From “Skyfall” to “The Avengers,” how the foreign box office is trouncing domestic

LOS ANGELES (TheWrap.com) – Foreign audiences are buying what Hollywood is selling, pushing the industry to a record-breaking year at the worldwide box office.

Last year, blockbusters like “The Avengers,” “The Dark Knight Rises” and “Skyfall” deftly navigated cultural barriers everywhere from Toluca, Mexico, to Hyderabad, India, demonstrating how the film business’ future hinges on a global cultural and commercial exchange.

Internationally, ticket sales grew by 3 percent to $ 23.1 billion compared to $ 22.4 billion the previous year, with foreign territories accounting for 68 percent of the top 10 grossing films. Thanks to a 5.8 percent rise at the domestic box office from roughly $ 10.2 billion to $ 10.8 billion, according to Rentrak, it was the biggest tally in box-office history.

“We are the beneficiaries of growing markets,” Chris Aronson, head of 20th Century Fox’s domestic distribution, said. “You’re seeing big numbers coming out of places like China that keep increasing every year – and other places like India and Russia that are evolving. They’re not yet mature movie going markets, but they’re going to be fantastic.”

All of this expansion has come while much of the world, particularly Europe, has been mired by recession. Yet studio executives say that a massive expansion of IMAX and 3D-capable theaters in certain regions has cushioned the blow in softer markets like Italy and Spain.

“We’ve seen some downturn in parts of the world, but the tremendous growth we’ve experienced in other places like Russia, Latin America and now China has compensated for it,” Veronika Kwan Vandenberg, president of distribution at Warner Bros. Pictures International, said.

Of course, some of those areas present thorny regional challenges, perhaps none more so than China.

With its massive population of moviegoers, China remains a marketplace with almost boundless potential. However, its rigid bureaucracy is frequently protectionist and suspicious of foreign investment, making it an elusive profit center.

Things are improving, though. Thanks to a much touted trade agreement that was signed last year, more non-Chinese films can be distributed in the country. As a result, analysts now think that China is poised to become the second largest market for U.S. films, surpassing Japan.

By 2020, some speculate it could even eclipse the United States.

That doesn’t mean China has always welcomed the increased competition with its own domestic-made films. After authorities became concerned that the influx of U.S. blockbusters was hurting their own local productions, they scheduled “The Amazing Spider-Man” and “The Dark Knight Rises” to open against each other last summer. Industry executives say that significantly cut into their box office takes.

More recently, “Skyfall” became the latest film to run afoul of China‘s stringent censors and was forced to re-edit scenes.

It also saw its release in the country pushed back from November to January to give Chinese films a wider berth.

“It’s a very interesting, very exciting country right now, but the whole aspect of having a country that on the one hand is becoming more and more capitalist, but on the other hand still has lot of government control, just makes it extremely difficult to navigate,” said Charles Roven, producer of “The Dark Knight Rises.”

Those hurdles won’t cool Hollywood’s expansionist kick. Particularly endearing foreign markets to Hollywood is the fact that audiences overseas are more tolerant of films that bomb domestically.

“Total Recall,” for instance, cost $ 125 million to produce but only managed to earn a meager $ 58 million stateside. It mopped up some of that red ink by grossing $ 139.6 million, perhaps benefiting from audiences who were unfamiliar with the 1990 Arnold Schwarzenegger original.

However, box-office analysts caution that the days of foreign markets feasting on hamburger and mistaking it for steak may one day come to an end.

“International audiences are more forgiving, but the bar is set higher now in terms of the need to do just more than just putting special effects on screen,” said Bruce Nash, founder of the box office statistics site The Numbers. “A studio can no longer guarantee success simply by spending $ 150 million on a movie.”

Credit for the sizzling box office does not rest simply with bigger budgets, analysts and studio executives say. They contend it goes to a slate of films like “The Amazing Spider-Man” or “Skyfall” that have an aspirational quality that makes them easily accessible in some far-flung parts of the globe.

“Whether you’re growing up in Moscow, Seoul or Kansas City, you could imagine yourself being Spider-Man, and I think many guys fantasize about being James Bond,” said Rory Bruer, worldwide president of distribution at Sony Pictures. “These stories may be set in New York or England, but they don’t belong to us, they belong to the world.”

Not that all superhero films are created equal. Take “Iron Man” and “Iron Man 2″ – some box-office watchers think that the character’s narcissism and arrogance rankled Asian audiences, resulting in the films being the rare blockbusters that actually performed better domestically than abroad.

However, partner Iron Man with Captain America and Thor in “The Avengers” and the message of team-work resonates much more strongly with the same audiences that may have rejected the character in his solo ventures. The result was that $ 888.4 million of the film’s box office take came from foreign territories.

“The narrative arc transcends borders,” said Kristen Simmons, senior vice president of the worldwide motion picture group at the research firm Ipsos MediaCT.

“You have these flawed characters coming together for the common good and that is culturally appealing across the world.”

Studios are also taking pains to tailor stories so they aren’t as geographically specific – setting them in the future or in a city or countryside that could double for urban or rural environments anywhere in the world. And they’re peppering their cast with international stars, so their films will be more reflective of the ethnic makeup of their audiences.

Among the recent instances of global casting were Indian star Irfan Khan’s key roles as a scientist in “The Amazing Spider-Man” and the narrator of “Life of Pi,” as well as Wang Xueqi, the so-called Sean Connery of China‘s addition to the cast of the upcoming “Iron Man 3.”

That can do a lot to increase playability abroad and to bring in fans who remain stubbornly immune to the charms of Robert Downey Jr. or Will Smith.

Sometimes the bet works, as in the case of “Life of Pi,” which rode its international setting and cast to $ 356.3 million at the foreign box office. That far surpasses the $ 95.6 million in domestic receipts and is the major reason the costly film will make a profit despite its $ 125 million budget and esoteric storyline about the search for faith.

Other times the globe-trotting gamble doesn’t pay off. “Cloud Atlas” spanned time, space and multiple continents, but bombed both domestically and abroad. Despite its sprawling, international troop of actors, the film eked out a mere $ 71 million worldwide, which won’t cover its reported $ 100 million production costs.

Producers say that casting decisions can’t just be a case of tokenism, they have to be dramatically sound. Nor do the films have to be pandering.

“If you stay true to the concept and elements that originally attracted you to the material, you can still make it appealing on a worldwide basis,” Roven said.

“I don’t believe making a movie accessible means you have to dumb them down,” he added.

Movies News Headlines – Yahoo! News

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HCA Must Pay Kansas City Foundation $162 Million

HCA, the nation’s largest profit-making hospital chain, was ordered on Thursday to pay $162 million after a judge in Missouri ruled that it had failed to abide by an agreement to make improvements to dilapidated hospitals that it bought in the Kansas City area several years ago.

The judge also ordered a court-appointed accountant to determine whether HCA had actually provided the levels of charitable care that it agreed to at the time.

The ruling came in response to a suit filed in 2009 by a community foundation that was created when HCA acquired the hospitals. Among other things, the foundation was responsible for ensuring that HCA met the obligations outlined in the deal.

The dispute in Kansas City is the second time in recent years that HCA has come under legal fire from officials in communities that sold troubled nonprofit community hospitals to HCA.

In another dispute in New Hampshire in 2011, a judge ruled in HCA’s favor, deciding that Portsmouth Regional Hospital would remain part of HCA after community leaders tried to regain control. During testimony in a 2011 trial, a former hospital official claimed he had difficulties getting HCA to pay for what he and others described as critical equipment and facility upgrades.

In an e-mailed statement, a spokesman for HCA said the company was disappointed in the court’s ruling and intended to appeal. He also added that the two cases were “rare exceptions” and that the company had enjoyed positive relationships with communities across the country.

The suit is among several problems for HCA. The company disclosed last year, for example, that the United States attorney’s office in Miami had subpoenaed documents as part of an inquiry to determine whether unnecessary cardiology procedures had been performed at HCA hospitals in Florida and elsewhere. At stake in that case is whether HCA inappropriately billed Medicare and private insurers for the procedures. HCA has denied any wrongdoing.

Financially, Thursday’s judgment is a slap on the wrist for HCA, which posted net income of $360 million in just the third quarter of last year. But the ruling may reverberate beyond HCA as communities across the country put their troubled nonprofit hospitals up for sale.

In many cases, the buyers with the deepest pockets have been profit-making hospital chains that want to convert the community hospitals to profit status, typically agreeing to spend money to fix them and to maintain certain levels of charitable care in the community.

In 2011, for instance, Vanguard Health Systems, which went public that year and has as its largest shareholder the private equity firm Blackstone Group, bought eight hospitals in Detroit. As part of that deal, Vanguard Health agreed to spend $850 million over five years to fix and maintain the hospitals.

The trouble in the Kansas City area began a year after HCA acquired a dozen hospitals from Health Midwest in 2003 for $1.125 billion. As part of the deal, HCA agreed to make $300 million in capital improvements in the first two years and an additional $150 million in the following three. The hospital chain also agreed to maintain the levels of care that had been provided to low-income individuals and families in the area for 10 years.

But when the members of the Health Care Foundation of Greater Kansas City, a nonprofit created from the proceeds of the sale of the hospital, received their first report from HCA in 2004 they discovered the hospital was already way behind.

Of the $300 million it was supposed to spend in the first two years, its own documents showed it had spent only about $50 million, according to Mark G. Flaherty, one of the founding members of the foundation and its general counsel.

HCA’s reports to the foundation also indicated that the level of charitable care it provided at the system’s large inner-city hospital had fallen while charitable care provided at the more affluent suburban hospital had risen sharply, Mr. Flaherty said.

“That was a big red flag to us,” he said.

After repeatedly asking HCA executives for explanations but receiving none, the foundation sued HCA in 2009. The case went to trial for several weeks in 2011.

HCA argued in the trial that it had met its obligation to spend money on hospital facilities by building two new hospitals at a cost of hundreds of millions of dollars, rather than repairing older facilities. But Judge John Torrence of Jackson County Circuit Court ruled that the agreement called for improvements to existing hospitals.

He said HCA still owed $162 million of the $300 million it had agreed to spend between 2003 and 2005. He then named a court-appointed forensic accountant to determine whether HCA had met its other capital commitments and whether it provided the charitable care it had said it would.

HCA’s own written statements claimed “differing amounts,” the judge wrote in his ruling. One HCA report said it provided $48 million in charitable care to the area in 2009 while another report on its Web site said it provided more than $87 million. The annual report to the foundation claimed it provided $185 million in uncompensated and charity care that year, the judge wrote.

During the trial, when asked about the widely differing numbers, the president of HCA’s Midwest division and other HCA executives had no explanation.

The money will be paid to the foundation, which will use it to create grants to provide care for uninsured or underinsured families in the area. It is unclear whether the spending on improvements will occur.

Depending on what the court-appointed accountant discovers, HCA may owe even more money, said Paul Seyferth of Seyferth Blumenthal & Harris, which represents the foundation.

“We think they’re going to have a tremendously difficult time convincing anybody that they spent what they claim they spent,” Mr. Seyferth said.

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Storm-Damaged Homes Mean Lower Property Tax Revenues in New York Region

Localities across the New York region, already reeling from the cost of cleaning up from Hurricane Sandy, are confronting the prospect of an even bigger blow to their finances: a precipitous decline in property tax revenues.

The storm damaged tens of billions of dollars’ worth of real estate, especially in coastal areas of Long Island and New Jersey. As a result, localities can no longer expect to reap the same taxes from properties that have lost much of their value — in some cases, permanently.

Without new revenues, state and local officials and Wall Street analysts said, these areas may have to make deep cuts in spending on schools, police and fire departments and other services. They also may be hard-pressed to finance rebuilding.

“Absolutely, this is going to be devastating for several years,” said Ester Bivona, former president of the New York State Receivers and Collectors Association, which represents local tax officials.

The Division of Local Government Services in New Jersey estimated this month that more than a dozen municipalities in the state could lose at least 10 percent of their tax bases. About another 10 face a drop between 5 percent and 10 percent, state and local officials said.

Among the worst hit is Toms River, one of New Jersey’s largest municipalities, with 90,000 people. It recently warned Wall Street that property tax receipts could drop 10 percent to 15 percent, according to its financial disclosure documents.

Down the coast, the tiny borough of Tuckerton lost close to 20 percent of its property tax base. In Sea Bright, nearly half the homes are uninhabitable.

The situation is similar on Long Island, according to interviews with officials there.

The village of Freeport in Nassau County expects that many of its 15,000 homeowners will qualify for reductions in property tax bills, erasing at least 5 percent of property tax revenues and probably far more.

Experts said the looming revenue crisis for localities in the region underscores how natural disasters can have a profound effect long after the debris is gone.

If localities try to raise overall tax rates to make up for looming deficits, they may touch off a backlash from homeowners with undamaged properties.

“My thing is to encourage property owners to not seek reassessments because you’re going to pay on one end or the other,” said Andrew Hardwick, Freeport’s mayor. “If too many people seek reassessment and are successful with it, that means, how do you pay the bills on the other end? You raise the taxes again? It doesn’t make sense.”

Some localities, like Long Beach, on Long Island, had shaky finances before the storm and are now in deeper trouble, according to local budget records. But many others had been on solid financial ground.

Two major bond-rating agencies, Moody’s Investors Service and Standard & Poor’s, have expressed concerns in recent weeks about the fiscal stability of numerous municipalities in the region.

New York City and county governments in New York are far less reliant on property taxes than localities, so they are expected to have an easier time weathering a drop in the value of the tax base caused by storm damage. The city, for example, has its own income and business taxes.

What’s more, the city and county governments in both states have a much broader property tax base than small localities.

The $50.7 billion Hurricane Sandy relief bill approved this month by the House of Representatives provides up to $300 million in low-interest loans for localities facing shortfalls. The Senate has supported a similar provision in its own relief package.

But some local officials said such financing was not nearly enough. States themselves have not yet sent aid, and senior state officials said they were not inclined to do so until federal money was exhausted.

“It’s a pretty inescapable conclusion that there will be an impact on the tax base,” said Michael Drewniak, chief spokesman for Gov. Chris Christie of New Jersey.

“In many instances, we had homes completely wiped out or severely damaged to the point they were rendered uninhabitable,” Mr. Drewniak said. “That left behind rebuildable land but, in the meantime, no ‘improvements’ to tax. In other cases, people may find it cost prohibitive to rebuild at all, depending on their individual circumstances.”

It could be a year or two before the aftereffects are fully understood, given that localities will have to assess damaged properties before lowering property taxes on them.

Griff Palmer contributed reporting.

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Former LAUSD teacher accused of molesting 20 children

A former Los Angeles Unified School District teacher was arrested Wednesday on suspicion of committing lewd acts and sexually abusing 20 children and an adult, law enforcement authorities said.

Robert Pimentel, 57, who taught at George de la Torre Jr. Elementary School in Wilmington, was taken into custody by Los Angeles Police Department detectives, who had launched an investigation in March after several fourth-grade girls said they had been inappropriately touched.

Prosecutors filed 15 charges against Pimentel involving a dozen of his alleged victims. The charges involve sexual abuse and lewd acts on a child and cover the period from September 2011 to March 2012, according to court records. Authorities said the teacher is suspected of inappropriately touching children under and over their clothing.

Detectives suspect Pimentel victimized an additional eight children and the adult, LAPD Capt. Fabian Lizarraga told The Times.

The arrest comes as the nation's second-largest school district has been rocked in recent months by allegations of sexual misconduct involving teachers and students.

In January, a teacher at Miramonte Elementary School in the Florence-Firestone neighborhood was arrested on suspicion of spoon-feeding semen to students in a classroom and taking dozens of photos. Some of the photos show students blindfolded and being fed allegedly tainted cookies.

An audit released in November concluded that the district failed to promptly report 150 cases of suspected teacher misconduct — including allegations of sexual contact with students — to state authorities as required by law. District officials said they have addressed the breakdowns highlighted in the audit.

Wednesday evening, L.A. Unified Supt. John Deasy said both Pimentel and the school's principal were immediately removed when the district found out about the allegations in March.

Deasy said he removed the principal because he was "dissatisfied" with how the situation was handled at the school. The principal has not been identified.

Parents at the school were informed within 72 hours after Pimentel was removed from the campus, and the California Commission on Teacher Credentialing was promptly notified, the district said.

District officials prepared a "notice of termination" for Pimentel and the principal, which they had planned to present to the Board of Education in April 2012, Deasy said. But both employees retired before the board meeting.

He said Pimentel and the principal will receive their full pensions because they retired before the district took action against them.

"Can you go back and fire someone who's already retired? No, you can't," Deasy said.

Detectives launched their investigation of Pimentel after some of the children told their parents they had been abused, Lizarraga said. The parents then alerted officers at the LAPD's Harbor Division.

Of the 20 children allegedly abused, 19 were students at the school, according to Lizarraga. He said detectives came across the other child as they gathered evidence.

Deasy told The Times that his recollection was that the adult was a co-worker of Pimentel.

Pimentel, who lives in Newport Beach, had been a teacher with the district since 1974, police said. He was taken into custody shortly after noon Wednesday and was being held on $12-million bail. He is expected to appear in court Thursday.

In the Miramonte Elementary case, former teacher Mark Berndt, 61, is charged with 23 counts of lewd conduct and is awaiting trial. He has pleaded not guilty.

The district is facing nearly 200 molestation and lewd conduct claims stemming from Berndt's alleged wrongdoing.

In a separate case, a jury recently awarded $6.9 million to a 14-year-old boy who was molested while he was in fifth grade at Queen Anne Place Elementary School in the Mid-Wilshire area.

The teacher in that incident pleaded no contest to two counts of a lewd act on a child and to continuous sexual abuse of a child younger than 14. He is serving a 16-year prison sentence.

richard.winton@latimes.com

howard.blume@latimes.com

Times staff writer Robert J. Lopez contributed to this report

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A Google-a-Day Puzzle for Jan. 24

Our good friends at Google run a daily puzzle challenge and asked us to help get them out to the geeky masses. Each day’s puzzle will task your googling skills a little more, leading you to Google mastery. Each morning at 12:01 a.m. Eastern time you’ll see a new puzzle posted here.

SPOILER WARNING:
We leave the comments on so people can work together to find the answer. As such, if you want to figure it out all by yourself, DON’T READ THE COMMENTS!

Also, with the knowledge that because others may publish their answers before you do, if you want to be able to search for information without accidentally seeing the answer somewhere, you can use the Google-a-Day site’s search tool, which will automatically filter out published answers, to give you a spoiler-free experience.

And now, without further ado, we give you…

TODAY’S PUZZLE:

Note: Ad-blocking software may prevent display of the puzzle widget.

Ken is a husband and father from the San Francisco Bay Area, where he works as a civil engineer. He also wrote the NYT bestselling book "Geek Dad: Awesomely Geeky Projects for Dads and Kids to Share."

Read more by Ken Denmead

Follow @fitzwillie and @geekdads on Twitter.

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Artist Christo takes small steps on Colo. project

DENVER (AP) — Construction of the proposed “Over the River” project in Colorado is on hold pending legal challenges, but artist Christo said Wednesday his team is doing other work so he can one day suspend nearly six miles worth of silvery fabric in sections over the Arkansas River.

Railroad tracks are being cleared along the project route that traces U.S. 50 between Canon City and Salida, and work is beginning to mitigate impacts to bighorn sheep.

Christo is also preparing for his upcoming exhibit in Oberhausen in Germany of “Big Air Package,” a 295-foot air-filled fabric bubble that will help raise funds for Over the River, which has cost $ 13 million so far.

As envisioned by Christo and his late wife, Jeanne-Claude, Over the River would be displayed for two weeks in late summer. The earliest it could be displayed is August 2016, but even that timeline may be unlikely.

The Bureau of Land Management‘s approval of a permit for it is being appealed, and a group called Rags Over the Arkansas River has filed lawsuits challenging permit approvals by the BLM and Colorado State Parks.

Opponents contend the project poses environmental, safety, traffic and economic risks and will require more than two years of industrial-scale construction work. Christo‘s team has said it plans dozens of measures to mitigate impacts.

Christo and Jeanne-Claude‘s massive projects have survived delays before.

“I don’t consider it a pause,” Christo said. “It’s part of the dynamics of the project.”

During the work on Over the River, he also is actively working on The Mastaba, a giant sculpture of 410,000 barrels planned for Abu Dhabi that he conceived in 1977. Because he is 77, Christo said he is trying to complete both projects simultaneously rather than focusing on one at a time.

Christo was in Denver for an exhibit Wednesday at Metropolitan State University of Denver’s Center for Visual Art of two sketches he donated to Colorado.

___

Find Catherine Tsai on Twitter at http://www.twitter.com/ctsai_denver

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Well: Long Term Effects on Life Expectancy From Smoking

It is often said that smoking takes years off your life, and now a new study shows just how many: Longtime smokers can expect to lose about 10 years of life expectancy.

But amid those grim findings was some good news for former smokers. Those who quit before they turn 35 can gain most if not all of that decade back, and even those who wait until middle age to kick the habit can add about five years back to their life expectancies.

“There’s the old saw that everyone knows smoking is bad for you,” said Dr. Tim McAfee of the Centers for Disease Control and Prevention. “But this paints a much more dramatic picture of the horror of smoking. These are real people that are getting 10 years of life expectancy hacked off — and that’s just on average.”

The findings were part of research, published on Wednesday in The New England Journal of Medicine, that looked at government data on more than 200,000 Americans who were followed starting in 1997. Similar studies that were done in the 1980s and the decades prior had allowed scientists to predict the impact of smoking on mortality. But since then many population trends have changed, and it was unclear whether smokers today fared differently from smokers decades ago.

Since the 1960s, the prevalence of smoking over all has declined, falling from about 40 percent to 20 percent. Today more than half of people that ever smoked have quit, allowing researchers to compare the effects of stopping at various ages.

Modern cigarettes contain less tar and medical advances have cut the rates of death from vascular disease drastically. But have smokers benefited from these advances?

Women in the 1960s, ’70s and ’80s had lower rates of mortality from smoking than men. But it was largely unknown whether this was a biological difference or merely a matter of different habits: earlier generations of women smoked fewer cigarettes and tended to take up smoking at a later age than men.

Now that smoking habits among women today are similar to those of men, would mortality rates be the same as well?

“There was a big gap in our knowledge,” said Dr. McAfee, an author of the study and the director of the C.D.C.’s Office on Smoking and Public Health.

The new research showed that in fact women are no more protected from the consequences of smoking than men. The female smokers in the study represented the first generation of American women that generally began smoking early in life and continued the habit for decades, and the impact on life span was clear. The risk of death from smoking for these women was 50 percent higher than the risk reported for women in similar studies carried out in the 1980s.

“This sort of puts the nail in the coffin around the idea that women might somehow be different or that they suffer fewer effects of smoking,” Dr. McAfee said.

It also showed that differences between smokers and the population in general are becoming more and more stark. Over the last 20 years, advances in medicine and public health have improved life expectancy for the general public, but smokers have not benefited in the same way.

“If anything, this is accentuating the difference between being a smoker and a nonsmoker,” Dr. McAfee said.

The researchers had information about the participants’ smoking histories and other details about their health and backgrounds, including diet, alcohol consumption, education levels and weight and body fat. Using records from the National Death Index, they calculated their mortality rates over time.

People who had smoked fewer than 100 cigarettes in their lifetimes were not classified as smokers. Those who had smoked at least 100 cigarettes but had not had one within five years of the time the data was collected were classified as former smokers.

Not surprisingly, the study showed that the earlier a person quit smoking, the greater the impact. People who quit between 25 and 34 years of age gained about 10 years of life compared to those who continued to smoke. But there were benefits at many ages. People who quit between 35 and 44 gained about nine years, and those who stopped between 45 and 59 gained about four to six years of life expectancy.

From a public health perspective, those numbers are striking, particularly when juxtaposed with preventive measures like blood pressure screenings, colorectal screenings and mammography, the effects of which on life expectancy are more often viewed in terms of days or months, Dr. McAfee said.

“These things are very important, but the size of the benefit pales in comparison to what you can get from stopping smoking,” he said. “The notion that you could add 10 years to your life by something as straightforward as quitting smoking is just mind boggling.”

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Media Decoder Blog: A Resurgent Netflix Beats Projections, Even Its Own

9:12 p.m. | Updated For all those who have doubted its business acumen, Netflix had a resounding answer on Wednesday: 27.15 million.

That’s the number of American homes that were subscribers to the streaming service by the end of 2012, beating the company’s own projections for the fourth quarter after a couple of quarters of underwhelming results.

Netflix’s growth spurt in streaming — up by 2.05 million customers in the United States, from 25.1 million in the third quarter — was its biggest in nearly three years, and helped the company report net income of $7.9 million, surprising many analysts who had predicted a loss.

The results reflected just how far Netflix has come since the turbulence of mid-2011, when its botched execution of a new pricing plan for its services — streaming and DVDs by mail — resulted in an online flogging by angry customers. Investors battered its stock price, sending it from a high of around $300 in 2011 to as low as $53 last year.

“It’s risen from the ashes,” said Barton Crockett, a senior analyst at Lazard Capital Markets. “A lot of investors have been very skeptical that Netflix will work. With this earnings report, they’re making a strong argument that the business is real, that it will work.”

Investors, cheered by the results, sent Netflix shares soaring more than 35 percent in after-hours trading Wednesday. The stock had ended regular trading at $103.26.

Netflix’s fourth-quarter success was a convenient reminder to the entertainment and technology industries that consumers increasingly want on-demand access to television shows and movies. Streaming services by Amazon, Hulu and Redbox are all competing on the same playing field, but for now Netflix remains the biggest such service, and thus a pioneer for all the others.

“Our growth and our competitors’ growth shows just how large the opportunity is for Internet TV, where people get to control their viewing experience,” Netflix’s chief executive, Reed Hastings, said in a telephone interview Wednesday evening.

Questions persist, though, about whether Netflix will be able to attract enough subscribers to keep paying its ever-rising bills to content providers, which total billions of dollars in the years to come. The company said on Wednesday that it might take on more debt to finance more original programs, the first of which, the political thriller “House of Cards,” will have its premiere on the service on Feb. 1. Netflix committed about $100 million to make two seasons of “House of Cards,” one of five original programs scheduled to come out on the service this year.

“The virtuous cycle for us is to gain more subscribers, get more content, gain more subscribers, get more content,” Mr. Hastings said in an earnings conference call.

The company’s $7.9 million profit for the quarter represented 13 cents a share, surprising analysts who had expected a loss of 12 cents a share. The company said revenue of $945 million, up from $875 million in the quarter in 2011, was driven in part by holiday sales of new tablets and television sets.

Netflix added nearly two million new subscribers in other countries, though it continued to lose money overseas, as expected, and said it would slow its international expansion plans in the first part of this year.

The “flix” in Netflix, its largely forgotten DVD-by-mail business, fared a bit better than the company had projected, posting a loss of just 380,000 subscribers in the quarter, to 8.22 million. The losses have slowed for four consecutive quarters, indicating that the homes that still want DVDs really want DVDs.

On the streaming side, Netflix’s retention rate improved in the fourth quarter, suggesting growing customer satisfaction.

Asked whether the company’s reputation had fully recovered after its missteps in 2011, Mr. Hastings said, “We’re on probation at this point, but we’re not out of jail.”

He has emphasized subscriber happiness, even going so far as to say on Wednesday that “we really want to make it easy to quit” Netflix. If the exit door is well marked, he asserted, subscribers will be more likely to come back.

The hope is that original programs like “House of Cards” and “Arrested Development” will lure both old and new subscribers to the service. Those programs, plus the film output deal with the Walt Disney Company announced in December, affirm that Netflix cares more and more about being a gallery — with showy pieces that cannot be seen anywhere else — and less about being a library of every film and TV show ever made.

“They’re morphing into something that people understand,” said Mr. Crockett of Lazard Capital.

Mr. Hastings said this had been happening for years, but that it was becoming more apparent now to consumers and investors.

Mr. Hastings’s letter to investors brought up the elephant in the room, the activist investor Carl C. Icahn, who acquired nearly 10 percent of the company’s stock last October. Mr. Icahn, known for his campaigns for corporate sales and revampings, stated then that Netflix “may hold significant strategic value for a variety of significantly larger companies.”

Netflix subsequently put into place a shareholder rights plan, known as a poison pill, to protect itself against a forced sale by Mr. Icahn.

The company said on Wednesday, “We have no further news about his intentions, but have had constructive conversations with him about building a more valuable company.”

Factoring in the stock’s 30 percent rise since November and the after-hours action on Wednesday, Mr. Icahn’s stake has now more than doubled in value, to more than $700 million from roughly $320 million.

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Israel elections deal a major setback to Netanyahu

JERUSALEM — Israeli voters dealt a stunning political rebuke to Prime Minister Benjamin Netanyahu, leaving parliamentary elections in a virtual tie between the right and center-left and denying him the mandate he sought to pursue hawkish policies toward Palestinian peace talks, Iran's nuclear program and construction of West Bank settlements.

Netanyahu was still regarded as the most likely candidate to form a new government after Tuesday's voting because there are few other credible figures. But the disappointing performance will require him to reach out to the center in order to form a governing coalition.

With all but votes from prisoners, military voters and some government workers counted early Wednesday, Israel's conservative and religious parties had won 60 seats in the Knesset, Israel's parliament, the same number won by centrist and left-wing parties, who were led by a surprisingly strong performance from a political newcomer, Yair Lapid.

Though the final tally could change slightly, the close race all but ensures a period of turmoil before a new government emerges, and catapults Lapid and his recently formed centrist party, Yesh Atid ("There Is a Future"), into the forefront of Israeli politics. The party formed by the charismatic former TV broadcaster won 19 seats, the second-highest number of any party.

Amid a stronger-than-expected voter turnout of 67% — up from 65% in 2009 — the conservative bloc fell five seats short of the 65 seats it amassed four years ago, while the center-left parties picked up five.

The right was led by a joint slate between Netanyahu's Likud Party and former Foreign Minister Avigdor Lieberman's nationalist Yisrael Beiteinu, which won 31 seats in the 120-member Knesset. That's far less than the combined 42 seats the two parties won four years ago when they ran separately. Based on the ratio determined in the shared slate, the results translate into about 20 seats for Likud and 11 for Yisrael Beiteinu.

Netanyahu held a slim lead as returns began to pour in Tuesday night. As the results were still being tallied, he declared victory early Wednesday and vowed to seek a broad coalition.

"I believe that the election results are an opportunity to make changes that the citizens are hoping for and that will serve all of Israel's citizens," he told supporters. "I intend to lead these changes, and to this end we must form as wide a coalition as possible."

That last part, at least, will prove true for whomever forms the next government.

Even before the tally slipped into a tie, however, Labor Party leader Shelly Yachimovich called the results a "no-confidence vote" for the prime minister, saying, "The public has said a clear 'no' to Netanyahu's policy." She also vowed to fight to replace Netanyahu in the coming days.

Her left-leaning party received 15 seats, but it was eclipsed by the surprise performance of Lapid's party, which won nearly twice as many seats as polls had predicted.

The results signal a slowdown in the rightward shift of the Israeli electorate in recent years. The conservatism has been attributed to growing pessimism by many Israelis about peace talks and by the belief that Palestinians will never accept Israel as a Jewish state. Such sentiments spread after the Palestinian uprising a decade ago, when hundreds of Israeli civilians were killed in suicide bombings.

Netanyahu's tough stance toward Palestinians and expansion of Jewish settlements on land claimed by Palestinians has tapped into such sentiments.

But critics, including centrist leaders like Lapid, say Netanyahu's policies have isolated Israel internationally and squandered a chance to reach a peace deal with Palestinian Authority President Mahmoud Abbas. Abbas has been praised as a moderate Palestinian leader who disavows violence, but he has refused to resume peace talks as long as Israel continues to build settlements on land it seized during the 1967 Middle East War.

Lapid, 49, appealed to middle-class, secular moderates, focusing his campaign on a promise to end the draft exemption that allows ultra-Orthodox young people to avoid military service and to slash government subsidies to West Bank settlers.

He also supports resuming Palestinian peace talks and opposes attacking Iran's nuclear program without American cooperation.

Though center-left leaders were pressuring Lapid to boycott a new Netanyahu government, he signaled willingness — at least when it still appeared Netanyahu would win — to join if his programs are implemented.

"What is good for Israel is not in the possession of the right and nor is it in the possession of the left," he said. "It lies in the possibility of creating here a real and decent center that listens to the other side, that knows how to engage in dialogue, that remembers that we are here together."

Netanyahu had been expected to reach out to Lapid in an effort to ensure the stability of his coalition and reduce his dependency on far-right and religious parties, such as the ultra-Orthodox Shas. The nature of a governing coalition, however, was thrown into question by the election results.

In theory, adding additional partners would make it more difficult for any single party to threaten to bring down the coalition by withdrawing, although it increases the chances of internal ideological battles.

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Open Source Outfit Bags $30M in Funding — And That Seems Small

Open source software is now big business. Last year, Red Hat became the first $1 billion open source company, and there are dozens — if not hundreds — of companies competing for second place.

Attitudes towards open source software have changed so much in recent years, some outfits are now swimming in venture capital. Code hosting service GitHub grabbed $100 million dollars from Andreessen-Horowitz this past July. 10gen — maker of the MongoDB database — has raised $81 million. Cloudera — one of several companies developing the open source big data system Hadoop — has stuffed $141 million into its war chest.

On Tuesday, the Portland, Oregon based IT automation company Puppet Labs announced that it had raised $30 million from tech giant VMware, and that figure actually seems small. It puts the total amount raised by Puppet Labs at “only” $45.5 million. But this is hardly a lean investment.

Puppet Labs makes open source tools for automatically configuring servers. As companies have added more virtual machines to their data centers, they’ve been turning to tools like Puppet to manage them. It plays right into two of the other big trends in corporate IT: virtualization and cloud computing.

According to founder and CEO Luke Kanies, that $30 million investment is sign of how well the company is doing — in more way than one. VMware likes what’s it’s doing, but it doesn’t need than astronomical sums raised by the likes of Cloudera and 10gen. “We’ve gotten more cash from customers than we’ve gotten from investors,” he says. “We’re cash-flow positive. We’re not deep in debt and trying to figure it out.”

Why does the company need any funding at all? It’s expensive to get and keep enterprise customers. GitHub was profitable before it took $100 million in funding, and some new-age enterprise companies are raising even more. Dropbox has raised over $250 million.

There’s also the fact — not mentioned by Kanies — that more companies are moving into the infrastructure automation market. There’s Puppet’s long time rival Chef, which is commercialized by the Seattle company Opscode. Dell developed a tool called Crowbar, which is based on Chef. Canonical, the company behind Ubuntu, built a deployment automation tool called JuJu. And then there’s CFEngine, which came before Puppet Labs. More competition means a greater need for both marketing and engineering.

To bolster the product in the face of increasing competition, Puppet Labs also announced a partnership with VMWare. Specific integrations have yet to be announced however. “We’re each dedicating resources to further integrations,” Kanies says. “But we didn’t want to tie getting more integrations out the door as a contingent on announcing the partnership.”

He also emphasized that Puppet Labs is still working closely with the OpenStack project, which is developing open source cloud tools that compete with some of VMware’s own offerings.

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