September 23, 2021

Sony Hires Rothman to Head Revived TriStar Unit

The new venture comes as Sony faces pressure from the activist shareholder Daniel S. Loeb to increase returns from its entertainment divisions. The move promises to reboot a film and television label that until the late 1990s was operated as a fully staffed studio, run in parallel with Sony’s Columbia Pictures unit.

“On the poetic side, I’m a film buff, and I like being with something historical,” Mr. Rothman said of his reason for reviving the unit, which will be called TriStar Productions, rather than starting from scratch. At the same time, he said, the prospect of significant investment from Sony, and TriStar’s good will within Hollywood’s creative ranks, give the rebuilt studio an edge.

Mr. Rothman, who expressed support for Sony’s management, declined to say how much money Sony would invest in the studio. He and company executives said it was expected to make four films a year, and to split its activities evenly between film and television. Mr. Rothman said he would have an equity stake in the venture and was open to outside investment but expected to begin operating with Sony’s money.

In a statement, Sony Pictures Entertainment said Mr. Rothman would report to Michael Lynton, who is chief executive of that unit, and Amy Pascal, who is co-chairwoman.

Speaking separately on Thursday, both Ms. Pascal and Mr. Rothman said negotiations toward the TriStar venture began well before the first round of criticism by Mr. Loeb. Earlier this year, Mr. Loeb acquired a stake in Sony and began pressing the corporation’s managers to spin off its entertainment division, as a way of pressing it for better returns. Sony Pictures suffered an embarrassing flop this summer in “After Earth,” a science fiction film that starred Will Smith and his son Jaden.

But it did better with two comedies, “This Is the End” and “Grown-Ups 2,” and is looking toward another science fiction film, “Elysium,” for a boost.

“Elysium,” which stars Matt Damon and is backed financially by Media Rights Capital and QED International, is being released under the TriStar brand, which in recent years has been used largely for smaller films or pictures acquired from outside financiers.

Mr. Rothman, who has a reputation for controlling costs, said he expects to staff the company efficiently but said that under the arrangement, he will operate without formal limits on the size or type of films he might make.

Ms. Pascal said early conversations with Mr. Rothman had centered on a venture that might provide the smaller, artier films for which Mr. Rothman became known when he started Fox Searchlight for News Corporation and its 20th Century Fox unit. But ultimately, she said, the partnership was crafted to allow for more scope. “We want to make movies that make money,” she said.

Founded in 1982 as a joint venture among Columbia, HBO and CBS, TriStar — initially Tri-Star Pictures — grew with the explosion in home video revenue. It was eventually merged with Columbia in Columbia Pictures Entertainment, which in 1989 was acquired by Sony. Its peak moments included the release of “Jerry Maguire,” which had five Oscar nominations in 1997, and of “Terminator 2: Judgment Day,” which took in about $520 million around the world after opening in 1991.

Article source: http://www.nytimes.com/2013/08/02/business/media/sony-hires-rothman-to-head-revived-tristar-unit.html?partner=rss&emc=rss

Sprint and SoftBank Near Agreement to Restrict Use of Chinese Suppliers

The agreement would allow national security officials to monitor changes to the company’s system of routers, servers and switches, among other equipment and processes, the officials said. It would also let them keep a close watch on the extent to which Sprint and SoftBank use equipment from Chinese manufacturers, particularly Huawei Technologies. The government officials spoke about the possible agreement on the condition of anonymity because negotiations are continuing.

While common to most technology investments in the United States by foreign companies, such agreements have come into sharper focus recently because of accusations by United States government officials of espionage by foreign countries.

SoftBank and Sprint have already assured members of Congress that they will not integrate equipment made by Huawei into Sprint’s United States systems and will replace Huawei equipment in Clearwire’s network. Clearwire is a discount cellphone firm Sprint is seeking to buy.

In meetings here on March 14, Masayoshi Son, the chairman and chief executive of SoftBank; Daniel Hesse, chief executive of Sprint; and Erik Prusch, chief executive of Clearwire, sought to reassure United States officials that the merged company would take the steps necessary to ensure that its networks would not endanger United States communications networks.

SoftBank, one of Japan’s biggest cellphone companies, is offering to buy majority control of Sprint for $20.1 billion.

Representative Mike Rogers, Republican of Michigan and chairman of the House Permanent Select Committee on Intelligence, said on Thursday that he also met this month with the company executives, who promised him that they would not use equipment from Huawei.

“I expect them to make the same assurances before any approval of the deal” by national security officials, Mr. Rogers said. “I am pleased with their mitigation plans but will continue to look for opportunities to improve the government’s existing authorities to thoroughly review all the national security aspects of proposed transactions.”

A recent report by the intelligence committee identified Huawei and the ZTE Corporation, another Chinese equipment provider, as possible security risks. The report cited the companies’ potential ties to Chinese intelligence or military services.

In a filing with the Federal Communications Commission, whose approval of the merger is needed to allow the transfer of wireless-phone licenses, the Communications Workers of America said that Huawei and ZTE were “helping to build SoftBank’s next-generation 4G wireless network in Japan” and that Huawei also helped build wireless networks for Clearwire.

But in their own F.C.C. filing, SoftBank and Sprint called the union’s concerns “misplaced.” The companies noted that national security reviews were already being conducted by Team Telecom, an interagency group that includes the Federal Bureau of Investigation and the Homeland Security, Justice and Defense Departments.

Tadashi Iida, a senior SoftBank network executive, said recently that the company and its subsidiaries did not “use any equipment manufactured by Huawei Technologies Co. or its affiliates in their core network infrastructure,” according to an affidavit attached to the document.

In another, related filing, Sprint similarly dismissed the concerns. “Not only is there no evidence of any national security threat that might arise from the proposed transaction, but the expert authorities on national security issues — in particular the agencies that work together in Team Telecom — already are engaged with Sprint and SoftBank on these questions,” it said.

Also studying the potential consequences of the transaction is a national security unit within the Treasury Department that reviews foreign acquisitions of American businesses: the Committee on Foreign Investment in the United States. The interest of government officials in monitoring Chinese manufacturers around the Sprint deal was reported on Thursday by The Wall Street Journal.

Officials at the Treasury and Justice Departments declined to comment, as did spokesmen for the F.C.C. and Sprint.

Roland Sladek, a spokesman for Huawei, said, “Huawei is a company that meets the highest standards of network security, is a trusted vendor to 45 of the world’s top 50 network operators and is an active investor and employer in the U.S.”

It will not be easy for SoftBank and Sprint to avoid all equipment made by Huawei, because it is second in size only to Ericsson of Sweden. American manufacturers of telecommunications equipment have been struggling to remain competitive in the fast-changing industry.

Michael J. de la Merced contributed reporting from New York and David Barboza from Shanghai.

Article source: http://www.nytimes.com/2013/03/29/business/sprint-and-softbank-near-agreement-to-restrict-use-of-chinese-suppliers.html?partner=rss&emc=rss

I.B.M. Exploring New Feats for Watson

That is just one of the questions that I.B.M. is asking as it tries to expand its artificial intelligence technology and turn Watson into something that actually makes commercial sense.

The company is betting that it can build a big business by taking the Watson technology into new fields. The uses it will be showing off to Wall Street analysts at a gathering in the company’s Almaden Research Center in San Jose, Calif., on Thursday include helping to develop drugs, predicting when industrial machines need maintenance and even coming up with novel recipes for tasty foods. In health care, Watson is training to become a diagnostic assistant at a few medical centers, including the Cleveland Clinic.

The new Watson projects — some on the cusp of commercialization, others still research initiatives — are at the leading edge of a much larger business for I.B.M. and other technology companies. That market involves helping corporations, government agencies and science laboratories find useful insights in a rising flood of data from many sources — Web pages, social network messages, sensor signals, medical images, patent filings, location data from cellphones and others.

Advances in several computing technologies have opened this opportunity and market, now called Big Data, and a key one is the software techniques of artificial intelligence like machine learning.

I.B.M. has been building this business for years with acquisitions and internal investment. Today, the company says it is doing Big Data and analytics work with more than 10,000 customers worldwide. Its work force includes 9,000 business analytics consultants and 400 mathematicians.

I.B.M. forecasts that its revenue from Big Data work will reach $16 billion by 2015. Company executives compare the meeting in San Jose to one in 2006, when Samuel J. Palmisano, then chief executive, summoned investment analysts to I.B.M.’s offices in India to showcase the surging business in developing markets, which has proved to be an engine of growth for the company.

I.B.M. faces plenty of competitors in the Big Data market, ranging from start-ups to major companies, including Microsoft, Oracle, SAP and the SAS Institute. These companies, like I.B.M., are employing the data-mining technology to trim costs, design new products and find sales opportunities in banking, retailing, manufacturing, health care and other industries.

Yet the Watson initiatives, analysts say, represent pioneering work. With some of those applications, like suggesting innovative recipes, Watson is starting to move beyond producing “Jeopardy” style answers to investigating the edges of human knowledge to guide discovery.

“That’s not something we thought of when we started with Watson,” said John E. Kelly III, I.B.M.’s senior vice president for research.

I.B.M.’s Watson projects are not yet big money makers. But the projects, according to Frank Gens, chief analyst for IDC, make the case that I.B.M. has the advanced technology and deep industry expertise to do things other technology suppliers cannot, which should be a high-margin business and give I.B.M. an edge as a strategic partner with major customers. And the new Watson offerings, he said, are services that future users might be able to tap into through a smartphone or tablet.

That could significantly broaden the market for Watson, Mr. Gens said, as well as ward off potential competition if question-answering technology from consumer offerings, like Apple’s Siri and Google, improve.

“It will take years for these consumerized technologies to compete with Watson, but that day could certainly come,” Mr. Gens said.

John Baldoni, senior vice president for technology and science at GlaxoSmithKline, got in touch with I.B.M. shortly after watching Watson’s “Jeopardy” triumph. He was struck that Watson frequently had the right answer, he said, “but what really impressed me was that it so quickly sifted out so many wrong answers.”

Article source: http://www.nytimes.com/2013/02/28/technology/ibm-exploring-new-feats-for-watson.html?partner=rss&emc=rss

New Misgivings About St. Jude’s Heart Device

The decision by Medtronic, the nation’s biggest producer of heart devices, raises more questions about the safety of the St. Jude component — an electrical wire that connects an implanted defibrillator to a patient’s heart — and about how executives of that company have responded to those issues.

St. Jude executives have repeatedly insisted the wire, or “lead,” known as the Durata, is safe. Asked about the new study, which was sponsored by Medtronic, a spokeswoman for St. Jude said in a statement that numerous studies and tests had demonstrated the safety of the insulating material used in the Durata.

“We do not rely on Medtronic to confirm the safety and reliability of material we use in our products,” the statement, by Amy Jo Meyer, said.

Shares of St. Jude fell more than 12 percent Wednesday, to $31.37, after the Food and Drug Administration released a plant inspection report that found significant problems in the company’s testing and oversight of the Durata. The stock price represented a three-year low.

The F.D.A. report, which raises the prospect of potential agency action against St. Jude, appears to be the latest misstep by company executives in dealing with questions from investors and doctors about the safety of the Durata and an earlier heart device lead called the Riata, which the company has recalled.

In October, St. Jude executives released the F.D.A. report as part of a filing with the Securities and Exchange Commission but blocked all references in it to the Durata. In taking the unusual action, the company stated that it believed the F.D.A. would make similar redactions when it released the report in response to a Freedom of Information Act request, but the agency did not do so.

Earlier this year, St. Jude’s chief executive, Daniel J. Starks, also publicly criticized a heart device expert, Dr. Robert G. Hauser, after he raised questions about the safety of the Riata and the Durata. Mr. Starks then sought to have a medical journal retract an article written by Dr. Hauser. The publication refused.

“It’s becoming increasingly difficult to defend Durata,” one Wall Street analyst, Lawrence Biegelsen of Wells Fargo Securities, wrote Wednesday in a note to investors in which he downgraded St. Jude stock to hold from buy. He added that the release of the full F.D.A. report was “likely to heighten concerns” among doctors about using the Durata lead.

The Medtronic-sponsored study at issue appeared in the November issue of a scientific journal, Macromolecules, which is published by the American Chemical Society, a professional group.

In it, researchers looked at the durability of two chemically related insulating materials. One material that St. Jude calls Optim is used in the Durata. Medtronic was interested in using the other material, called Pursil 35, in a new heart device lead it was developing. Both products belong to a class of materials known as silicone-based polyurethanes.

The products were developed by different companies in an effort to solve a longstanding problem. Over time, insulating materials used in implanted devices are broken down by bodily fluids, exposing them to possible electrical failure and even short circuits that can prevent a device, like a defibrillator, from working when needed to save a life.

Recent episodes involving failures of heart devices or their components have involved failures of the insulating materials used in them.

In the study, both Optim and Pursil 35 were exposed in laboratory tests to water and heating techniques aimed to accelerate aging of the materials. While the Pursil 35 material changed faster than Optim, both materials lost substantial strength in the tests, said Dr. Frank S. Bates, a professor at the University of Minnesota and a Medtronic consultant who was involved in the study.

A spokesman for Medtronic, Christopher Garland, said the study results led the company recently to cancel the development of a new lead that would have used Pursil 35 as an insulating material. St. Jude has an exclusive arrangement with the developer of Optim to use it in heart device leads. Mr. Garland said that Medtronic had also been looking at that material’s use in other kinds of medical devices.

He added that Medtronic was working with producers of both materials to find ways to resolve some of the problems detected in the laboratory study.

Dr. James Runt, a professor at Pennsylvania State University who is a St. Jude consultant, said that the Medtronic study struck him as an “outlier” because both internal St. Jude studies and external reviews had supported the durability of Optim.

Katie Thomas contributed reporting.

Article source: http://www.nytimes.com/2012/11/22/business/new-misgivings-about-st-judes-heart-device.html?partner=rss&emc=rss

DealBook: TheStreet to Buy The Deal for $5.8 Million

TheStreet's primary interest is in The Deal's online subscription service.TheStreet’s primary interest is in The Deal’s online subscription service.

10:07 a.m. | Updated

TheStreet agreed on Wednesday to buy The Deal, publisher of a longtime bible of the mergers industry, for $5.8 million from the investment firm that manages money for the estate of the late Bruce Wasserstein and other investors.

TheStreet’s primary interest is in The Deal’s online subscription service, and company executives said on a conference call with analysts on Wednesday that they planned to shut down the company’s monthly magazine.

The deal will unite TheStreet, the financial information Web site and service that rose to fame on the back of its association with Jim Cramer, with The Deal, which began as a magazine co-created by Mr. Wasserstein in 1999 to cater to his fellow specialists in mergers and acquisitions.

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Buying The Deal will bolster TheStreet’s revenue from subscriptions, particularly from senior bankers and lawyers who receive the magazine and have access to its Web site. The company is betting on a resurgence in deal activity, which it is hoping will propel a growth in subscriptions.

Among its plans, executives said, was to push more content from TheStreet onto The Deal Pipeline service.

“This is a terrific combination that grows the most profitable portion of our business, subscription revenues,” Elisabeth DeMarse, TheStreet’s chief executive, said in a statement. “The Deal is a prominent and well-respected brand that the market will intuitively associate with TheStreet, creating new revenue opportunities for both businesses at minimal incremental cost.”

Article source: http://dealbook.nytimes.com/2012/09/12/thestreet-to-buy-the-deal-magazine/?partner=rss&emc=rss

Boeing Machinists’ Union Seeks to End Labor Complaint

About 74 percent supported the contract on Wednesday in a ballot among 31,000 union members, mostly in the Seattle area, who accepted the surprise proposal unveiled last week.

Boeing plans to increase output by 60 percent after four union walkouts since 1989 delayed hundreds of deliveries. Workers were promised that a revamped 737 jet would be built at a current factory near Seattle, and the union requested that the N.L.R.B. retract the complaint filed over a new 787 plant in South Carolina.

The faltering relationship between the plane maker and its largest union reached a low point two years ago, when Boeing decided to build its first commercial assembly plant outside the Puget Sound area, where the company was founded in 1916.

The union complained to the N.L.R.B. after company executives said that the new 787 factory in South Carolina would avoid walkouts in Washington. The new plant is not unionized. After an investigation, the labor board accused Boeing of violating workers’ federally protected right to strike.

The N.L.R.B. has said it would consider the union’s request for a dismissal of the case.

Workers will get a 2 percent raise each year of the contract, a new performance-based incentive program and a $5,000 ratification bonus that will be paid this month. Pensions and retirees’ medical benefits will be preserved.

Employees will have to pay more of their health costs, which was one proposal that prompted a strike three years ago.

Article source: http://feeds.nytimes.com/click.phdo?i=d4163817d3882ebbcd9901a0c4ba5f18

DealBook: Cash Found at MF Global but Customer Money Still Missing

Jon S. Corzine on the trading floor of MF Global last year. Mr. Corzine’s Wall Street comeback ended early Friday.David Goldman for The New York TimesJon S. Corzine on the trading floor of MF Global last year. Mr. Corzine’s Wall Street comeback ended early Friday.

The missing customer money at MF Global is still missing.

On Friday, funds from the bankrupt brokerage firm suddenly surfaced at JPMorgan Chase. Washington and Wall Street, for a moment, were hopeful it was the money they had been searching for all week.

But then, just as quickly, nearly everyone agreed it was not the missing money, and the hunt was on again.

While MF Global has more than $2 billion in accounts at JPMorgan, regulators had previously accounted for those funds, according to people briefed on the matter who were not authorized to speak publicly. Federal officials estimate that roughly $600 million has been misplaced or misused or has disappeared altogether, two of the people said.

The revelation — and the sharp reversal — is the latest debacle in the bankruptcy of MF Global.

Adding to the drama, the firm’s chief executive, Jon S. Corzine, the former Democratic governor of New Jersey and head of Goldman Sachs, resigned early Friday. In a more surprising development, Gary Gensler, head of the Commodity Futures Trading Commission, will no longer participate in the investigation due to his long acquaintance with Mr. Corzine, according to a person with direct knowledge of the matter.

It is just the beginning. Regulators are still camped out at the brokerage firm’s Midtown Manhattan headquarters, poring over the books. Exchange officials are transferring customer accounts to other brokerage firms. And company executives are helping to close the firm.

The process of winding down MF Global will be long and arduous. The courts continue to sort through the mess at Lehman Brothers, more than three years after the investment bank filed for Chapter 11.

“It’s going to be complicated when you have a multibillion-dollar company,” said Professor J. Samuel Tenenbaum, the director of the Investor Protection Center at Northwestern University School of Law. “That just doesn’t happen overnight. It would be nice to think that you can get this done quickly, but that would be fanciful.”

The demise of MF Global can be traced to risky bets on European sovereign debt.

Soon after joining the firm in 2010, Mr. Corzine moved to transform the sleepy brokerage firm into a full-service investment bank in the mold of his former employer, Goldman. He aggressively bought up the bonds of troubled economies like Italy, Ireland and Spain, betting that the Continent would not let the countries default on their loans.

As the sovereign debt crisis dragged on this summer, regulators noticed the risky bets and pushed the firm to hold more capital against the investments. The move alarmed shareholders, clients and rating agencies, inciting a crisis of confidence. With the stock sliding, the firm searched desperately for a suitor.

But the missing money proved the death knell for MF Global.

Before dawn on Monday, the firm uncovered a nearly $1 billion hole in its customer accounts. The startling discovery scuttled a last-minute deal to sell part of the business to Interactive Brokers Group, a Connecticut rival. Out of options, MF Global filed for bankruptcy that morning.

Within hours, regulators, including the Securities and Exchange Commission and the Commodity Futures Trading Commission, started investigating MF Global and the missing money. The Federal Bureau of Investigation joined the fray on Tuesday. Federal authorities worried that MF Global had violated a basic principle in this business: customer assets must be kept separate from company funds.

As the scrutiny intensified, Mr. Corzine was said to have hired Andrew F. Levander, a prominent criminal defense lawyer. Mr. Levander, the chairman of Dechert, has represented other Wall Street executives including John Thain, the former chief executive of Merrill Lynch. Mr. Corzine has retained two bankruptcy lawyers from the firm Perkins Coie to represent him in the civil Chapter 11 proceedings.

Neither Mr. Corzine nor MF Global have been accused of any wrongdoing. MF Global says the shortfall is temporary, as additional money will flow in from banks and clearinghouses.

In resigning on Friday, Mr. Corzine ended what was supposed to be his grand return to Wall Street after nearly a decade in politics. The company said that he would not seek his $12 million in severance.

“I feel great sadness for what has transpired at MF Global and the impact it has had on the firm’s clients, employees and many others,” Mr. Corzine, 64, said in a statement. “I intend to continue to assist the company and its board in their efforts to respond to regulatory inquiries and issues related to the disposition of the firm’s assets.”

Mr. Gensler, head of the C.F.T.C., decided Thursday to step back from the inquiry, and the following day he did not participate in an agency briefing on MF Global; Mr. Gensler had worked for Mr. Corzine while both were at Goldman Sachs in the 1990s.

As regulators try to untangle the books, customers, whose accounts were frozen on Monday, are waiting to get their money back. The CME Group, the exchange where MF Global did business, is transferring client funds to other brokerage firms, including R.J. O’Brien and ABN Amro, people involved in the process said.

But customers won’t be made whole — at least not yet.

Industry groups pushed for customers to receive about 70 percent of their cash, according to the people involved in the process. But because roughly $600 million hasn’t been found, clients will only get on average 60 cents on the dollar, court filings show.

The situation puts customers, including individual investors, hedge funds and big companies, in a financial bind. Until the money surfaces, many clients will have to come up with extra cash to maintain their positions, or they will be forced to liquidate their trades, potentially at a loss.

It could take some time for the money to materialize, assuming it does.

With scarce information, even regulators and industry insiders are grasping for answers. The situation was underscored by the brief elation following media reports that the missing money might have turned up.

But, it hadn’t. JPMorgan, which confirmed MF Global had accounts with the bank, said in a statement “that it does not have any information as to whether any such balances are related in any way to the ‘missing’ customer funds.”

Azam Ahmed, Kevin Roose and Peter Lattman contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=1a417bd547043fc37090c7a96cd91e4f

Citing Lack of Progress, Verizon Workers Threaten Strike

Officials with the union, the Communications Workers of America, said Verizon was demanding so many concessions — on health coverage, pensions and other matters — that it would set workers back 50 years.

Verizon executives say far-reaching concessions are needed because of a long-term drop in revenue and profit in its land line telephone business and because of intense competition in television and Internet services.

The Communications Workers and the International Brotherhood of Electrical Workers, which represents another 10,000 workers at Verizon, have both threatened to strike at 12:01 a. m. Sunday, when their contracts expire, unless a settlement is reached by then. The strike would involve telephone repair technicians, customer service representatives and cable installers from Massachusetts to Virginia.

In a statement issued at 6:30 p.m. Saturday, Candice Johnson, a spokeswoman for the Communications Workers, said negotiations “are not moving forward.”

“Over months of negotiations, there has been no real bargaining by Verizon management,” Ms. Johnson said. “In fact, every major concession demand — more than 100 in all — remains on the table. Even at the 11th hour, with contracts set to expire, Verizon continues to seek to strip away 50 years of contract gains.”

A Verizon spokesman, Peter Thonis, said Saturday evening that the company executives “continue to negotiate in good faith.”

In the talks being held in New York and Philadelphia, Verizon has asked its unionized workers to start contributing to their health care premiums, proposing that workers pay $1,300 to $3,000 for family coverage, depending on the plan. Verizon executives say the contributions would be similar to those already made by its 135,000 nonunion employees.

Verizon has also called for freezing pensions for current employees and eliminating traditional pensions for future workers, while making its 401(k) plans somewhat more generous for both. It would also like to limit sick days to five a year, as opposed to the current policy, which company executives say sets no limit.

In addition, Verizon wants to make it easier to lay off workers without having to buy them out and wants to tie raises more closely to job performance, denying annual raises to subpar performers.

Union officials say these proposals are the most aggressive Verizon has ever made.

Verizon said many field technicians earn more than $100,000 a year, including overtime, with an additional $50,000 in benefits. But union officials say the field technicians and call center workers generally earn $60,000 to $77,000 before overtime, saying that benefits come to well under $50,000 a year.

The crux of the clash is Verizon’s financial health. The company says its traditional wire line division is struggling, while the union says Verizon’s overall business, including Verizon Wireless, a joint venture in which Verizon is the majority owner, is thriving.

Article source: http://feeds.nytimes.com/click.phdo?i=841d73ef4cd615773a4364abd8416be6

A Bad Year for Car Bargains

Though the average price remains below historic highs when adjusted for inflation, nominally it has never been so high, according to the auto-research site TrueCar.com. That concerns some car company executives, who fear that the industry’s recent comeback could be stalled if buyers start experiencing sticker shock.

And early sales data for this month are not encouraging: Retail sales of new vehicles are projected to total about 850,000 in May, according to J. D. Power Associates. That translates to an annual seasonally adjusted selling rate of about 9.6 million units, a significant drop-off from the 10.7 million rate achieved from January through April. The data exclude sales to rental car and other fleets.

“You’ve got to figure out that sweet spot where you offer just enough incentives to get people to buy your cars without sacrificing profitability,” said Jesse Toprak, vice president of industry trends at TrueCar.

Several factors account for the rising prices. Because there are more new models on the market than in recent years, automakers need fewer incentives to lure consumers into the showrooms. The earthquake in Japan has also caused shortages of some cars and crossover vehicles built there by Toyota, Honda and Nissan, which has driven the prices up on the limited inventory in stock.

Car companies are also commanding better prices for their small cars because of added features like entertainment systems and heated seats. Consumers are increasingly paying more to get upscale options on smaller cars that were once primarily bare-bones purchases.

“On a dollar basis, they’re paying more, but they’re getting a whole lot more car than in the past,” said Mr. Toprak.

The average transaction price for a new vehicle in the United States, including rebates and other incentives, reached $29,602 in April, according to TrueCar.com. That figure represented an increase of $324 over March. But automakers are not necessarily getting greedy, industry analysts said. Some of the increases are going toward covering higher material costs, and the companies are also taking advantage of strong demand.

General Motors, for example, is running short on supply of its Chevrolet Cruze compact car, and the Ford Motor Company is low on inventories of its Focus sedan and Explorer S.U.V. Some of the biggest year-over-year price increases are found on revamped, hot-selling models like Chrysler’s Jeep Grand Cherokee and Honda’s Odyssey minivan.

“The pricing is more of a symptom of lack of supply than anything else,” said Jim Farley, Ford’s head of global sales marketing. “But it is affecting the industry’s volumes.”

Ford and Toyota announced across-the-board price increases this year on their 2011 models. Ford said it would raise prices by an average of $117, or 0.4 percent, while Toyota said it would lift prices by about 1.7 percent on many of its Toyota, Lexus and Scion models. G.M. has said it will charge more for many of its vehicles, by an average of $123.

But the increases are only part of the equation. Overall discounts and sales incentives fell to their lowest levels in five years in April, according to the automotive site Edmunds.com.

Incentives averaged about $2,320 per vehicle in April, a $370 reduction from the period a year earlier. Some of the reduction is attributed to sales programs that expired and were not renewed. Japanese carmakers have also pulled back incentives because of the earthquake-related shortages, and the American companies have followed suit.

“Our incentive strategy is based on the competitive environment,” said Mr. Farley. “There’s been a drastic change because stocks have been depleted and we’re launching a lot of new products that don’t require incentives to sell.”

Automakers always try to balance the need for incentives against consumers’ demand. But if companies pull back too far on discounts, some potential shoppers will simply wait until the next deals are announced.

The American automakers are not as reliant on heavy incentives as in years past, mostly because the companies closed dozens of factories to bring their production in better balance with their market shares.

They also have little reason to pile on discounts when their Japanese competitors have cut incentives so drastically.

“Putting incentives on cars you don’t have doesn’t make sense,” said Neale A. Kuperman, president of Rockland Toyota in Blauvelt, N.Y.

Mr. Kuperman said he usually sold up to 20 Prius gas-electric hybrid cars each month, but so far in May has only sold six. His overall dealership sales volumes are down about 50 percent because of inventory shortages.

There are no discounts available on many models because of supply constraints, he said.

“As much as everybody likes to think that we set the prices, the market dictates it,” said Mr. Kuperman. “When there’s less of a supply, the prices tend to go up. When there’s more, the prices go down.”

J. D. Powers’s executive director of forecasting, Jeff Schuster, said the lower sales so far in May could be attributed partly to higher transaction prices, as well as rising fuel costs and inventory shortages.

With fleet sales included, the annual selling rate for May so far is about 11.9 million vehicles, compared with a 13.2 million rate for the previous four months combined.

Even with the sales drop, Mr. Schuster said that vehicle prices, without incentives, had risen about 1.6 percent in May from April.

“It makes for better margins for the automakers, but on potentially lower volumes,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=e909959e27605212ae1b07460c656b63