Facebook seeks to reclaim edge with bold Home phone

It's not the Facebook phone or operating system that some were anticipating. But the Home service Facebook CEO Mark Zuckerberg unveiled yesterday for Android phones may be the best Facebook yet, experts said.

Rather than seeing icons for email, maps and other services when they first turn on their phones, users who download the new software beginning on April 12 will be greeted with photos and updates from their Facebook feeds.

"It's essentially a start page where you turn on your phone and you start on Facebook," said David Gerzof Richard, founder of BIGfish and professor of social media and marketing at Emerson College.

The idea is to bring content straight to users without requiring them to go to apps. A new feature called "chat heads," for example, will allow people to communicate with their friends directly from their phone's home screen without opening a separate app.

"Essentially, Facebook is betting that people might want their devices to be less about apps focused on tasks — email, photos, music — and more about people they want to connect with," said N. Venkat Venkatraman, professor of management at Boston University. "Most analysts have missed the nuanced shift that Zuckerberg is unveiling. Most expected that there would be a revolutionary phone or new operating system. But I think this is a clever evolution that could position Facebook as a rule maker on the mobile Web."

After the announcement, Facebook's stock rose 82 cents, or 3.1 percent, to close at $27.07, still 23 percent below its initial public offering price of $35.

"Home" comes amid rapid growth in the number of people who access Facebook from phones and tablet computers. Of its 1.06 billion monthly users, 680 million log into Facebook using a mobile gadget.

"I think this is the exact right move for Facebook," said Todd Van Hoosear, owner of Fresh Ground, a Cambridge social media consulting group. "Last year, Zuckerberg admitted they were failing on the mobile front. They had invested all this money in html, and that model wasn't working for them. ... Is this the Facebook phone everyone wants? Not really. But it's what Facebook needs to do. Facebook has been fighting Facebook fatigue. Some people are getting a little bored with it and spending less time on it. This is a great way to reclaim those people."

Herald wire services contributed to this report.

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Facebook barges into Google turf with Home

NEW YORK — Facebook Home, the new application that takes over the front screen of a smartphone, is a bit of a corporate home invasion. Facebook is essentially moving into Google's turf, taking advantage of software the search giant and competitor created.

Facebook Home will operate on phones running Google Inc.'s Android software and present Facebook status updates, messages and other content on the home screen, rather than making the user fire up Facebook's app. The software will be available for users to download on April 12 and will come preloaded on a new phone from HTC Corp., sold by AT&T Inc. in the U.S.

Google gives away Android, the most popular smartphone software in the world, in the hope that it will steer phone users toward Google services, such as Maps and Gmail, and the ads it sells. Compared to ads targeting PC surfers, mobile ads are a small market, but it's growing quickly. Research firm eMarketer expects U.S. mobile ad spending to grow 77 percent this year to $7.29 billion.

With Home, Facebook is inserting itself between users and Google, diverting them to the social network's own ads and services. It's taking advantage of the fact that Google places few restrictions on how phone manufacturers and software developers modify Android. By contrast, Facebook Home would not work on the iPhone without approval from Apple Inc., and close collaboration with the company.

"Facebook Home can only reside on Android because only Google was daft enough to allow it," said independent phone analyst Horace Dediu, via Twitter.

At the launch event Thursday, Facebook CEO Mark Zuckerberg said Google was aware of the project, but Facebook didn't work them to create Home. Asked if he believed Google could change tactics and restrict apps like Home, he said it was theoretically possible, but highly unlikely for Google to do a "180-degree change" in its stance on Android's openness.

It's not the first time a big Internet company has co-opted Android: Amazon.com has gone much farther with its Kindle Fire tablets. They run a version of Android that strips out all Google services, replacing them with Amazon's equivalents. Barnes & Noble Inc. does the same thing with its Nook tablets. These devices lie outside the Google system, whereas phones running Facebook Home still come with Google apps like Maps and the Play Store for music, movies and applications.

The Play Store has many examples of downloadable applications that modify the Android home screen — so-called "launchers." Home, however, represents the first time a major Internet company and Google competitor has created a downloadable launcher.

J.P. Morgan analyst Doug Anmuth said Home may increase the pressure on Google to find ways to get people to spend more time on its Plus social network, which so far hasn't been as magnetic as Facebook's hangout. Anmuth also thinks the communication tools built into Home could decrease usage of Google's Gmail and Gchat services.

But Zuckerberg said the app will help Google.

"I think this is really good for Android," he told the audience at the launch event in Menlo Park, Calif. Developers do their best work on the iPhone first, but with Home, Facebook is putting Android first. If consumers want the Facebook Home experience, they'll have to get an Android phone.

In a statement, Google seemed to agree. "This latest device demonstrates the openness and flexibility that has made Android so popular," it said.

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AP Technology Writers Barbara Ortutay and Michael Liedtke contributed to this report.

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Official: Obama proposes cuts to Social Security

WASHINGTON — President Barack Obama's proposed budget will call for reductions in the growth of Social Security and other benefit programs while still insisting on more taxes from the wealthy in a renewed attempt to strike a broad deficit-cutting deal with Republicans, a senior administration official says.

The proposal aims for a compromise on the Fiscal 2014 budget by combining the president's demand for higher taxes with GOP insistence on reductions in entitlement programs.

The official, who spoke on a condition of anonymity to describe a budget that has yet to be released, said Obama would reduce the federal government deficit by $1.8 trillion over 10 years. The president's budget, the first of his second term, incorporates elements from his last offer to House Speaker John Boehner in December. Congressional Republicans rejected that proposal because of its demand for more than a $1 trillion in tax revenue.

A key feature of the plan Obama now is submitting for the federal budget year beginning Oct. 1 is a revised inflation adjustment called "chained CPI." This new formula would effectively curb annual increases in a broad swath of government programs, but would have its biggest impact on Social Security. By encompassing Obama's offer to Boehner, R-Ohio, the plan will also include reductions in Medicare spending, much of it by targeting payments to health care providers and drug companies.

Obama's budget proposal also calls for additional tax revenue, including a proposal to place limits on tax-preferred retirement accounts for wealthy taxpayers. Obama has also called for limits on tax deductions by the wealthy, a proposal that could generate about $580 billion in revenue over 10 years.

The inflation adjustment would reduce federal spending over 10 years by about $130 billion, according to past White House estimates. Because it also affects how tax brackets are adjusted, it would also generate about $100 billion in higher taxes and affect even middle income taxpayers.

The reductions in the growth of benefit programs, which would affect veterans, the poor and the older Americans, is sure to anger many Democrats. Labor groups and liberals have long been critical of Obama's offer to Boehner for including such a plan.

Administration officials have said Obama would only agree to the reductions in benefit programs if they are accompanied by increases in revenue, a difficult demand given the strong anti-tax sentiment of House Republicans.

That Obama would include such a plan in his budget is hardly surprising. White House aides have said for weeks that the president's offer to Boehner in December remained on the table. Not including it in the budget would have constituted a remarkable retreat from his bargaining position.

Obama's budget, to be released next Wednesday, comes after the Republican-controlled House and the Democratic-run Senate passed separate and markedly different budget proposals. House Republicans achieved long-term deficit reductions by targeting safety net programs; Democrats instead protected those programs and called for $1 trillion in tax increases.

But Obama has been making a concerted effort to win Republican support, especially in the Senate. He has even scheduled a dinner with Republican lawmakers on the evening that his budget is released next week.

House Republicans, however, have been adamant in their opposition to increases in taxes, noting that Congress already increased taxes on the wealthy in the first days of January to avoid a so-called fiscal cliff, or automatic, across the board tax increases and spending cuts.

Congress and the administration have already secured $2.5 trillion in deficit reduction over the next 10 years through budget reductions and with the end-of-year tax increase on the rich. Obama's plan would bring that total to $4.3 trillion over 10 years.

As described by the administration official, the budget proposal would also end a loophole that permits people to obtain unemployment insurance and disability benefits at the same time.

Obama's proposal, however, includes calls for increased spending. It would make pre-school available to more children by increasing the tax on tobacco.

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KFC to offer boneless chicken

NEW YORK — KFC is stripping out the bones to make it easier for people to eat its chicken.

The fast-food chain is introducing fried boneless chicken chunks on April 14 as an alternative to its traditional breast, thigh and drumstick pieces.

The new offering reflects the growing popularity of nuggets and strips that are easier to eat on the go. KFC says nearly four out five servings of fried chicken in the U.S. are now boneless.

Based on customer trends, the company says chicken with bones could eventually be pushed off its menu.

The new boneless, skinless pieces are about twice the size of KFC's crispy strips and come in white or dark meat. Customers can order them for the meal deals, which include two pieces, a side, a biscuit and a drink for $4.99. They also come in buckets, which include four pieces of boneless chicken and six pieces of chicken with bones for $14.99. The boneless chicken option costs the same as the regular fried chicken.

A piece of the boneless white meat has 200 calories and 8 grams of fat. A dark meat piece has 250 calories.

Spokesman Rick Maynard said it took two to three years to develop its version of boneless chicken, which performed strongly in test markets including Oklahoma City and Omaha last year.

KFC has more than 18,000 restaurants around the world, including more than 4,500 in the U.S. Its parent company Yum Brands Inc. also owns Taco Bell and Pizza Hut, which have also been introducing major new menu offerings in recent months.

Shares of Yum Brands fell 67 cents to $67.06 in premarket trading Friday, in step with a broader market decline in trading ahead of the opening.

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US economy adds 88K jobs, rate drops to 7.6 pct.

WASHINGTON — U.S. employers added just 88,000 jobs in March, the fewest in nine months and a sharp retreat after a period of strong hiring. The slowdown in job growth may signal that the economy is heading into a weak spring.

The Labor Department said Friday that the unemployment rate dipped to 7.6 percent, the lowest in four years, from 7.7 percent. But the rate fell last month only because more people stopped looking for work. People who are out of work are no longer counted as unemployed once they stop looking for a job.

The percentage of Americans working or looking for jobs fell to 63.3 percent in March, the lowest such figure in nearly 34 years.

Stock futures sank after the jobs report was released at 8.

March's job gains were half the pace of the previous six months, when the economy added an average of 196,000 jobs a month. The government said hiring was even stronger in the previous two months than previously estimated. February's job gains were revised to 268,000, up from 236,000. January job growth was raised to 148,000, up from 119,000.

Several industries cut back sharply on hiring in March. Retailers cut 24,000 jobs after averaging 32,000 in the previous three months. Manufacturers cut 3,000 jobs after adding 19,000 the previous month. Financial services shed 2,000.

The number of people either working or looking for work fell by nearly 500,000 last month. It was sharpest such drop since December 2010. And the number of Americans who said they were employed dropped nearly 210,000.

Average hourly pay rose a penny, the smallest gain in five months. Average pay is just 1.8 percent higher than a year earlier, trailing the pace of inflation, which rose 2 percent in the past 12 months.

"This is not a good report through and through," Dan Greenhaus, chief economic strategist at brokerage firm BTIG, said in a note to clients.

Economists had hoped that the bigger pay increases in recent months would continue and boost Americans' ability to spend.

Some economists said they expect a slowdown this spring, though not as severe as in the past three years.

"We don't anticipate the slowdown becoming too severe, not when the housing recovery is firing on all cylinders, but it is a reminder that the U.S. is still unable to sustain what used to be just average rates of growth," said Paul Ashworth, an economist at Capital Economics.

The decline in the work force reflects several trends, economists say: Many of those out of work become discouraged and give up on their job hunts. And as the population ages, more people are retiring.

Most analysts think the economy strengthened from January through March, helped by the pickup in hiring, a sustained recovery in housing and steady consumer spending. Consumers stepped up purchases in February and January, even after Social Security taxes increased this year.

Still the higher taxes have reduced paychecks. And many economists say steep government spending cuts that began taking effect March 1 will slow growth in the spring and summer.

Mark Vitner, an economist at Wells Fargo Securities, thinks the economy expanded at a 3.2 percent annual rate in the first quarter. But he forecasts that growth will slow to a 2 percent annual pace in the current second quarter, and then rebound after the impact of the government spending cuts fades.

Economists expect the spending reductions will shave half a percentage point off economic growth this year. Many federal workers will experience pay cuts. And government contractors will likely cut jobs. That could also drag down overall monthly hiring.

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Arthur Frommer gets Frommer brand back from Google

NEW YORK — Travel guru Arthur Frommer said Wednesday that he has reacquired rights to his travel guidebook brand from Google, and that he intends to resume publishing Frommer guidebooks.

Google acquired the Frommer brand last summer from the Wiley publishing company, but last month Skift.com reported that Google was "quietly pulling the plug" on publishing Frommer's books.

Google refused comment at the time, but Arthur Frommer confirmed in a phone call from his home Wednesday night that he had reacquired rights to the brand.

"It's a very happy time for me," Frommer, 83, told The Associated Press. "We will be publishing the Frommer travel guides in ebook and print formats and will also be operating the travel site Frommers.com."

Frommer sold the Frommer line of travel books to Simon & Schuster in 1977. The books had more recently been published by Wiley & Sons.

Frommer started the guidebook enterprise in 1957 with a self-published book called "Europe on 5 Dollars a Day." It was an expanded version of a small travel guide he had written for American soldiers in Europe. With its emphasis on budget travel, it became an immediate best-seller and launched a guidebook company that became one of the world's most recognized travel brands. Frommer's daughter Pauline Frommer also has written numerous guidebooks for the brand and, like her father, is a much-quoted expert on consumer travel and related issues.

Google confirmed in an email Wednesday night that the brand was returned to its founder, but added that the travel content it had acquired from Frommer's and Wiley had been integrated into various Google services such as Google Plus.

The terms of the deal between Google and Frommer were not disclosed.

Pat Carrier, who has watched the ups and downs of the travel publishing industry as the former owner of the Globe Corner Bookstore in Cambridge, Mass., said the whole thing was "baffling."

"I don't get why they (Google) bought Frommer's and then decided to essentially shut down the whole enterprise," he said. "Do they really think the content that they acquired from the Frommer's deal has a longer shelf life than yogurt?"

Jason Clampet, who reported Google's decision to cease publishing Frommer content on Skift.com, called Frommer's reacquisition of his brand "fantastic news."

"Everyone I know was hoping this would happen once we saw that Google was just after content for Google Plus rather than the brand's history and potential," said Clampet, a former editor for Frommer's. "I think Arthur's and Pauline's passion will reinvigorate the series. There are dedicated readers both online and in print who will stay with a name they trust."

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Eyes on Facebook mobile event as company evolves

NEW YORK — Facebook is unveiling a new Android product Thursday, a move that comes as a fast-growing number of its 1.06 billion users access it on smartphones and tablet computers.

Advertisers are not far behind. Though mobile ads have been a big concern for Facebook's investors since before the company's initial public offering last May, some of that worry has subsided as Facebook began muscling its way into the market.

Last year, the company began showing ads to its mobile audience by splicing corporate sponsorships and content into users' news feeds, which also includes updates from friends and brands they follow. Among the challenges Facebook faces now is showing people mobile ads without annoying or alienating them.

The mobile advertisement market is growing quickly. That's thanks in large part to Facebook and Twitter, which also entered the space in 2012. Research firm eMarketer expects U.S. mobile ad spending to grow 77 percent this year to $7.29 billion, from $4.11 billion last year.

As for Thursday's event at the company's Menlo Park, Calif., headquarters, speculation has centered on a mobile phone, made by HTC Corp., that deeply integrates Facebook into the Android operating system. The move comes as Facebook works to evolve from its Web-based roots to a "mobile-first" company, as its mantra goes.

"What Facebook wants is to put itself at the front of the Android user experience for as many Facebook users as possible and make Facebook more elemental to their customers' experience," said Forrester analyst Charles Golvin.

EMarketer said Wednesday that it expects Facebook Inc. to reap $965 million in U.S. mobile ad revenue in 2013. That's about 2.5 times the $391 million in 2012, the first year that Facebook started showing mobile ads.

Clark Fredricksen, vice president at eMarketer, said it's "tough to speculate" how much effect Thursday's announcement would have on ad revenue.

At the same time, he says "there are some clear reasons why a deeper integration with mobile operating systems and handsets make sense for Facebook. At the end of the day, the more deeply Facebook can engage consumers, no matter what device or operating system or handset," the better.

Facebook's rival, Google Inc., makes the Android software that Facebook and HTC would be using under the widely speculated scenario. Google makes the software available on an open-source basis, meaning others including rivals are free to adapt it to their needs. Amazon.com Inc. does just that in modifying Android to run its Kindle tablet computers.

Facebook is No. 2 behind Google Inc. when it comes to mobile advertisements, and it isn't expected to surpass the online search leader any time soon. Google dominates the mobile search market with 93 percent of U.S. mobile search advertising dollars, according to eMarketer. Online music service Pandora Inc. is in third place when it comes to mobile ad dollars, followed by Twitter.

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Disney lays off staff at game developer LucasArts

LOS ANGELES — Four months after acquiring "Star Wars" maker Lucasfilm, The Walt Disney Co. is shutting down video game production at subsidiary LucasArts and laying off staff as it focuses on the less-risky, less-expensive path of licensing its characters and stories to other developers.

A Disney spokesman confirmed the layoffs Wednesday, but didn't say how many people were affected.

Website Kotaku said 150 people were laid off, citing an unnamed source. Two games that had been in production, "Star Wars: First Assault" and "Star Wars: 1313," were canceled, Kotaku said.

Disney has been moving away from games that are expensive to make for consoles, like the Xbox 360 and PlayStation 3, and toward apps.

One example of the licensing model is Rovio Entertainment Ltd.'s November launch of "Angry Birds Star Wars."

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Music service Rdio launches Vdio for TV, movies

LOS ANGELES — Rdio, the music streaming service started by a co-founder of Skype, is getting into video.

New and current subscribers of a $10-a-month unlimited music plan from Rdio will get $25 to spend in the new digital store for video, called Vdio.

The content will work on personal computers and Apple's iPad for now. It's opening at first to users in the U.S. and Britain. The latest TV episodes from shows such as "The Walking Dead" will sell for about $3 each and will be in high definition, while movies such as "Zero Dark Thirty" will cost from $3 to rent to $20 to buy.

Rdio Chief Executive Drew Larner said the plan is for users to get ideas about what to watch based on the music they and their friends love, and the other way around.

For instance, fans of Adele's hit single "Skyfall" might want to watch the James Bond movie of the same name, or viewers of the 1978 documentary "The Last Waltz" might want to listen to music by The Band, the subject of that movie.

"There's just so much interplay between film, TV and music. We just think this is going to be a natural combination," he said.

The company opted against a subscription video offering because the newest TV shows and movies would not be available that way, Larner said. Studios typically offer online subscription services such as Netflix Inc. only past seasons of TV shows, along with movies that have debuted in theaters months or years earlier. Larner said the company hopes to one day offer a plan that would give customers a selection of movies, TV shows and music for one price.

He didn't specify how many subscribers San Francisco-based Rdio has amassed since it launched in 2010 with the backing of Skype co-founder Janus Friis. But he said the rate at which new users come to the service, offered in 23 countries, has tripled since the company began spending money on advertising late last year.

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US unemployment aid applications jump to 385,000

WASHINGTON — The number of Americans seeking unemployment aid rose to a four-month high last week, although the increase partly reflects seasonal distortions around the spring holidays.

Weekly applications increased 28,000 to a seasonally adjusted 385,000, the Labor Department said Thursday. It was the third straight weekly increase and the highest level since late November. The four-week average, a less volatile measure, rose to 354,250.

A Labor Department spokesman says it can be difficult to seasonally adjust the figures during the Easter holiday because the timing of the holiday varies from year to year. Economists warned before the report that the data could be volatile.

Applications are a proxy for layoffs. The recent increases could suggest that companies are cutting jobs, possibly because of steep government spending cuts that began on March 1. Other reports have pointed to that possible trend, although most economists have said that any reductions are likely temporary.

The government will issue the March employment report Friday.

Job growth has picked up in recent months. Employers added an average of 200,000 jobs per month from November through February. That's nearly double the average from last spring.

Stronger economic growth this year has spurred more hiring. A steady housing recovery has boosted home construction and prices. Higher home prices make Americans feel wealthier, which can spur more spending.

In February, consumer spending rose by the most in five months. And consumer confidence improved in March from the previous month, according to a survey released last week by the University of Michigan.

Two reports Wednesday, however, suggested companies may have grown more cautious last month. Services companies grew in March but at a slower pace than in February, according to the Institute for Supply Management, a trade group. Service firms, which include retailers, hotels, restaurants and financial companies, cut back on hiring and a measure of new orders fell.

And private employers added fewer jobs in March compared with February, according to payroll processor ADP. Construction firms didn't add any positions after three months of strong gains.

Several economists lowered their forecasts for hiring in March after Wednesday's reports. Still, many analysts cautioned that the ADP is not always an accurate predictor of the government's more comprehensive figures

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