third quarter of 2012; in comparison, Staples disclosed $6.4 billion in revenue for the same period.

Office Depot has also been under pressure from an activist hedge fund, Starboard Value, which sent a letter to the retailer’s board last fall. In it, Starboard called for more cost cuts and a greater focus on higher-margin businesses like copy and print services. With a 14.8 percent stake, Starboard is the company’s biggest investor.

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Wall St. Shares Inch Ahead

Shares on Wall Street inched higher in early trading on Tuesday, putting the Standard & Poor’s 500-stock index on track to extend its seven-week winning streak.

Shortly after the opening bell, the S.&P. 500 was up 0.3 percent, while the Dow Jones industrial average was up 0.1 percent. The Nasdaq composite rose 0.2 percent.

The strong start to the year has been helped by legislators in Washington, who temporarily averted a series of automatic spending cuts and tax increases, as well as by better-than-expected earnings and economic data. The Federal Reserve’s stimulus policy has also been a major factor.

But further gains for the benchmark S.&P. index have been a struggle as investors look for new catalysts to lift the index, which hovers near five-year highs.

The compromise by lawmakers on across-the-board spending cuts, known as sequestration, only postponed until March 1 a resolution to the Congressional budget fight.

The faster pace in merger-and-acquisition activity, a sign of optimism about the outlook on Wall Street, has resulted in more than $158 billion in deals announced so far in 2013.

“The firm market tone continues," said Andre Bakhos, director of market analytics at Lek Securities in New York, "fueled by a lack of negative surprises as well as an increase in M.&A. activity, adding confidence to market valuations.”

“The market has been able to shrug off minor negatives as it looks ahead to a potential bigger hurdle in the sequestration,” he said. “Until then, the situation looks stable.”

The No. 2 office supply retailer in the United States, Office Depot, surged 24 percent. The company is said to be in merger talks with a smaller rival, OfficeMax. OfficeMax shares jumped 30 percent.

The computer maker Dell reports fourth-quarter results on Tuesday, and it is expected to show earnings per share fall to 39 cents from 51 cents a year earlier. Analysts will have their first chance to question management on a buyout deal struck earlier this month by its chief executive, Michael Dell, private equity firm Silver Lake and Microsoft.

According to the Thomson Reuters data through Friday, of the 388 companies in the S.&P. 500 that have reported results, 69.8 percent have exceeded analysts’ expectations, compared with a 62 percent average since 1994 and 65 percent over the last four quarters.

Fourth-quarter earnings for S.&P. 500 companies are estimated to have risen 5.6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

European shares rose on Tuesday, lifted by gains at food group Danone and fresh signs of a German economic recovery, although broader market sentiment remained cautious ahead of Italian elections this weekend.

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Tech Industry Sets Its Sights on Gambling

Jim Wilson/The New York Times

Cesar Miranda, left, and his brother, Edgar, working on their claw crane game in San Jose, Calif.

SAN FRANCISCO — Look out Las Vegas, here comes FarmVille.

Silicon Valley is betting that online gambling is its next billion-dollar business, with developers across the industry turning casual games into occasions for adults to wager.

At the moment these games are aimed overseas, where attitudes toward gambling are more relaxed and online betting is generally legal, and extremely lucrative. But game companies, from small teams to Facebook and Zynga, have their eye on the ultimate prize: the rich American market, where most types of real-money online wagers have been cleared by the Justice Department.

Two states, Nevada and Delaware, are already laying the groundwork for virtual gambling. Within months they will most likely be joined by New Jersey.

Bills have also been introduced in Mississippi, Iowa, California and other states, driven by the realization that online gambling could bring in streams of tax revenue. In Iowa alone, online gambling proponents estimated that 150,000 residents were playing poker illegally.

Legislative progress, though, is slow. Opponents include an influential casino industry wary of competition and the traditional antigambling factions, who oppose it on moral grounds.

Silicon Valley is hardly discouraged. Companies here believe that online gambling will soon become as simple as buying an e-book or streaming a movie, and that the convenience of being able to bet from your couch, surrounded by virtual friends, will offset the lack of glittering ambience found in a real-world casino. Think you can get a field of corn in FarmVille, the popular Facebook game, to grow faster than your brother-in-law’s? Five bucks says you cannot.

“Gambling in the U.S. is controlled by a few land-based casinos and some powerful Indian casinos,” said Chris Griffin, chief executive of Betable, a London gambling start-up that handles the gaming licenses and betting mechanics of the business for developers. “What potentially becomes an interesting counterweight is all of a sudden thousands of developers in Silicon Valley making money overseas and wanting to turn their efforts inward and make money in the U.S.”

Betable has set up shop in San Francisco, where 15 studios are now using its back-end platform. “This is the next evolution in games, and kind of ground zero for the developer community,” Mr. Griffin said.

Overseas, online betting is generating an estimated $32 billion in annual revenue — nearly the size of the United States casino market. Juniper Research estimates that betting on mobile devices alone will be a $100 billion worldwide industry by 2017.

“Everyone is really anticipating this becoming a huge business,” said Chris DeWolfe, a co-founder of the pioneering social site Myspace, who is throwing his energies into a gaming studio with a gambling component backed by, among others, the personal investment funds of Jeff Bezos, Amazon’s founder, and Eric E. Schmidt, Google’s executive chairman.

As companies eagerly wait for the American market to open up, they are introducing betting games in Britain, where Apple has tweaked the iPhone software to accommodate them. Facebook began allowing online gambling for British users last summer with Jackpotjoy, a bingo site; deals with other developers followed in December and this month.

Zynga, the company that developed FarmVille, Mafia Wars, Words With Friends and many other popular casual games, is advertising the imminent release of its first betting games in Britain. “All your favorite Zynga game characters will be there, except this time they’ll have real money prizes to offer you,” an ad says. “Play online casino games for pennies and live the dream!”

Mr. DeWolfe’s studio, SGN, is also on the verge of starting its first real-money games in Britain. “Those companies that have a critical mass of users that are interested in playing real-money games are going to be incredibly valuable,” he said.

Mark Pincus, the chief executive of Zynga, said the company was just following the market. “There is no question there is great interest from all kinds of people in games of chance, whether it is for real money or virtual rewards,” he said. Zynga, which has missed revenue expectations in the last year, is making gambling a centerpiece of its new strategy. It has just applied to Nevada for a gambling license.

Casual gaming first blossomed on Facebook’s Web site, where players could readily corral friends into their games. It is now being rethought for mobile devices, so people can play in brief snippets as they wait for a bus or a sandwich.

Some games mimic the slots and poker found in casinos; others emphasize considerably more creativity. The vast majority of casual game players play at no charge. A small number buy virtual objects in the game to speed their play or increase their status.

Tech executives expect an equally small number to play for real money but believe they will bet heavily, making them much more valuable to the gaming companies. By Betable’s estimate, the lifetime value of a casual player is $2 versus $1,800 for a real-money player.

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A First Step on Continent for Google on Use of Content

PARIS — Publishers in France say they have struck an innovative agreement with Google on the use of their content online. Their counterparts elsewhere in Europe, however, say the French gave in too easily to the Internet giant.

The deal was signed this month by President François Hollande of France and Eric E. Schmidt, the executive chairman of Google, who called it a breakthrough in the tense relationship between publishers and Google, and as a possible model for other countries to follow.

Under the deal, Google agreed to set up a fund, worth €60 million, or $80 million, over three years, to help publishers develop their digital units. The two sides also pledged to deepen business ties, using Google’s online tools, in an effort to generate more online revenue for the publishers, who have struggled to counteract dwindling print revenue.

But the French group, representing newspaper and magazine publishers with an online presence, as well as a variety of other news-oriented Web sites, yielded on its most important demand: that Google and other search engines and “aggregators” of news should start paying for links to their content.

Google, which insists that its links provide a service to publishers by directing traffic to their sites, had fiercely resisted any change in the principle of free linking.

The agreement dismayed members of the European Publishers Council, a lobbying group in Brussels, which has been pushing for a fundamental change in the relationship between publishers and Google. The group criticized the French publishers for breaking ranks and striking a separate business agreement that has no statutory standing.

The deal “does not address the continuing problem of unauthorized reuse and monetization of content, and so does not provide the online press with the financial certainty or mechanisms for legal redress which it needs to build sustainable business models and ensure its continued investment in high-quality content,” Angela Mills Wade, executive director of the publishers council, said in a statement.

German publishers were also scornful, with Anja Pasquay, a spokeswoman for the German Newspaper Publishers’ Association, saying: “Obviously the French position isn’t one that we would favor. This is not the solution for Germany.”

Germany has been in the forefront of the push to get Google to share with online news publishers some of the billions of euros that the company earns from the sale of advertising. A proposed law, endorsed by the government of Chancellor Angela Merkel and working its way through the federal legislature, would grant a new form of copyright to digital publishers. If enacted, it could allow publishers to charge search engines or aggregators for displaying even snippets of news articles alongside links to other Web sites.

Mr. Hollande had vowed to introduce similar legislation this winter if Google and the publishers did not come to terms. It appears that Google, which had threatened to stop indexing French Web sites’ content if it had to pay for links, has sidelined the threat of legislation, at least for now; the agreement will be reviewed after three years, Mr. Hollande has said.

Under the deal, Google says it will help the publishers use several of its digital advertising services, including AdSense, AdMob and Ad Exchange, more effectively.

Publishers are already free to use these services, and it was not immediately clear how they would be able to generate more revenue from them; this part of the accord remains confidential, both sides say, because they are still negotiating the fine print.

“This agreement can help accelerate the move toward greater advertising revenues in the digital world,” said Marc Schwartz of Mazars, a consulting firm, who is serving as an independent mediator in the talks. “I’m not saying we have done everything, but it’s a first step in the right direction.”

More has been said about the planned innovation fund. Publishers will submit proposals to the fund, which will select ideas to finance and develop, with the involvement of Google engineers.

“The idea is that it would inject innovation into the sector in France,” said Simon Morrison, copyright policy manager at Google.

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Common Sense: High Taxes Are Not a Prime Reason for Relocation, Studies Say

Pool photo by Mikhail Klimentyev

Gerard Depardieu with Vladimir Putin in January. Russia granted Mr. Depardieu a passport after his spat with France over taxes.

Last month, Vladimir V. Putin hugged his newly minted fellow Russian citizen, the actor Gerard Depardieu, posing for cameras at the Black Sea port of Sochi. “I adore your country,” Mr. Depardieu gushed — especially its 13 percent flat tax on personal income.

Sochi may not be St. Tropez, but it does have winter temperatures in the 60s and even palm trees. Mr. Putin’s deputy prime minister confidently predicted a “mass migration of wealthy Europeans to Russia.”

Here in the United States, the three-time Masters champion Phil Mickelson recently walked off the 18th hole at Humana Challenge and said he might move from California because the state increased its top income tax rate to 13.3 percent from 10.3 percent.

“Hey Phil,” Gov. Rick Perry of Texas wrote in a Twitter message, “Texas is home to liberty and low taxes ... we would love to have you as well!!” Tiger Woods later said that he had left California for Florida for just that reason years ago. Mr. Mickelson can “vote with his Gulfstream,” a Wall Street Journal editorial noted, and warned California to “expect a continued migration.”

It’s an article of faith among low-tax advocates that income tax increases aimed at the rich simply drive them away. As Stuart Varney put it on Fox News: “Look at what happened in Britain. They raised the top tax rate to 50 percent, and two-thirds of the millionaires disappeared in the next tax year. Same things are happening in France. People are leaving where the top tax rate is 75 percent. Same thing happened in Maryland a few years ago. New millionaire’s tax, the millionaires disappeared. You’ve got exactly the same thing in California.”

That, at least, is what low-tax advocates want us to think, and on its face, it seems to make sense. But it’s not the case. It turns out that a large majority of people move for far more compelling reasons, like jobs, the cost of housing, family ties or a warmer climate. At least three recent academic studies have demonstrated that the number of people who move for tax reasons is negligible, even among the wealthy.

Cristobal Young, an assistant professor of sociology at Stanford, studied the effects of recent tax increases in New Jersey and California.

“It’s very clear that, over all, modest changes in top tax rates do not affect millionaire migration,” he told me this week. “Neither tax increases nor tax cuts on the rich have affected their migration rates.”

The notion of tax flight “is almost entirely bogus — it’s a myth,” said Jon Shure, director of state fiscal studies at the Center on Budget and Policy Priorities, a nonprofit research group in Washington. “The anecdotal coverage makes it seem like people are leaving in droves because of high taxes. They’re not. There are a lot of low-tax states, and you don’t see millionaires flocking there.”

Despite the allure of low taxes, Mr. Depardieu hasn’t been seen in Russia since picking up his passport and seems to be hedging his bets by maintaining a residence in Belgium. Meanwhile, Russian billionaires are snapping up trophy properties in high-tax London, New York and Beverly Hills, Calif.

“I don’t hear about many billionaires moving to Moscow,” said Robert Tannenwald, a lecturer in economic policy at Brandeis University and former Federal Reserve economist. Along with Nicholas Johnson, he and Mr. Shure are co-authors of “Tax Flight Is a Myth,” a 2011 research paper.

Of course, some people do move for tax reasons, especially wealthy retirees, athletes and other celebrities without strong ties to high-tax locations, like jobs and families. In renouncing his French citizenship, Mr. Depardieu follows other French celebrities, the chef Alain Ducasse, the singer Johnny Hallyday and Yannick Noah, a former tennis star. Several Paris hedge fund managers have decamped to London and the fashion mogul Bernard Arnault applied for Belgian citizenship, though not, he has said, for tax reasons.

Stars like Mr. Depardieu and Mr. Mickelson certainly have incentives to move. Mr. Depardieu complained that he paid 85 percent of his income in taxes in France last year and has paid 145 million euros over 45 years. France has a top rate of 41 percent as well as a wealth tax, and the Socialist president, François Hollande, is trying to impose a temporary surcharge of 75 percent on incomes over 1 million euros. Mr. Mickelson earned more than $60 million last year, Sports Illustrated estimates, which means the three-percentage-point California tax increase could add up to an additional $1.8 million in tax.

This article has been revised to reflect the following correction:

Correction: February 15, 2013

An earlier version of this column misstated Mr. Depardieu’s citizenship. He has applied for residency in Belgium; he is not a citizen of that nation. The earlier version also misidentified the golf tournament at which the golfer Phil Mickelson said he might move from California to escape its taxes. It was the Humana Challenge, not Pebble Beach.

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Stocks Trade in Narrow Range

Wall Street stocks opened little changed on Friday, continuing a trend of thin trading and tight moves, with the Standard & Poor’s 500 in range of extending its weekly streak of gains to seven.

The S.&P. 500, the Dow Jones industrial average and the Nasdaq composite index all tiptoed into positive territory in morning trading. European stock indexes were also slightly higher in afternoon trading.

Data showed manufacturing in New York state expanded in February for the first time in seven months, bolstered by a surge of new orders, but industrial production slipped 0.1 percent in January.

A surge in merger and acquisition activity, with more than $158 billion in deals announced so far in 2013, has given support to the equity market as it points to healthy valuations and bets on the economic outlook.

“No retracement of this move is positive — it shows underlying support for this market,” said Art Hogan, managing director of Lazard Capital Markets in New York. He said the flurry of mergers and acquisitions should be seen as a tailwind for the market.

Herbalife shares soared 18.6 percent a day after the billionaire investor Carl Icahn said in a regulatory filing that he now owns 13 percent of Herbalife and was ready to put it in play.

Burger King Worldwide shares jumped 6.8 percent after it beat estimates with a 94 percent rise in fourth-quarter profit because of menu additions.

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DealBook: Berkshire and 3G Capital to Buy Heinz for $23 Billion

9:07 a.m. | Updated

Warren E. Buffett has found another American icon worth buying: H. J. Heinz.

Berkshire Hathaway, the giant conglomerate that Mr. Buffett runs, said on Thursday that it would buy the food giant for about $23 billion, adding Heinz ketchup to its stable of prominent brands.

Mr. Buffett is teaming up with 3G Capital Management, a Brazilian-backed investment firm that owns a majority stake in a company whose business is complementary to Heinz’s: Burger King.

Under the terms of the deal, Berkshire and 3G will pay $72.50 a share, about 20 percent above Heinz’s closing price on Wednesday. Including debt, the transaction is valued at $28 billion.

“This is my kind of deal and my kind of partner,” Mr. Buffett told CNBC on Thursday. “Heinz is our kind of company with fantastic brands.”

In many ways, Heinz fits Mr. Buffett’s deal criteria almost to a T. It has broad brand recognition – besides ketchup, it owns Ore-Ida and Lea & Perrins Worcestershire sauce – and has performed well. Over the last 12 months, its stock has risen nearly 17 percent.

Mr. Buffett told CNBC that he had a file on Heinz dating back to 1980. But the genesis of Thursday’s deal actually lies with 3G, an investment firm backed by several wealthy Brazilian families, according to a person with direct knowledge of the matter.

One of the firm’s principal backers, Jorge Paulo Lemann, brought the idea of buying Heinz to Berkshire about two months ago, this person said. Mr. Buffett agreed, and the two sides approached Heinz’s chief executive, William R. Johnson, about buying the company.

“We look forward to partnering with Berkshire Hathaway and 3G Capital, both greatly respected investors, in what will be an exciting new chapter in the history of Heinz,” Mr. Johnson said in a statement.

Berkshire and 3G will each contribute about $4 billion in cash to pay for the deal, with Berkshire also paying $8 billion for preferred shares. The rest of the cost will be covered by debt financing raised by JPMorgan Chase and Wells Fargo.

Mr. Buffett told CNBC that 3G would be the primary supervisor of Heinz’s operations, saying, “Heinz will be 3G’s baby.”

The food company’s headquarters will remain in Pittsburgh, Heinz’s home for over 120 years. Heinz’s stock was up nearly 20 percent in premarket trading, at $72.46, closely mirroring the offered price.

Heinz was advised by Centerview Partners, Bank of America Merrill Lynch and the law firm Davis Polk & Wardwell. A transaction committee of the company’s board was advised by Moelis & Company and Wachtell, Lipton, Rosen & Katz.

Berkshire’s and 3G’s lead adviser was Lazard, with JPMorgan and Wells Fargo providing additional advice. Kirkland & Ellis provided legal advice to 3G, while Berkshire relied on its usual law firm, Munger, Tolles & Olson.

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Media Decoder Blog: Comcast Buys Rest of NBC in Early Sale

9:28 a.m. | Updated Comcast gave NBCUniversal a $16.7 billion vote of confidence on Tuesday, agreeing to pay that sum to acquire General Electric’s remaining 49 percent stake in the entertainment company. The deal accelerated a sales process that was expected to take several more years.

Brian Roberts, chief executive of Comcast, said the acquisition, which will be completed by the end of March, underscored a commitment to NBCUniversal and its highly profitable cable channels, expanding theme parks and the resurgent NBC broadcast network.

“We always thought it was a strong possibility that we’d some day own 100 percent,” Mr. Roberts said in a telephone interview.

He added that the rapidly changing television business and the growing necessity of owning content as well as the delivery systems sped up the decision. “It’s been a very smooth couple of years, and the content continues to get more valuable with new revenue streams,” he said.

Comcast also said that NBCUniversal would buy the NBC studios and offices at 30 Rockefeller Plaza, as well as the CNBC headquarters in Englewood Cliffs, N.J. Those transactions will cost about $1.4 billion.

Mr. Roberts called the Rockefeller Plaza offices “iconic” and said it would have been “expensive to replicate” studios elsewhere for the “Today” show, “Saturday Night Live,” “Late Night With Jimmy Fallon” and other programs produced there. “We’re proud to be associated with it,” Mr. Roberts said of the building.

With the office space comes naming rights for the building, according to a General Electric spokeswoman. So it is possible that one of New York’s most famous landmarks, with its giant red G.E. sign, could soon be displaying a Comcast sign instead.

When asked about a possible logo swap on the building, owned by Tishman Speyer, Mr. Roberts told CNBC, that is “not something we’re focused on talking about today.” Nevertheless, the sale was visible in a prominent way Tuesday night: the G.E. letters, which have adorned the top of 30 Rock for several decades, were not illuminated for an hour after sunset. But the lights flickered back on later in the evening.

Comcast, with a conservative, low-profile culture, had clashed with the G.E. approach, according to employees and executives in television. Comcast moved NBCUniversal’s executive offices from the 52nd floor to the 51st floor — less opulent space that features smaller executive offices and a cozy communal coffee room instead of General Electric’s lavish executive dining room.

Comcast took control of NBCUniversal in early 2011 by acquiring 51 percent of the media company from General Electric. The structure of the deal gave Comcast the option of buying out G.E. in a three-and-a-half to seven-year time frame. In part because of the clash in corporate cultures, television executives said, both sides were eager to accelerate the sale.

Price was also a factor. Mr. Roberts said he believed the stake would have cost more had Comcast waited. Also, he pointed to the company’s strong fourth-quarter earnings to be released late Tuesday afternoon, which put it in a strong position to complete the sale.

Comcast reported a near record-breaking year with $20 billion in operating cash flow in the fiscal year 2012. In the three months that ended Dec. 31, Comcast’s cash flow increased 7.3 percent to $5.3 billion. Revenue at NBCUniversal grew 4.8 percent to $6 billion.

“We’ve had two years to make the transition and to make the investments that we believe will continue to take off,” Mr. Roberts said.

The transactions with General Electric will be largely financed with $11.4 billion of cash on hand, $4 billion of subsidiary senior unsecured notes to be issued to G.E. and a $2 billion in borrowings.

Even with the investment in NBCUniversal, Comcast said it would increase its dividend by 20 percent to 78 cents a share and buy back $2 billion in stock in 2013.

When it acquired the 51 percent stake two years ago, Comcast committed to paying about $6.5 billion in cash and contributed all of its cable channels, including E! and some regional sports networks, to the newly established NBCUniversal joint venture. Those channels were valued at $7.25 billion.

The transaction made Comcast, the single biggest cable provider in the United States, one of the biggest owners of cable channels, too. NBCUniversal operates the NBC broadcast network, 10 local NBC stations, USA, Bravo, Syfy, E!, MSNBC, CNBC, the NBC Sports Network, Telemundo, Universal Pictures, Universal Studios, and a long list of other media brands.

Mr. Roberts and Michael J. Angelakis, vice chairman and chief financial officer for the Comcast Corporation, led the negotiations that began last year with Jeffrey R. Immelt, chief executive of General Electric, and Keith Sharon, the company’s chief financial officer. JPMorgan Chase, Goldman Sachs, Centerview Partners and CBRE provided financial and strategic advice.

The sale ends a long relationship between General Electric and NBC that goes back before the founding days of television. In 1926, the Radio Corporation of America created the NBC network. General Electric owned R.C.A. until 1930. It regained control of R.C.A., including NBC, in 1986, in a deal worth $6.4 billion at the time.

In a slide show on the company’s “GE Reports” Web site titled “It’s a Wrap: GE, NBC Part Ways, Together They’ve Changed History,” G.E. said the deal with Comcast “caps a historic, centurylong journey for the two companies that gave birth to modern home entertainment.”

Mr. Immelt has said that NBCUniversal did not mesh with G.E.’s core industrial businesses. That became even more apparent when the company became a minority stakeholder with no control over how the business was run, according to a person briefed on G.E.’s thinking who could not discuss private conversations publicly.

“By adding significant new capital to our balanced capital allocation plan, we can accelerate our share buyback plans while investing in growth in our core businesses,” Mr. Immelt said in a statement. He added: “For nearly 30 years, NBC — and later NBCUniversal — has been a great business for G.E. and our investors.”

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This post has been revised to reflect the following correction:

Correction: February 13, 2013

An earlier version of this article misstated part of the name of the site where the NBC studios and offices are located. It is 30 Rockefeller Plaza, not 30 Rockefeller Center.

A version of this article appeared in print on 02/13/2013, on page B1 of the NewYork edition with the headline: Comcast Buys Rest Of NBC In Early Sale.

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DealBook: Nexen Secures U.S. Approval of Its Sale to Cnooc

Nexen said on Tuesday that it had received the last regulatory approval needed for its $15 billion sale to a major Chinese oil company, after the Obama administration declared the deal free from national security concerns.

With all necessary regulatory approvals in place, Nexen is set to become the latest acquisition by the Chinese oil industry, as the country seeks more and more sources of oil and natural gas to fuel its economy.

The deal is expected to close around Feb. 25.

The buyer in this transaction, the Chinese National Offshore Oil Corporation, or Cnooc, has been among the most acquisitive. It has announced six deals in the last two years, according to Standard & Poor’s Capital IQ. Nexen, based in Calgary, is the biggest proposed deal by Cnooc since its failed attempt to buy Unocal for $18.5 billion in 2005.

Though most of its holdings are abroad, Nexen has major operations in the Gulf of Mexico, which fall under the jurisdiction of the Committee on Foreign Investment in the United States, or Cfius.

The approval by the Obama administration comes two months after the Canadian government approved the deal. That was regarded as perhaps the biggest hurdle, given spurts of nationalistic concern over foreign buyers claiming big tracts of natural resources in Canada.

A review by Cfius (pronounced SIF-ee-us) is still regarded as potentially tough, however. The organization, which is chaired by the Treasury secretary, makes its decisions behind closed doors, and buyers are not always told why a deal is rejected.

But Cfius has approved several potentially sensitive deals recently, including the sale of the bankrupt car battery maker A123 Systems to the Wanxiang Group.

Lawyers at Cleary Gottlieb Steen & Hamilton wrote in a note to clients on Monday that the A123 approval “is evidence that even when politics, protectionism and xenophobia all appear to be significant obstacles, Cfius will not raise objections if it believes no security issues exist.”

“With proper planning and transparency,” Cleary Gottlieb added, “even politically controversial transactions can successfully negotiate the Cfius process.”

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DealBook: British Regulators to Investigate Accounting at Autonomy

LONDON – British accounting regulators said on Monday that they would investigate the financial reporting at the British software maker Autonomy before its $11.1 billion acquisition by Hewlett-Packard in 2011.

The announcement comes after accusations from H.P. that Autonomy inflated its sales and carried out improper accounting practices that misled the American technology giant ahead of the multibillion-dollar takeover.

In November, H.P. took a charge of $8.8 billion after it wrote down the acquisition of Autonomy. The figure included around $5 billion related to what H.P. called accounting and disclosure abuses at Autonomy.

Investigations by American authorities, including the Justice Department, are under way. The Financial Reporting Council, the British accounting watchdog, said on Wednesday that it would also examine Autonomy’s financial accounts from the beginning of 2009 to the middle of 2011.

The investigation may take around a year to reach disciplinary proceedings if wrongdoing is discovered, according to a spokeswoman for the council.

Mike Lynch, the founder of Autonomy who has denied the charges of accounting misconduct leveled by H.P., said he welcomed the investigation by British regulators.

“We are fully confident in the financial reporting of the company and look forward to the opportunity to demonstrate this to the F.R.C.,” he said in a statement on behalf of the former management team of Autonomy.

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Boeing 787 Completes Test Flight

A Boeing 787 test plane flew for more than two hours on Saturday to gather information about the problems with the batteries that led to a worldwide grounding of the new jets more than three weeks ago.

The flight was the first since the Federal Aviation Administration gave Boeing permission on Thursday to conduct in-flight tests. Federal investigators and the company are trying to determine what caused one of the new lithium-ion batteries to catch fire and how to fix the problems.

The plane took off from Boeing Field in Seattle heading mostly east and then looped around to the south before flying back past the airport to the west. It covered about 900 miles and landed at 2:51 p.m. Pacific time.

Marc R. Birtel, a Boeing spokesman, said the flight was conducted to monitor the performance of the plane’s batteries. He said the crew, which included 13 pilots and test personnel, said the flight was uneventful.

He said special equipment let the crew check status messages involving the batteries and their chargers, as well as data about battery temperature and voltage.

FlightAware, an aviation data provider, said the jet reached 36,000 feet. Its speed ranged from 435 to 626 miles per hour.

All 50 of the 787s delivered so far were grounded after a battery on one of the jets caught fire at a Boston airport on Jan. 7 and another made an emergency landing in Japan with smoke coming from the battery.

The new 787s are the most technically advanced commercial airplanes, and Boeing has a lot riding on their success. Half of the planes’ structural parts are made of lightweight carbon composites to save fuel.

Boeing also decided to switch from conventional nickel cadmium batteries to the lighter lithium-ion ones. But they are more volatile, and federal investigators said Thursday that Boeing had underestimated the risks.

The F.A.A. has set strict operating conditions on the test flights. The flights are expected to resume early this week, Mr. Birtel said.

Battery experts have said it could take weeks for Boeing to fix the problems.

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U.S. Use of Mexican Battery Recyclers Is Faulted

United States companies are sending spent lead batteries to recycling plants in Mexico that do not meet American environmental standards, according to an environmental agency created under the North American Free Trade Agreement, putting Mexican communities at risk.

In a blistering report submitted this week, the agency, the Commission for Environmental Cooperation, notes that the United States does not fully follow procedures common among developed nations that treat international battery shipments as hazardous waste. It faults environmental agencies on both sides of the border for lapses in regulation and enforcement. Cross-border trade in lead batteries increased by up to 525 percent from 2004 to 2011, the report said.

The report, which has been circulating in draft form, has been forwarded to the governments of the United States, Canada and Mexico, which have 60 days to object to its publication. An estimated 20 percent of lead acid batteries from the United States now go to Mexico for recycling, according to trade statistics.

“There needs to be better coordination between government agencies and better cross-border tracking,” said Evan Lloyd, who was the agency’s executive director until late last year and oversaw the yearlong study.

The report highlighted a number of shortcomings: Customs data on the number of batteries crossing the border did not mesh with counts by the United States Environmental Protection Agency. Though the E.P.A. requires notice of batteries leaving the United States, there was no effort to make sure that they had arrived at qualified recyclers in Mexico. The data that battery companies sent to the E.P.A. about exports consisted of “piles of paper,” Mr. Lloyd said, and it was never amassed into an electronic database that would be “useful to regulators.”

Almost all lead acid batteries used in the United States are recycled to extract the lead for reuse because lead is a dangerous pollutant and because it is a valuable commodity. Lead batteries are used in vehicles, cellphone towers and wind turbines.

Since 2008, new United States limits on lead pollution have made domestic recycling complicated and costly. That has helped propel the recycling trade to Mexico, both legally and illegally, environmental groups say, because that country has less stringent limits for lead pollution, and far less vigorous enforcement.

“There’s a pretty consistent pattern suggesting that exports are the direct result of U.S. emissions standards,” said Perry Gottesfeld, executive director of Occupational Knowledge International, which has led the campaign against lead poisoning internationally. Mr. Gottesfeld noted that a Mexican plant owned by a major American recycler, Johnson Controls Inc., puts out more than 30 times as much lead emissions as its newest plant in the United States.

“What Mexico needs to do is to get its recycling up to U.S. standards, and the U.S. needs to do a much better job of tracking batteries overseas,” he said. In an e-mail, Johnson Controls, based in Milwaukee, said it was “modernizing and reinvesting” in the Mexican facility, acquired in 2005, “to reduce its environmental footprint.”

The report was initiated in response to a report by Occupational Knowledge International and Fronteras Comunes, a Mexican environmental group, as well as to an investigative article in The New York Times, Mr. Lloyd said. Soil collected by The Times in a school playground near a recycling plant outside Mexico City was found to have lead levels five times those allowed in the United States.

Lead poisoning causes high blood pressure, kidney damage and abdominal pain in adults, and serious developmental delays and behavioral problems in young children. When batteries are broken for recycling, the lead is released as dust and, during melting, as lead-laced emissions.

In the United States, recyclers operate in highly mechanized, tightly sealed plants, with smokestack scrubbers and extensive monitors to detect lead release. Plants in Mexico vary greatly in safety standards, and in some, the recycling process is little more than men with hammers smashing batteries and melting down their contents in furnaces.

In recent months, there have been new efforts to curb the flow of batteries south of the border, though many battery makers have fought that. In response to a draft of the report released late last year, Battery Council International, an industry group, said it opposed “the creation of additional burdensome certification programs.”

Last year, the United States General Services Administration, which is responsible for federal vehicles, asked ASTM International, an independent standards agency, to explore a voluntary standard for battery recycling.

But that effort came to naught after the proposal was voted down at an open meeting attended by representatives from industry, government and environmental groups in December. Of the 103 people at the meeting, 49 worked for Johnson Controls.

This article has been revised to reflect the following correction:

Correction: February 9, 2013

An earlier version of this article misstated part of the name of an American recycler cited by Perry Gottesfeld, executive director of Occupational Knowledge International, as the owner of a Mexican plant that puts out more than 30 times as much lead emissions as the company’s newest plant in the United States. The American recycling company is Johnson Controls Inc., not Johnson Controls International.

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