Samsung’s Profit Rises, but So Does the Competition

Samsung, which is based in Suwon, South Korea, said net income rose to 7.77 trillion won, or $6.9 billion, from 5.19 trillion won a year earlier. Sales rose to 57.46 trillion won, from 47.6 trillion won.

But the report showed a decline in earnings from the first quarter in Samsung’s mobile phone business despite the introduction of a new flagship model, the Galaxy S4.

Though the S4 has been selling at a brisk pace, it has fallen short of some analysts’ expectations. Promotional events like an introductory gala for the S4 at Radio City Music Hall have driven up marketing costs, while rivals continue to roll out competing models.

“The strong growth streak for the smartphone market is expected to continue in the third quarter, albeit at a slower pace,” Samsung said in a statement.

Market reaction to the report from Samsung was muted because the company issued an earnings forecast earlier this month; the results reported Friday were broadly in line with that outlook, though below previous expectations.

The results from Samsung follow the earnings report from the company’s chief rival, Apple, which showed similar trends in the smartphone business.

Apple reported earnings that beat Wall Street expectations, but its profit declined from a year earlier and its revenue was flat. While Apple’s posted strong iPhone sales in the United States, the company showed weakness in China and in sales of iPads.

In recent months, the shares of Apple and Samsung have been hammered by investors, who worry that even as the companies report continued growth in sales of smartphones, they will struggle to maintain their momentum.

“In a way, Apple and Samsung have become victims of their own success,” Pete Cunningham of the research firm Canalys said before the Samsung results were released. “When these companies report many billions of profits every quarter, it’s hard to say they are doing anything wrong.”

Many say the high end of the smartphone market, which Samsung and Apple dominate, is looking saturated. Most wealthy consumers in developed markets already own such devices, so growth is increasingly occurring in lower-price brackets in developing markets, where Apple does not compete.

Samsung, with a broader product range, may be better positioned, analysts say, though it faces stiff competition at the low end of the market from Chinese makers.

For expensive phones, the companies face renewed competition from Sony, HTC and Nokia, though analysts say innovations in smartphone design and technology are becoming more incremental.

“If you combine all these players and look at what they are doing, it’s hard for Samsung or Apple to keep growing market share,” said Bryan Wang, an analyst at Forrester Research. “But the expectations for both companies are still high.”

IDC, a research firm, said Samsung’s share of the smartphone market slipped to 30.4 percent in the second quarter, from 32.2 percent a year earlier.

Samsung’s smartphone sales rose by 43.9 percent, outpacing Apple, which showed a 20 percent gain. But smaller smartphone makers that focus on lower-cost devices did even better, with Lenovo and LG, for example, more than doubling their sales.

“The smartphone market is still a rising tide that’s lifting many ships,” said Kevin Restivo, senior research analyst at IDC, in a statement. “Though Samsung and Apple are the dominant players, the market is as fragmented as ever. There is ample opportunity for smartphone vendors with differentiated offerings.”

While Samsung does not break out the number of devices it sells on a quarterly basis, another research firm, Strategy Analytics, estimated that the company shipped 76 million smartphones in the second quarter, 56 percent more than a year earlier and more than double Apple’s total of 31.2 million.

With growth picking up in the low end, Strategy Analytics said, the smartphone market over all is expanding faster than it was a year ago. That helps Samsung in another way, because the company also is the world’s biggest producer of semiconductors, an important component in smartphones and other electronic devices.

Samsung said operating profit in its semiconductor division rose to 1.76 trillion won from 1.03 trillion won a year earlier, as it experienced strong demand from its own mobile business, as well as from other phone makers to which it supplies chips.

But Samsung said its television business was hurt by sluggish demand in Europe, where an economic recovery has struggled to take hold.

Medtronic’s 4th-Quarter Revenue Rises 4%

Medtronic reported net income of $969 million, or 95 cents a share, a decrease of 2 percent from $991 million in the period a year ago. Excluding one-time events and gains, the company would have earned $1.12 billion, or $1.10 a share. Revenue rose 4 percent to $4.46 billion for the period ended April 26.

That was better than estimates of analysts polled by FactSet, which predicted earnings of $1.03 a share on revenue of $4.38 billion.

“With our scale and breadth of innovative technology, Medtronic is clearly outperforming the market,” Medtronic’s chief executive, Omar Ishrak, said in a statement.

Shares of Medtronic, which is based in Minneapolis, rose $2.46 to $52.35.

Sales of the company’s pacemakers and implantable defibrillators increased 3 percent to $1.33 billion, driven by international sales. Sales of spinal treatments slipped 1 percent to $811 million, and neuromodulation devices increased 6 percent to $492 million.

The results suggested Medtronic might be regaining momentum after years of sluggish sales. The company’s defibrillators have been hurt by safety recalls and reduced medical spending.

The spinal business has been hurt by revelations about Medtronic’s handling of studies and marketing of its protein bone graft Infuse. Last year, a Senate investigation concluded that the company had helped write and edit medical journal articles that played down the graft’s risks. InFuse contains a genetically engineered protein that can stimulate bone growth.

For fiscal year 2014, Medtronic said, it expects earnings of $3.80 to $3.85 a share on revenue of $17 billion to $17.2 billion.

You're the Boss Blog: One Social Media Start-Up Rises From the Ashes of Another

The adventure of new ventures.

One of the hardest things for an entrepreneur to do is to admit defeat. But in the case of Apu Gupta and Nick Shiftan, failure was likely the best thing that could have happened to them.

In 2011, Mr. Gupta, 37, and Mr. Shiftan, 31, founded Storably, a company they billed as Airbnb for storage space. Anyone with spare space — in their basement, driveway, garage, closet — could rent it out to those in need. Storably facilitated the transaction, provided insurance and allowed users to post reviews.

Mr. Gupta and Mr. Shiftan raised $750,000 from the venture capital firms NEA, First Round Capital and MentorTech Ventures and introduced Storably in September 2011. Two months later, the founders knew it wasn’t working. The site was getting barely 3,000 visitors a month. “That’s the equivalent of opening a retail store and having crickets show up,” Mr. Gupta said. “It’s abysmal. By the time we shut down, only 23 people had used the site for a transaction.”

At that point, Mr. Gupta and Mr. Shiftan had burned through 25 percent of their money and felt they had two options, which they presented to their investors. “We said we can give 75 percent of your investment back and liquidate the company, or we can figure something else out,” Mr. Gupta said. “And they told us, ‘We didn’t invest in the idea, we invested in you guys. We don’t want our money back, so go figure something else out.’ It was an amazing thing to hear.”

Courtesy of Curalator After two months, Apu Gupta (left) and Nick Shiftan knew Storability was not working.

The pair — along with their first employee, Brendan Lowry — brainstormed for about a month, coming up with three or four ideas apiece each day. At the end of the month, they had about 70 ideas, seven of which they deemed promising. They tested a few, including DrinkedIn, an application for LinkedIn that would match users and send them to a bar to have a drink and network.

But the idea that rose to the top was a platform that allows companies to measure the impact of Pinterest and other visual social media. They called the company Curalate, and they introduced it in beta in March 2012 and for real two months later. Mr. Gupta said the rise of Pinterest last year looked similar to Twitter’s early days with brands “falling over themselves to get on board but reluctant to commit until they had some way to measure their presence on the platform.”

Enter Curalate, which created a way to listen and measure visual conversations. The company’s algorithm recognizes images using pixels and then matches it to a brand. “The platform tells companies the conversations people are having about their product,” Mr. Gupta said.

He told the story of a shoe offered by the department store H&M. The company’s Web site displayed the shoe in a bright neon color, but the shoe customers were “pinning” and describing in loving terms was a combination of beige and pink. “So there was a big discrepancy between what the brand thought people wanted versus what people actually wanted,” Mr. Gupta said. “And that’s the whole point behind what we’re doing. We reveal, by looking at their imagery, what consumers really care about.”

Here’s where the company stands now, roughly a year after its introduction.

Employees: 15

Location: Philadelphia

Pitch: “We are trying to help brands form meaningful relationships with their customers,” Mr. Gupta said. “You have to be able to understand your customers and if they speak to you visually, you need a platform for that. It’s not just about Pinterest, but a fundamental shift in consumer behavior. Consumers increasingly talk about brands using pictures rather than words. Even Facebook has become a more visual medium. We pin and reblog and Instagram our lives.”

Challenges: Finding the right talent — salespeople, developers and designers — has been an ongoing challenge. A more perplexing challenge, Mr. Gupta said, is staying focused. Curalate’s space is so wide open that the company can try just about anything, and that freedom has caused them to sometimes lose direction. “When a space is new, it’s easy to feel pulled in different directions by clients,” he said. “It’s easy to lose your own point of view. So we really have to figure out a road map. And sometimes that means we need to say, ‘this is what we build and it’s not right for everyone’ and we may have to turn some clients away.”

Traction: Mr. Gupta said Curalate was now used by 350 brands that paid a monthly fee for its software as a service, which included a suite of marketing tools in addition to analytics. The company recently added the ability to analyze Instagram images to its platform. “Pinterest is about the things people aspire to buy, the things they want,” Mr. Gupta said. “Instagram is people celebrating what they bought.”

Revenue: The company declined to discuss its revenue, but the typical brand spends about $1,500 a month for Curalate’s services.

Financing: After going through what was left of the original $750,000, the company raised another $3 million late last year from the same investors.

Competition: Repinly, Piquor and PinReach are a few companies operating in the space, but none of them “is doing anything across platforms or using image recognition,” Mr. Gupta said.

What’s Next? “We want to broaden the number of platforms we get insights from,” Mr. Gupta said. “Companies also want us to build things that encourage consumers to communicate visually more often.”

What do you think? Have Mr. Gupta and Mr. Shiftan hit upon the right idea this time?

You can follow Eilene Zimmerman on Twitter.

Microsoft Profit Rises 19%

The company, based in Redmond, Wash., also disclosed that Peter Klein, its chief financial officer, will leave the company this year after nearly four years of running its finance department. Mr. Klein’s departure was unexpected, and Microsoft said it would name a new C.F.O. from its finance team within the next several weeks.

Microsoft is closely identified with the PC business, which is struggling as new types of electronics products, most notably smartphones and tablets, nibble away at sales. The research firm IDC recently reported that global PC shipments fell almost 14 percent during the first three months of the year, the industry’s worst performance in almost two decades.

During its fiscal third quarter, which ended March 31, Microsoft said revenue from its Windows division rose 23 percent to $5.7 billion from $4.63 billion a year earlier.

The company reported better financial performance than the overall PC sector for several reasons. Its Windows sales for the quarter included the delayed recognition of revenue from an upgrade offer that allowed Microsoft customers last year to receive the latest Windows operating system, Windows 8, after it was released last fall. Without that deferred revenue, sales in Microsoft’s Windows division were flat, the company said.

The Windows results included sales of Surface, a family of Microsoft-designed tablet computers that the company did not begin selling until late last year. Finally, the business got a lift from multiyear licensing agreements with big corporate customers, which allow them to install new versions of the operating system on their computers, with Microsoft gradually recognizing the revenue over the life of the contracts.

Analysts said the results were better than some of the more dire outcomes that had been predicted for Microsoft. “Windows revenue being flat is better than being down double digits,” said Colin Gillis, an analyst at BGC Financial.

The company’s profit figures exceeded Wall Street estimates and the company’s shares rose 2.7 percent in after-hours trading.

For its fiscal third quarter, which ended March 31, the company reported net income of $6.06 billion, or 72 cents a share, up from $5.11 billion, or 60 cents a share in the same period a year ago.

Revenue rose 18 percent to $20.49 billion from $17.41 billion.

While revenue came in slightly below analysts’ expectations of $20.56 billion, the company beat Wall Street forecasts of 68 cents a share, according to an average estimate compiled by Thomson Reuters.

Microsoft still has a lot of work to do to restore growth to its Windows business, one of the main engines of the company’s profits. The company created a markedly different interface for Windows 8 to make the software work better on touch-screen devices. But its look is so different from past versions of Windows that the product might have put off some customers, according to IDC, and some PC makers say they’ve been disappointed with the customer reception of Windows 8.

The company has also struggled to gain ground in the mobile phone market with an operating system called Windows Phone, which lags far behind Apple’s iPhone and devices running Google’s Android operating system in market share.

In an e-mail sent to Microsoft employees on Thursday, Microsoft’s chief executive, Steve Ballmer, said that “while the mobile device environment is challenging, the decisions we made with Windows 8 and Windows Phone 8 set us up well for long-term growth.”

The departure of a chief financial officer is often the source of hand-wringing among investors, who fear it could be a sign of deeper financial problems at a company. Microsoft has seen the departure of a number of other high-level executives over the past several years, raising concerns about its ability to retain talent.

“They’ve had a lot of departures, so that part is troubling,” said Brendan Barnicle, an analyst at Pacific Crest Securities.

But investors seemed to shrug off the news of Mr. Klein’s departure. In an interview, Mr. Klein said he was leaving Microsoft after 11 years at the company to spend more time with his family, which he said he could not do during his career in business.

“This is what it is,” Mr. Klein said. “I’ve been killing it for 30 years.”

Microsoft’s broad product portfolio helped lift its growth, including its server and tools division, which rose 11 percent to $5.04 billion. The company’s business division, which includes its Office software and a new service called Office 365, rose 8 percent to $6.32 billion.

Microsoft’s Internet division, a perennial money-loser for the company, bled only $262 million in red ink in the quarter, compared to $480 million a year earlier.

“I always feel with Microsoft there’s a lot of good things they don’t get credit for, but they are facing a lot of challenges,” Mr. Gillis said. “That’s going to be the focus.”

Apple Profit Rises 24% on iPhone 5 Sales

That forecast for the holiday quarter was the main blemish on an otherwise solid financial report. Apple said its fiscal fourth-quarter profit jumped 24 percent, largely because of a surge in sales of the iPhone, a product that now accounts for nearly half of the company’s sales.

The quarter ended Sept. 29 was the first to reflect sales of the iPhone 5, which was introduced Sept. 21. Apple has struggled to deliver enough of the devices to meet customer demand, making them tough to find in many retail stores. The company’s shares have fallen 9 percent since the product hit the market, in part because of investor concerns about short supply.

In a conference call with analysts, Timothy D. Cook, Apple’s chief executive, said that demand for the new iPhone was “extremely robust” and that the company had a significant number of back orders for it. He said production had picked up substantially since earlier this month.

The profit report was slightly below analysts’ expectations, and Apple’s stock was largely unchanged in after-hours trading. It fell 1.2 percent to $609.54 in regular trading.

Underscoring how drastically Apple’s business has been transformed by mobile products, revenue from the iPhone rose 56 percent to $17.13 billion, making up 48 percent of the company’s total revenue. It sold 26.9 million iPhones, 58 percent more than a year earlier.

Apple said its net income was $8.22 billion, or $8.67 a share, compared with $6.62 billion, or $7.05 a share, a year ago. Revenue for the period rose 27 percent to $35.97 billion, and revenue for the full fiscal year was $156.5 billion. To put that in perspective, Apple’s revenue for the year exceeded that of Microsoft, Google and Facebook combined.

Analysts surveyed by Thomson Reuters had expected Apple to report earnings of $8.75 a share and revenue of $35.8 billion. The results were well ahead of Apple’s own forecast of $7.65 a share in earnings and $34 billion in revenue for the period.

It was the company’s projections for its current holiday quarter that raised eyebrows among investors. The company forecast earnings of $11.75 a share and revenue of $52 billion for the period, typically its biggest of the year. That implied a gross profit margin of 36 percent, lower than the 40 percent margin Apple reported in the fourth quarter, said Rob Cihra, an analyst at Evercore Partners.

Apple executives attributed the decline to higher costs associated with building its new products, which tend to get less expensive over time as Apple gets better at manufacturing them. While this pattern is familiar, the company said the sheer magnitude of its product-line overhaul made the decline in gross margin more severe. In addition to the new iPhone and iPods, Apple has announced new Macs and a smaller version of the iPad, called the iPad Mini.

Mr. Cihra said the company might be lowballing its estimates. “They have a history of beating their guidance,” he said.

Apple said its revenue from the iPad rose 9 percent to $7.51 billion.

As with most Apple products, the iPad Mini’s arrival was widely anticipated after months of rumors and leaks about the product in the news media. Mr. Cook said the rumors led people to postpone tablet purchases.

At the iPad Mini event, Apple hinted that sales of the iPad had been slower than expected when it revealed that the company had sold 100 million of the devices since their introduction two years ago, causing some analysts to trim their forecasts for the quarter.

“I think on balance it was pretty in line with reduced expectations,” said Toni Sacconaghi, an analyst at Bernstein Research.

At a starting price of $329, the iPad Mini is more expensive than many people were hoping, and well above the sub-$200 bar for smaller tablets set by Amazon and Google. But the device could still open the iPad to a new swath of customers who were put off by the larger size of the original.

Facebook’s Revenue Rises 32 Percent to $1.26 Billion

Facebook said on Tuesday that it now gets 14 percent of its advertising revenue from mobile ads, helping to reassure investors that the social network is beginning to figure out how to earn money off smartphone and tablet users.

Mobile ad revenues totaled roughly $150 million, up from an estimated $40 million to $50 million in the second quarter and almost nothing in the first.

"This certainly dispels the most bearish view, that Facebook couldn't monetize people on phones or tablets," said Colin Sebastian, an analyst with Robert Baird & Co.

"In about a six-month period they've actually started to generate decent revenues form their mobile applications," Sebastian added, though he said Facebook still needs to show that its mobile ads can command the same rates as its traditional ads and that they can deliver results for marketers.

Mobile advertising has been among the key investor concerns hanging over Facebook, helping slash more than $40 billion off its market value since its May IPO. As its users increasingly access the social network with their smartphones, Facebook has struggled to transition its business to mobile devices.

The mobile ads helped reignite Facebook's overall advertising business during the third quarter, following several consecutive quarters of slowing revenue growth that raised questions about Facebook's long-term prospects.

Advertising revenue increased 36 percent to $1.09 billion, up from 28 percent growth in the second quarter. But revenue from its payments and other businesses increased just 13 percent to $176 million.

Mark Zuckerberg, the 28-year-old chief executive who created Facebook in his Harvard dorm room, said mobile was the "most misunderstood aspect" of the company and took issue with the "myth" that Facebook could not earn money on mobile.

"Over the long run we're going to see more monetization per time spent on mobile than on desktop," Zuckerberg said on a conference call with analysts on Tuesday.

The company's shares leapt nearly 13 percent to $21.97 in after-hours trading on Tuesday.

Facebook said it had crossed the 1 billion threshold for monthly active users by September 30, of which 604 million were mobile users, a gain of 61 percent from a year earlier.

The shift to mobile has challenged many of the Web industry's top companies. Google Inc is the No.1 provider of smartphone software with its Android operating system. But the company missed Wall Street's revenue targets in the third quarter, with some analysts blaming the shortfall on its increasing reliance on lower-priced mobile ads.

Social game maker Zynga Inc, which announced layoffs of 5 percent of its staff on Tuesday, has suffered as it struggles to translate its hit games to mobile devices and as the use of its games on Facebook's service declines.

NOT PLEASED WITH GAMING

Zynga's woes were visible in Facebook's results, with Facebook's payments revenue from the maker of Farmville down 20 percent year on year.

Zuckerberg said he was not pleased with revenue from gaming, but said that beyond Zynga - which accounts for 7 percent of Facebook's total revenue - the situation was brighter.

"The interesting thing is that the rest of the games ecosystem has actually been growing. Our monthly payments revenue from the rest of the ecosystem increased 40 percent over the past year, since payments has been adopted," he said.

Zuckerberg also said Instagram, the photo-sharing app that Facebook acquired for roughly $750 million this year, now has 100 million users, up from 27 million when Facebook bought the company.

Facebook posted a net loss of $59 million or 2 cents a share in the three months ended September 30 after booking a big provision for income taxes. Excluding share-based compensation and income tax adjustments, it earned 12 cents a share, a penny higher than the average analyst expectation.

Facebook Finance Chief David Ebersman said the company would continue to invest aggressively during the fourth quarter, though the company did not provide a specific financial outlook, in keeping with its previous practice.

Ebersman said that the total number of ads that Facebook delivered in the third quarter increased 27 percent year-on-year and that the average price per ad increased 7 percent.

Facebook's third-quarter mobile revenue marked a big jump from the second quarter, when Facebook said that it was generating more than $1 million a day from a new class of ads that appear in users' newsfeeds. Facebook said that roughly half of that revenue was from mobile ads, suggesting that mobile advertising revenue totaled $45 million in the second quarter.

Stifel Nicolaus analyst Jordan Rohan said that Facebook's mobile ad revenue was impressive, but said that Facebook needs to proceed carefully so as not to damage the user experience by overloading its service with too many ads.

And he said that Facebook's desktop PC advertising business appeared to have shrunk by about $40 million from the second quarter. Rohan said he would rather see the desktop ad business remain stable as the mobile ad business grows.

Facebook's third-quarter revenue of $1.26 billion was a hair above the average analyst expectation of $1.23 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Alexei Oreskovic; Editing by Phil Berlowitz and Mark Bendeich)

Verizon’s Income Rises 15.5% as Sales Climb

Verizon reported on Thursday that its net income in the third quarter rose 15.5 percent, to $1.59 billion, from a year ago. The company said revenue climbed 3.9 percent to $29 billion, in line with a survey of analysts’ expectations by FactSet.

Lowell C. McAdam, Verizon’s chairman and chief executive, said the company remained “solidly on track to meet our financial objectives for the year.”

The company, which is based in New York, said its Verizon Wireless business, a joint venture with Vodafone of Britain, had a record profit, partly because of strong sales of smartphones. It sold 6.8 million smartphones in the quarter, compared with 5.6 million a year ago.

Its shared data plans, which allow customers to pay for a single pool of data and share it across multiple smartphones, tablets and laptops, have also been popular, Verizon said. Analysts have found that these types of plans can be beneficial for higher-income families with multiple devices, but more expensive for people who have an individual plan. As a result, Verizon’s revenue per account grew to $145.42 a month, up 6.5 percent.

Verizon’s shared data plans are its response to an industrywide trend in the American wireless business: subscriber growth is slowing, because many people who want a cellphone already own one. Carriers, therefore, are relying on generating more money from each customer, and from what customers use most: wireless data to send e-mail, browse the Web and stream video.

Another factor helping Verizon make more money from each customer is its faster fourth-generation Long Term Evolution, or LTE, network.

Customers who still have the company’s old unlimited data plans, and are using a smartphone on the older third-generation network, must give up those plans if they choose to upgrade to phones compatible with the newer network.

Verizon says that, over time, it expects customers with shared data plans using the faster LTE network to want to pay for increasing amounts of data.

“It is going to be more important that people will start to upgrade in their tiers as they start to really realize the benefits of the LTE networks,” said Fran Shammo, Verizon’s chief financial officer, at the J.P. Morgan Global Technology, Media and Telecom Conference in Boston in May. “Over the future time, as they add more devices, they are going to have to buy up into tiers. So again, you will see the revenue increase there.”

Verizon Wireless said its 4G LTE network was helping it attract customers. With LTE service in 419 cities, it is leading the race to build out faster networks; AT&T, the second-biggest American carrier, is in a distant second place, with LTE service in 77 cities.

The wireless division added 1.5 million contract subscribers, its most valuable type of customer, in the third quarter, bringing the total number of subscribers on contracts to 34.8 million.

That is good news for Verizon, but the overall slowdown of customer growth in the wireless industry is still evident: subscriber growth in the overall American wireless market was only 1 percent in the quarter, said Craig Moffett, an analyst with Sanford C. Bernstein.

“Unless one believes that industry growth rates accelerated — and we certainly don’t — Verizon’s gain is AT&T’s, Sprint’s, and T-Mobile’s loss,” Mr. Moffett said in a research note.

AT&T also has adopted shared data plans, but not every carrier is taking that route. In their efforts to lure customers, T-Mobile USA and Sprint offer unlimited data plans, as Tim Horan, an analyst with Oppenheimer & Company, noted during the earnings call. But Mr. Shammo said Verizon was confident that its bigger, more reliable LTE network would keep its customers loyal.

“I think our network and our competitive advantage speaks for itself,” he said. “And I think the superiority of our network, I think, what you’re seeing is that we are competing in that arena today against the unlimited plans.”

Medicare Billing Rises at Hospitals With Electronic Records

But, in reality, the move to electronic health records may be contributing to billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care.

Hospitals received $1 billion more in Medicare reimbursements in 2010 than they did five years earlier, at least in part by changing the billing codes they assign to patients in emergency rooms, according to a New York Times analysis of Medicare data from the American Hospital Directory. Regulators say physicians have changed the way they bill for office visits similarly, increasing their payments by billions of dollars as well.

The most aggressive billing — by just 1,700 of the more than 440,000 doctors in the country — cost Medicare as much as $100 million in 2010 alone, federal regulators said in a recent report, noting that the largest share of those doctors specialized in family practice, internal medicine and emergency care.

For instance, the portion of patients that the emergency department at Faxton St. Luke’s Healthcare in Utica, N.Y., claimed required the highest levels of treatment — and thus higher reimbursements — rose 43 percent in 2009. That was the same year the hospital began using electronic health records.

The share of highest-paying claims at Baptist Hospital in Nashville climbed 82 percent in 2010, the year after it began using a software system for its emergency room records.

In e-mailed statements, representatives for both hospitals said the increases reflected more accurate billing for services. Faxton also said its patients required more care than in past years.

Over all, hospitals that received government incentives to adopt electronic records showed a 47 percent rise in Medicare payments at higher levels from 2006 to 2010, the latest year for which data are available, compared with a 32 percent rise in hospitals that have not received any government incentives, according to the analysis by The Times.

The higher coding has captured the attention of federal and state regulators and private insurers like Aetna and Cigna. This spring, the Office of Inspector General for the federal Health and Human Services Department warned that the coding of evaluation services had been “vulnerable to fraud and abuse.”

Some experts blame a substantial share of the higher payments on the increasingly widespread use of electronic health record systems. Some of these programs can automatically generate detailed patient histories, or allow doctors to cut and paste the same examination findings for multiple patients — a practice called cloning — with the click of a button or the swipe of a finger on an iPad, making it appear that the physicians conducted more thorough exams than, perhaps, they did.

Critics say the abuses are widespread. “It’s like doping and bicycling,” said Dr. Donald W. Simborg, who was the chairman of federal panels examining the potential for fraud with electronic systems. “Everybody knows it’s going on.”

When Methodist Medical Center of Illinois in Peoria rolled out an electronic records system in 2006, Dr. Alan Gravett, a former emergency room physician, quickly expressed alarm.

He said the new system prompted doctors to click a box that indicated a thorough review of patients’ symptoms had taken place, even though the exams were rarely performed, while another function let doctors pull exam findings “from thin air” and include them in patients’ records.

In a whistle-blower lawsuit filed in 2007, Dr. Gravett contended that these techniques drove up Medicare reimbursement levels substantially. According to the lawsuit, Dr. Gravett was eventually fired for ordering too many tests. He says he was retaliated against for complaining about the new system. The Justice Department is weighing whether to join an amended suit in Federal District Court in Central Illinois.

Medicare Billing Rises at Hospitals With Electronic Records

But, in reality, the move to electronic health records may be contributing to billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care.

Hospitals received $1 billion more in Medicare reimbursements in 2010 than they did five years earlier, at least in part by changing the billing codes they assign to patients in emergency rooms, according to a New York Times analysis of Medicare data from the American Hospital Directory. Regulators say physicians have changed the way they bill for office visits similarly, increasing their payments by billions of dollars as well.

The most aggressive billing — by just 1,700 of the more than 440,000 doctors in the country — cost Medicare as much as $100 million in 2010 alone, federal regulators said in a recent report, noting that the largest share of those doctors specialized in family practice, internal medicine and emergency care.

For instance, the portion of patients that the emergency department at Faxton St. Luke’s Healthcare in Utica, N.Y., claimed required the highest levels of treatment — and thus higher reimbursements — rose 43 percent in 2009. That was the same year the hospital began using electronic health records.

The share of highest-paying claims at Baptist Hospital in Nashville climbed 82 percent in 2010, the year after it began using a software system for its emergency room records.

In e-mailed statements, representatives for both hospitals said the increases reflected more accurate billing for services. Faxton also said its patients required more care than in past years.

Over all, hospitals that received government incentives to adopt electronic records showed a 47 percent rise in Medicare payments at higher levels from 2006 to 2010, the latest year for which data are available, compared with a 32 percent rise in hospitals that have not received any government incentives, according to the analysis by The Times.

The higher coding has captured the attention of federal and state regulators and private insurers like Aetna and Cigna. This spring, the Office of Inspector General for the federal Health and Human Services Department warned that the coding of evaluation services had been “vulnerable to fraud and abuse.”

Some experts blame a substantial share of the higher payments on the increasingly widespread use of electronic health record systems. Some of these programs can automatically generate detailed patient histories, or allow doctors to cut and paste the same examination findings for multiple patients — a practice called cloning — with the click of a button or the swipe of a finger on an iPad, making it appear that the physicians conducted more thorough exams than, perhaps, they did.

Critics say the abuses are widespread. “It’s like doping and bicycling,” said Dr. Donald W. Simborg, who was the chairman of federal panels examining the potential for fraud with electronic systems. “Everybody knows it’s going on.”

When Methodist Medical Center of Illinois in Peoria rolled out an electronic records system in 2006, Dr. Alan Gravett, a former emergency room physician, quickly expressed alarm.

He said the new system prompted doctors to click a box that indicated a thorough review of patients’ symptoms had taken place, even though the exams were rarely performed, while another function let doctors pull exam findings “from thin air” and include them in patients’ records.

In a whistle-blower lawsuit filed in 2007, Dr. Gravett contended that these techniques drove up Medicare reimbursement levels substantially. According to the lawsuit, Dr. Gravett was eventually fired for ordering too many tests. He says he was retaliated against for complaining about the new system. The Justice Department is weighing whether to join an amended suit in Federal District Court in Central Illinois.

Intel’s Net Income Rises, but Company Warns of Slower Growth

Intel on Tuesday lowered its outlook for the second half of the year based on poor retail demand for personal computers powered by the company’s chips and slower growth in emerging markets.

There were some bright spots in Intel’s earnings report for the second quarter; demand from corporations for PCs and laptops was good, and net income rose slightly, the company said, beating analysts’ expectations.

Paul Otellini, Intel’s chief executive, told analysts in a conference call after the quarterly earnings were announced that revenue would be in the “3 to 5 percent range, versus high single digits” of earlier projections. As a result, Intel, based in Santa Clara, Calif., plans to slow hiring for the remainder of the year. At the end of June Intel had about 103,000 employees worldwide.

The rise of alternatives like tablet computers and smartphones has also eroded demand for personal computers. Mr. Otellini expressed optimism that sales of ultrabooks, a kind of lightweight laptop computer that Intel has invested in to compete with the new devices, would eventually revive growth.

“We’ll see $699 systems” for ultrabooks in the fall, Mr. Otellini said. “In a softer selling season these devices become even more attractive.” While just a few kinds of ultrabooks have appeared in the last few months, Mr. Otellini said there were “over 140 designs in the pipeline” for later this year.

Over 40 of these designs, he said, will have touch-sensitive screens similar to Apple’s iPad and iPhone, or the Surface tablet recently announced by Microsoft. Intel would also get a boost from the release of the new Windows 8 operating system by Microsoft, he said.

Intel reported that its net income in the quarter ending in June rose to $2.8 billion, or 54 cents a share, from this time last year. Revenue climbed 5 percent, to $13.5 billion. The company appeared to have sacrificed some of its gross profit margin for the higher revenue, however. Gross margins were at 63.4 percent, compared with 64 percent a year earlier.

Wall Street analysts have been lowering their outlook for semiconductor demand. Analysts had expected 52 cents a share and revenue of $13.56 billion, according to a survey of analysts by Thomson Reuters.

“What’s saving them is lowered expectations,” said Douglas Freedman, an analyst at RBC Capital Markets. “They are performing on their business better than expected, but it is a mixed bag on growth.”

Intel’s performance was significantly better than that of its chief competitor, Advanced Micro Devices. This month AMD warned that its second-quarter revenue would decline about 11 percent from the preceding quarter, instead of the 3 percent growth it had earlier projected. AMD said its results, which will be announced Thursday, had been affected by lower sales of consumer devices and slower economic growth in Europe and China.

Intel is also a major supplier of chips for computer servers, which are increasingly used in cloud-based data systems. Intel said its data center sales grew 15 percent from a year ago, to $2.8 billion. Sales to PC makers rose just 3 percent over the quarter, to $8.7 billion.

Unlike many tech companies, Intel continues to invest heavily in research and development. Intel previously said it would spend $18.3 billion in R&D this year, up from a little over $16 billion in 2011, but Stacy J. Smith, Intel’s chief financial officer, said that because of the lowered outlook, the company was cutting this year’s R&D to $18.2 billion.