March 28, 2024

App Smart: Searching for Apps Is Finally Getting Easier

Luckily, that didn’t happen.

As consumers increasingly migrate to mobile apps and developers fight to have their apps discovered in the chaos of the marketplace, app-related search engines and stores have vastly improved their support for both constituencies.

Apple users have seen some improvement, but Android is the much bigger story of the year because of upgrades to the Android Market, the emergence of the Amazon Appstore for Android (which sells only Android apps) and upgrades to existing services like Appolicious and Appbrain.com.

Of these developments, the polishing of the Android Market Web site is the most meaningful. The version of the Android Market offered on mobile devices was fairly good, but the Web version was a shallow, amateurish sampler that inexplicably offered users no way to search for apps.

Considering the fact that Android is owned by Google, it was a shockingly poor performance.

Google started fixing that problem in February by introducing search on the Market Web site and populating the Market with a big assortment of categories for browsing.

As the year progressed, the Market added editors’ picks, trending apps and spruced up the graphics, to the point where the service bears a passing resemblance to the iTunes App Store.

More recently, Google took a page from Amazon’s playbook by virtually giving away apps that, in some cases, were among the more popular and expensive in the Market. But instead of making this a pure giveaway, the Market is selling 10 apps daily for 10 cents apiece, thereby requiring customers to enter their credit card information.

That’s a line many prospective app buyers refuse to cross, either because of the inconvenience or because of fear that their financial information may somehow be compromised. But for apps like SoundHound Infinity and Minecraft — Pocket Edition (both regularly $7) and SwiftKey X Keyboard (regularly $4), the sale price is quite an enticement.

Unfortunately, Google last week still showed signs that it was not ready to rival Apple or Amazon for retailing excellence. Several of the purchases I tried to make from the “10 Billion Downloads” promotional list failed, for instance, and by the time Android notified me, the promotional price had disappeared. A few days later, Android sent an apology to customers, along with free access to the apps customers had tried to purchase.

As a search engine, the Android Market is very good, and getting better. You can sort search results by relevance or popularity, and the site now judges relevance much more effectively. Earlier this year, people who searched apps created by Google often were confronted with a long list of apps that simply mentioned Google, but now the company’s own apps top the results.

Sample images from the apps, meanwhile, are enough to convey the gist of the app experience, and when you click through to an individual app description, Android makes good suggestions for similar apps that users have either bought or browsed.

Amazon pioneered that approach, and its Appstore, which is for Android only, honors the company’s reputation as a source of good recommendations.

But Amazon’s Appstore has a much more limited selection of roughly 22,000, compared with around 300,000 on the Android Market. That’s partly because, unlike Google, Amazon tests each Android app to be sure it meets the company’s standards for content quality and technological performance.

Often you won’t notice the Appstore’s limited selection, but there are occasional glaring omissions. Late last week, half the apps featured on the Android Market’s 10 Billion Downloads promotion were not available on Amazon, including hits like Minecraft and Endomondo Sports Tracker Pro.

When it comes to discovering new apps, Android users would do well to also try Appbrain.com, which compiles customer reviews and tracks apps that are attracting the most attention among users.

Last week, Appbrain’s users were clearly paying attention to the 10 Billion Downloads promotion, but other trending apps included Any.DO: To Do List / Task List, which is free.

Appolicious.com is similar to Appbrain in that it features user reviews and a search engine of its own, but Appolicious has more useful content, and it covers Apple as well as Android apps.

Appolicious is a search and recommendation service in which app suggestions are generated by staff and readers. The service, which is also behind Best Buy’s App Discovery Center (at apps.bestbuy.com), covers nearly 600,000 apps on Apple and roughly 200,000 on Android.

Users can search those by keyword or phrase, or browse an index that is divided into hundreds of subcategories. Task management apps, for instance, can be found in the productivity category, which itself is a subset of the business category.

Appolicious employs five editors and dozens of freelancers who review apps and offer category roundups, like the Best Shopping Apps of 2011. And the company said its service had attracted more than 100,000 members who write their own reviews and publish lists in categories that you’d struggle to find help with elsewhere, like “Top 3 Chinese Character Flashcard Apps for iPhone.”

It’s a great supplement to Apple’s App Store, which continues to do its best to keep pace with the avalanche of new apps arriving daily. Apple’s editorial staff turns out new category roundups every few weeks, but it’s difficult to find those features once they are removed from the front page.

If you type “skiing” into the App Store’s search box, for example, the results don’t even include the editorial team’s current compilation.

With all the improvement on the Android Market in 2011, maybe next year Apple can follow suit.

Quick Calls

7 Wonders: Magical Mystery Tour ($3 on iPhone, $5 on iPad) is a new puzzle game set in mythological locations. StoryLines (free on Apple) offer a new twist on the traditional “telephone” storytelling game. Pat LaFrieda’s Big App for Meat ($7 on iPad) is a carnivore’s delight that includes videos on meat-carving technique, as well as games and shopping.

Article source: http://feeds.nytimes.com/click.phdo?i=567224f9b34c858b5b52d91531240375

DealBook: Despite a Rough Year, Hedge Funds Maintain Their Mystique

Hedge funds, the golden children of finance, are having a very rough year.

For one, they are not making money the way they used to. Returns for a number of funds, including those of star managers like John A. Paulson, have fallen by as much as half this year. And that poor performance comes just as these investment partnerships are coming under increased regulatory scrutiny.

Yet the money keeps pouring in, even for Mr. Paulson.

This year alone, more than $70 billion in new money has gone to hedge funds, mostly from pensions and endowments. A recent study by the industry tracker Preqin found that 80 percent of investors were mulling new allocations to hedge funds, and 38 percent of investors were planning to add to existing ones.

One bad year for hedge funds can be written off. But most investors rarely enjoy a bounty of returns even over the long run. The average hedge fund investor earned about 6 percent annually from 1980 to 2008 — a hair above the 5.6 percent return they would have made just holding Treasury securities, according to a study published this year in The Journal of Financial Economics.

So why would large investors pay hedge funds billions of dollars in fees over the years for poor returns? The answer highlights the financial problems at the country’s largest pensions.

As waves of workers prepare to retire, pensions find themselves in a race against time. Short of what they need by an estimated $1 trillion, according to the Pew Center on the States, public pensions are seeking outsize returns for their investments to make up the gap. And with interest rates hovering near zero and stock markets gyrating, the pensions and others are increasingly convinced that hedge funds are the only avenue to pursue.

“Even with the short-term ups and downs, at the moment there is not a credible alternative with the same risk profile for pensions,” said Robert F. De Rito, head of financial risk management at APG Asset Management US, one of the largest hedge fund investors in the world.

Hedge Fund Investments Rise

Hedge funds, once on the investing fringes, have become a mainstay for big investors, amassing huge amounts of capital and accumulating more of the risk in the financial system. The impact of this latest gold rush into hedge funds is unclear. Some argue that the hedge fund industry’s exponential growth — it has quadrupled in size over the last 10 years — has depressed returns. Others, meanwhile, wonder whether the bonanza in one of the most lightly regulated corners of the investment universe will have broader, less clear implications.

“I worry that institutions are betting on an asset class that is not well understood,” said William N. Goetzmann, a professor of finance at the Yale School of Management. “We know that the real long-term source of performance is not picking someone good at beating the market, it’s taking risks on meat and potato assets like stocks and bonds.”

The growth has been fueled in part by more sophisticated marketing — most funds now have employees whose job is to manage relationships with investors and to seek out new ones, jobs that were uncommon a decade ago. And there is still a mystique: funds that have had at least one spectacular year have excelled at raising and keeping money.

Despite the appeal of a blowout year, however, performance tends to peter out after investors jump into a hot new fund. Yet even with the lackluster returns of late, many investors have resigned themselves to sticking with hedge funds. The financial crisis taught them that even more important than making money was not losing the money you had.

Reflecting that perspective, hedge funds have started to change how they sell themselves. For decades, funds have marketed themselves as “absolute return” vehicles, meaning that they make money no matter the market conditions. But as more and more money crowds into them, the terminology has started to change. Now, managers and marketers increasingly speak of “relative returns,” or performance that simply beats the market.

“In general, they’re probably not going to have the blowout returns of the ‘80s and ‘90s,” said Francis Frecentese, who oversees hedge fund investments for the private bank at Citigroup. “But hedge funds are still a good relative return for investors and worth having in the portfolio.”

Gauging by the inflows, pensions seem to agree.

This year, major pensions in New Jersey and Texas lifted the cap on hedge fund investing by billions of dollars. The head of New York City’s pension recently said its hedge fund investments could go as high as $4 billion, a roughly tenfold increase from current levels. Illinois added another $450 million to its portfolio last month, which already managed about $1.5 billion in hedge fund investments.

About 60 percent of hedge funds’ total $2 trillion in assets comes from institutions like pensions, a big shift from the early days when hedge funds were the province of ultra-wealthy individuals.

As the investor base has changed, hedge funds themselves have grown into more institutional businesses. The biggest firms have vast marketing, compliance and legal teams. They hire top-notch accounting firms to run audits, and their technology infrastructure rivals that of major banks.

They make money even off mediocre returns. A manager overseeing $10 billion, for instance, earns $200 million in management fees simply for promising to invest the assets. Investment returns of 15 percent, or $1.5 billion, would translate into another $300 million in earnings for the hedge fund.

By contrast, a mutual fund that invests in the shares of large companies charges less than half a percent in management fees, or less than $50 million.

Psychology plays a meaningful role in hedge fund investing. Investors often pile into the hottest funds, even well after their best years are behind them.

This year’s must-have manager is John A. Thaler — despite having closed his fund to new investors last year in the face of a flood of money. While little known outside Wall Street, Mr. Thaler and his stock-picking prowess have been the talk of the hedge fund world. A former star portfolio manager at Shumway Capital Partners, Mr. Thaler developed a reputation early on as an astute analyst of media and technology companies.

His hedge fund, JAT Capital, had done well since its founding in 2007, and this year, as returns climbed to 40 percent amid the market upheaval, investors clamored to gain entry.

Then, last month, two of his biggest holdings, Netflix and Green Mountain Coffee Roasters, took a bath. His fund fell by nearly 15 percent in a few short weeks, a reminder that even high-flying managers can quickly fall back to earth.

But few hedge fund managers have risen and fallen so quickly and so publicly as Mr. Paulson, the billionaire founder of the industry giant Paulson Company.

He made his name after earning billions of dollars in 2007 and 2008 with a prescient bet against the subprime mortgage market. Afterward, investors clamored to get money into the fund, and by the start of 2011 assets had swelled to $38 billion.

This year, Mr. Paulson has lost gobs of money on an incorrect call that the United States economy would recover. One of his major funds was down nearly 50 percent, while others fell more than 30 percent. Investors who poured money into Mr. Paulson’s hedge fund after his subprime bet have given back gains from 2009 and 2010, according to an investor analysis.

But last month, when investors had the opportunity to flee the fund that had suffered the worst losses, most instead chose to stick around. Some even put more money into Mr. Paulson’s funds, despite losing almost half of their holdings this year.

Article source: http://feeds.nytimes.com/click.phdo?i=8f27b1b0832b58feda8e6288689087ca

DealBook: The Merrill Lynch and Lehman Deals, 3 Years Later

Harry Campbell

This is a tale of two deals.

Three years ago today, Bank of America leapt into the maelstrom and bought Merrill Lynch for about $50 billion. Early the next morning, Lehman Brothers announced its bankruptcy filing. Lehman soon sold its investment banking and capital markets operations to Barclays for $250 million.

One of these deals has been a success. The other is questionable. The difference shows not only how a chief executive’s hubris can destroy a company, but how three years later, the failure of the Treasury Department, Federal Reserve and the banks themselves to shrink significantly the banks’ mortgage liabilities still threatens our economy.

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Of the two deals, the hands-down winner is the Lehman Brothers acquisition. Barclays paid anything but retail for Lehman, and in the process acquired a powerful franchise in the United States. Barclays is now the seventh-largest American investment bank measured by revenue, according to Dealogic. The former Lehman bankers are competing strongly in some crucial areas. In advising on mergers and acquisitions in the United States, Barclays was fifth in the first half of the year, according to Dealogic. Barclays was also the largest adviser on debt offerings in the world and third-largest in the United States.

At first blush, Merrill is also performing well, but in a way that highlights Bank of America’s scarily poor performance. The bank lost $8.8 billion in the second quarter after taking a $20.7 billion write-off for mortgage-related losses. It would have been worse without Merrill. Bank of America’s investment banking and wealth management operations, which are largely old Merrill operations, contributed $2.1 billion to Bank of America’s profits on $11.3 billion of revenue.

While Merrill is currently throwing a lifeline to its parent, Bank of America, Merrill has also contributed substantially to Bank of America’s problems. The Merrill acquisition added nearly $900 billion worth of assets to Bank of America’s balance sheet. With that, Merrill’s liabilities related to the mortgage crisis were assumed by Bank of America. It is unclear how big they are, but they total in the tens of billions. During the financial crisis, Merrill’s mortgage problems forced Bank of America to take an extra $20 billion in Troubled Asset Relief Program money.

This is where the two deals truly differ. Barclays’s regulator stopped Barclays from buying Lehman before it declared bankruptcy. This was unbelievably lucky for Barclays. By buying Lehman out of bankruptcy, Barclays did not take on Lehman’s toxic assets. These consisted of more than $600 billion in debt. Barclays avoided liability for most of it.

In contrast, Bank of America plunged headlong into buying Merrill. The deal was driven by Bank of America’s former chief executive, Kenneth D. Lewis, who had lusted after Merrill Lynch for years. Bank of America paid a 70 percent premium three years ago for a bank that was worth far less and might have been insolvent. And while Bank of America executives a few months later appeared to get cold feet, the federal government pushed them to close the deal.

Being as deeply in the mortgage market as Merrill was — if not more so — Bank of America should have been aware in September 2008 of the problems looming on the horizon. Yet Mr. Lewis’s eagerness to buy Merrill consumed all sober judgment. At the same time, blaming him alone is also simplistic. I wonder where the Bank of America board was in all of this. This is yet another example of a board failing in its responsibility to ask hard questions.

Things would have been different had Bank of America waited. It would at a minimum have paid a bargain basement price for Merrill, one that was tens of billions lower at least.

There is still some talk of spinning off Merrill Lynch. The operations of Merrill have already been combined with Bank of America, so a real separation would be complicated. And the recent reorganization of the bank’s management — which puts Merrill Lynch’s wealth management business under David Darnell, the co-chief operating officer, but Bank of America-Merrill Lynch under the other chief operating officer, Tom Montag — also makes a split more difficult.

Ultimately, Barclays made a better deal by doing what should be done in an acquisition, carefully assessing the future liabilities and limiting them as much as possible. But let’s be clear. Barclays did this only because it was forced to by the regulator.

The first lesson of Bank of America and Merrill Lynch is that impatience and a chief executive’s hubris can lead to some very bad decisions. And regulators can sometimes stop these heady moves.

There is also a larger lesson here. In the case of Barclays, a regulator asserted that the liabilities could not be assumed. These had to be dealt with before the acquisition. The result was a messy and expensive bankruptcy process for Lehman, but one that has allowed the viable part of Lehman to prosper.

In contrast, Merrill was anything but a clean acquisition. Merrill’s toxic assets were put together with Bank of America’s and Countrywide’s toxic assets. While some argue that Merrill’s investment banking division is helping Bank of America, this ignores the fact that Merrill’s mortgage assets are now most likely hurting the bank even more.

The ultimate lesson from these two deals is that taking your medicine early is worthwhile. Regulators and banks still have not come to terms with the mortgage debt on bank balance sheets left over from the financial crisis, let alone the liability these banks face for selling these mortgages to investors.

This is a problem concentrated in the large banks. As of the end of last year, the four biggest banks held 42 percent of the $950 billion in second-lien loans then outstanding, according to The American Banker, which most banks have yet to write down. Bank of America alone held $136 billion of these loans as of the first quarter. Second-lien loans are the riskiest of mortgage assets because they are the most likely to be written down. According to CoreLogic, 23.1 percent of the nation’s mortgaged homes are underwater, their owners owing more than the home is worth. This means that there will be more pain for Bank of America and other large banks in the coming years.

Putting together Bank of America’s and Merrill’s bad assets has only kicked the can down the road. Three years after that fateful September weekend changed Wall Street, the same mortgage liabilities continue to haunt many banks. This is not a worry for Barclays, at least in the United States. It made the better deal.


Steven M. Davidoff, writing as The Deal Professor, is a commentator for DealBook on the world of mergers and acquisitions.

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Off the Charts: Euro Benefits Germany More Than Others in Zone

Since the introduction of the euro at the beginning of 1999, the European Central Bank calculates that Germany has gained competitiveness, not only against other major industrial nations but against all other members of the euro zone.

Over the same period, Germany’s balance of payments has gone from a small deficit to a strong surplus, but in the euro zone as a whole the balance of payments position has deteriorated slightly. Trade balances are the largest part of the balance of payments, but other transfers — not including international investments and profits from those investments — are also included.

The loss of competitiveness has been a major problem for some other members of the euro zone, most notably Greece and Ireland, each of which has been bailed out by Europe. Portugal, the other country to seek help, has suffered a smaller loss of competitiveness.

Ireland’s problems were caused largely by the collapse of its banking system, which stemmed from the collapse of a property boom that had been propelled by cheap credit and tax incentives. The loss of competitiveness was not as much of a problem for Ireland as it was for Greece and Portugal.

After the collapse, Ireland embarked on a harsh program of austerity, including wage cuts, and both its competitiveness and its balance of payments have improved.

The competitiveness measure is based on currency movements and changes in unit labor costs in major industrialized countries. German competitiveness against the rest of the world was probably helped by the fact that the relatively poor performance of other members of the euro zone held down the appreciation of the euro against other currencies.

The first set of charts accompanying this article shows Germany’s performance in competitiveness, as well as the country’s balance of payments as a percentage of gross domestic product. The next set of charts shows similar measures for the other major countries of the euro zone, France, Italy and Spain. The final set shows the performance of the three countries that were forced to seek European help.

The European Central Bank does not publish a competitiveness index for Portugal based on unit labor costs, so a similar one based on overall inflation in the economy is used instead. Greek balance of payments data is not available for 1999.

With the exception of Germany, each of the countries shown has lost competitiveness because unit labor costs have risen more rapidly in those countries. Absent the euro, many of the countries probably would have devalued their national currencies, but that is not possible as long as they remain in the euro zone.

Since the financial crisis intensified in mid-2008, all of the countries, including Germany, have improved their global competitive positions. Ireland has improved its position more than any other country in the euro zone, but both Greece and Portugal have continued to lose ground to Germany.

Floyd Norris comments on finance and the economy in his blog at nytimes.com/norris.

Floyd Norris comments on finance and the economy in his blog at nytimes.com/norris.

Article source: http://feeds.nytimes.com/click.phdo?i=91f180bd84f5971e5e535da35a42f172