A look back at memorable days on Wall Street

2012 had its fair share of big days on the stock market. Here's a look back at what set off the biggest moves in the Dow Jones industrial average.
The Biggest Drops:
— Nov. 7: Down 313 points. On the day after the presidential election, investors worried that a divided government wouldn't reach deal on the budget in time to avoid across-the-board government spending cuts and tax increases Jan. 1.
— June 1: Down 275 points. A dismal report on hiring and employment for May sent the market swooning.
— June 21: Down 251 points. A sharp decline in a closely watched measure of manufacturing in the Northeast got investors worried about the U.S. economy. China also reports a slowdown at its factories.
— October 23: Down 244 points. Big companies including Xerox, DuPont and 3M report slumping revenues for the third quarter.
— April 10: Down 214 points. Rising borrowing costs for Spain and Italy made investors worry that those two major countries would become the latest to be engulfed in Europe's government debt crisis.
The Biggest Gains:
— June 6: Up 287 points. Hope that European officials would find ways to ease the region's debt crisis launched a rally.
— June 29: Up 278 points. Markets stormed higher after European leaders came up with a plan to rescue banks, relieve debt-burdened governments and restore investor confidence.
— Sept. 6: Up 244 points. Mario Draghi, the head of the European Central Bank, unveiled a program to buy government bonds from the region's struggling countries with the aim of lowering their borrowing costs.
— March 13: Up 218 points. U.S. banks led a powerful rally after JPMorgan Chase said it plans to buy back as much as $15 billion of its stock and raise its dividend. The government also reported strong retail sales for February.

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Stocks shoot up as investors bet on 'cliff' deal

 The stock market shot higher on Monday even as the "fiscal cliff" neared. By the time trading ended, Republicans and Democrats still hadn't reached a budget compromise — but investors were betting that they would.
It was a dramatic day on what turned out to be a strong year for stocks. The Standard & Poor's 500 index rose 13.4 percent for the year, after finishing flat in 2011. It was the index's best year since 2009, and it came despite overhanging problems like Europe's debt crisis and anemic U.S. growth, bringing U.S. indexes close to their highs reached before the 2008 financial crisis.
Including dividends, the gain for the S&P 500 was even higher — 16 percent.
The close Monday was a high note in what had been a choppy day for the market, as choppy as the "fiscal cliff" deal-making that has been yanking it around. It also marked a turnaround after five straight days of "cliff"-influenced losses. The Dow Jones industrial average and the Standard & Poor's 500 both climbed more than 1 percent. The Nasdaq composite index rose 2 percent.
Stocks fell at the opening of trading Monday and struggled for direction throughout the morning. The indecisiveness overlaid a day of dramatic budget negotiations in Washington, where lawmakers were trying to hammer out a new budget deal to avert the "fiscal cliff." That refers to automatic tax increases and government spending cuts that will kick in without a budget deal.
Stocks jerked higher at midday following reports that the bare outline of a deal to avoid the "cliff" had been knit together. The gains faded after President Barack Obama said in the early afternoon that a compromise was "within sight," but not finalized. Then, in the late afternoon, the indexes shot higher again. Congressional Republicans and the Democratic White House said they had agreed on some measures, but still had no final deal in hand.
At the close of trading, Dow Jones industrial average was up 166.03 points, finishing the year at 13,104.14. That's a gain of 7.3 percent for the year, its fourth straight year of gains.
The S&P 500 rose 23.76 to 1,426.19. The Nasdaq composite climbed 59.20 to 3,019.51. For the year the Nasdaq rose 15.9 percent.
With the "fiscal cliff" still closing in, investors' opinions about its potential impact varied, making its long-term effect on the market hard to guess.
Some investors are unruffled. They think that even if the U.S. does go over the "cliff," it would be more akin to the anti-climactic Y2K scare than a true Armageddon. The "cliff's" impact would be felt only gradually, they reason. For example, workers might get more taxes withheld from their first couple of paychecks in the new year, but it's not as if they'd have to pay all their higher taxes up front on Tuesday. And Congress could always retroactively repeal those higher taxes.
Others are more concerned. The higher taxes and lower government spending could take more than $600 billion out of the U.S. economy and send it back into recession. Investors would have no good read on the country's long-term policy for taxes and spending.
The psychological impact — the U.S. would essentially be broadcasting that its lawmakers can't compromise — would also hurt.
"We're having a fragile recovery, with the pain of 2008 still fresh on everybody's mind," said Joe Heider, principal at Rehmann Group outside Cleveland. "It's fear of the unknown. And fear is one of the greatest drivers of the financial markets."
Tim Speiss, partner in charge of the personal wealth advisers practice at EisnerAmper in New York, followed the "cliff" negotiations on Monday and wondered if the U.S. would get its debt rating cut again. The Standard & Poor's ratings agency cut its rating of the U.S. government amid similar negotiations in August 2011, when lawmakers were arguing over the government's borrowing limit. S&P said at the time that the "political brinksmanship" highlighted how "America's governance and policymaking (is) becoming less stable, less effective, and less predictable." Its rating cut sent the stock market into a tailspin.
The other major ratings agencies, Moody's and Fitch, have suggested that they might lower their ratings of the U.S. because of the "fiscal cliff."
"That is, unfortunately, the big story," Speiss said.
It's also one of the only stories. There's been little other news to trade on during the holiday season, giving the "fiscal cliff" drama outsized influence. No major companies are scheduled to report earnings this week. The most significant economic indicator scheduled for this week, the government's monthly jobs report, won't be released until Friday.
The yield on the benchmark 10-year Treasury note rose to 1.76 percent from 1.70 percent late Friday, a sign that investors were moving money into stocks.
Some of the best-performing stocks for the year were those that were making up for deep losses in 2011. Homebuilder PulteGroup nearly tripled after falling for five of the previous six years. Appliance maker Whirlpool and Bank of America more than doubled over the year, after falling by double-digit percentages in 2011.
Some of the worst performers of 2012 were Best Buy, Hewlett-Packard and J.C. Penney. All are struggling to keep up with competitors who have adapted more quickly to changing technologies and customer tastes. They were all up for the day, but were all down at least 44 percent for the year.

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A surprisingly good vintage as market logs gains

 If you'd told investors what was going to happen in 2012 — U.S. economic growth at stall speed, an intensifying European debt crisis, a slowdown in China, fiscal deadlock in Washington, decelerating corporate earnings growth — and asked how the stock market would perform, few would have predicted a good year.
But that's just what they got.
The Dow Jones industrial average, the Standard & Poor's 500 and the Nasdaq composite index all ended the year substantially higher, despite losing ground in the final days of year as concerns about the looming "fiscal cliff" mounted.
The Dow gained 7 percent for the year, its fourth consecutive annual advance, having started the year at 12,217. The S&P 500, which started the year at 1,257, is up 13 percent, beating the 7.8 percent average annual gain of the past 20 years. The Nasdaq also logged a better-than-average gain, 16 percent.
Including dividends, the total return on the S&P 500 index was even better: 16 percent.
Financial companies led the gains among S&P 500 stocks, advancing 26 percent, as banks continued their restructuring efforts after the recession. Bank of America more than doubled, gaining $6.05 to $11.61 and Citigroup advanced $13.25, or 50 percent, to $39.56. Utilities, the best-performing industry group last year, was the only sector of 10 industry groups in the index to decline, dropping 2.9 percent.
"There's been a lot thrown at this market, and it's proven to be very resilient," said Gary Flam, a portfolio manager at Bel Air Investment Advisors in California. "Here we are at the end of the year, and it's still relatively strong."
Stocks started the year on a tear, with optimism about an improving job market and a broader economic recovery providing the backdrop to the S&P 500's best first-quarter rally in 14 years.
The index advanced 12 percent by the end of March, closing the quarter at 1,408, its highest in almost four years, with financial companies and technology firms leading the charge. The Dow ended the first quarter at 13,212, logging an 8 percent gain.
Apple was one of the star performers of the first quarter and was probably the year's most talked-about company.
The popularity of the iPhone and iPad led to staggering sales growth that helped push its stock up 48 percent to almost $600 at the end of March. Apple also announced a dividend and overtook Exxon Mobil as the U.S.'s most valuable company.
At the start of the second quarter, the intensifying European debt crisis and concerns about the impact that it would have on global economic growth prompted a sell-off.
By the start of June, U.S. stocks had given up the year's gains. Borrowing costs for Spain surged and investors fretted over the outcome of Greek elections that had the potential to pull the euro currency bloc apart.
The outlook for growth in China, the world's second-largest economy, also began to weigh on investors' minds. Economic growth there slowed to 8.1 percent in the first quarter as export demand waned, and investors worried that it would keep falling.
The Dow fell as low as 12,101 June 4. The S&P dropped to 1,278 June 1.
The second quarter was also marred by Facebook's initial public offering.
The stock sale was one of the most keenly anticipated initial public offerings in years, but investors didn't "like" the $16 billion market debut. The social network priced its IPO at $38 per share, and the stock started to fall soon after the first day of trading on concern about the company's mobile strategy.
Facebook closed as low as $17.73 on Sept. 4 before recovering some of the ground it lost to close the year at $26.62.
Company earnings reports were also starting to make uncomfortable reading for investors. Earnings growth for S&P 500 companies fell as low as 0.8 percent in the second quarter, according to S&P Capital IQ data.
The stock market only recovered its poise after the European Union put together loans to bail out Spain's banks on June 10 and the head of the European Central Bank, Mario Draghi, pledged to do "whatever it takes" to save the euro.
Speculation that the Federal Reserve was set to provide the economy with more stimulus to prevent it from slipping back into recession also bolstered stocks.
The rally even survived a blip when a software glitch at trading firm Knight Capital threw stock prices into chaos Aug. 1.
The firm said the problem was triggered by new trading software it installed. Erroneous orders were sent to 140 stocks listed on the New York Stock Exchange, causing sudden price swings and surging trading volume.
Apple launched the iPhone 5, the latest version of its smartphone, in September, and the company's stock climbed to a record close of $702.10 on Sept. 19. That gave Apple a market value of $658 billion, and many analysts predicted more gains lay ahead.
By the time Fed Chairman Ben Bernanke announced Sept. 13 that the U.S. central bank would start a third round of its bond-purchase program, which is intended to push longer term interest rates lower and encourage borrowing and investment, the S&P 500 had surged 14 percent from its June 1 low. A day later, the index peaked at five-year high of 1,466. The Dow Jones reached its peak for the year of 13,610, Oct. 5.
As is often the case on Wall Street, investors "bought the rumor and sold the fact," and quickly turned their attention to the challenges that lay ahead.
Analysts had also been cutting their outlook for growth in the final quarter of the year. At the start of the second quarter, estimated earnings growth for the period was 15.7 percent. That forecast had fallen to 3.4 percent by Dec. 27.
"One of the blessings that supported the stock market's moves in prior years was earnings growth," said Lawrence Creatura, a portfolio manager at Federated Investors. "That's true this year, but at a decelerating rate. It's not gone unnoticed that earnings growth is slowing, and many forecasts now include a full stall."
Apple's halo also began to slip in the final three months of the year. Its iPad Mini tablet, launched Nov. 2, met with lukewarm reviews, there were hints of unrest among its executive ranks. Investors began to fret that the intensifying competition in the smartphone market would crimp Apple's profits. The stock tumbled, and despite rallying in recent days is still down 27 percent from its September peak.
The year's final twist came in Washington.
Stocks wavered ahead of a presidential election that at times seemed too close to call, and while President Barack Obama ultimately reclaimed the White House by a comfortable margin, the Republicans retained control of the House.
The divided government set the stage for a tense end to the year as Democrats and Republicans sought to thrash out a budget plan that would avoid the U.S. falling off the "fiscal cliff," a series of tax hikes and government spending cuts that economists say would push the economy back into recession.
Initially, markets fell as much as 5 percent in the 10 days after the elections as investors worried that a divided government would not be able to agree on a budget plan to cut the U.S. deficit.
While the S&P 500 managed to recoup those losses by December on optimism that a deal would be reached, some investors are still urging caution. Any agreement will still be "ill-tasting medicine" to the economy, as it will almost certainly involve both spending cuts and tax hikes, says Joe Costigan, director of equity research at Bryn Mawr Trust Company.
"The question is, how much will the drag from the government be offset by business and personal spending," says Costigan. "The market has reasonable expectations for growth priced in, so I don't think we're going to see a big run-up.

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Housing and jobs key to lifting S&P toward record

It may be a big if, but assuming Washington lawmakers can get past the "fiscal cliff," many analysts say that the outlook for stocks next year is good, as a recovering housing market and an improving jobs outlook helps the economy maintain a slow, but steady recovery.
An advance of 10 percent in 2013 would send the S&P 500 toward, and possibly past, its record close of 1,565 reached in October 2007.
A mid-year rally in 2012 pushed stocks to their highest in more than four years. Both the Standard & Poor's 500 and the Dow Jones industrial average gained in 2012. Those advances came despite uncertainty about the outcome of the presidential election and bouts of turmoil from Europe, where policy makers finally appear to be getting a grip on the region's debt crisis.
"As you remove little bits of uncertainty, investors can then once again return to focusing on the fundamentals," says Joseph Tanious, a global market strategist at J.P. Morgan Funds. "Corporate America is actually doing quite well."
Although earnings growth of S&P 500 listed companies dipped as low as 0.8 percent in the summer, analysts are predicting that it will rebound to average 9.5 percent for 2013, according to data from S&P Capital IQ. Companies have also been hoarding cash. The amount of cash and cash-equivalents being held by companies listed in the S&P 500 climbed to an all-time high $1 trillion at the end of September, 65 percent more than five years ago, according to S&P Dow Jones Indices.
By the time trading ended Monday, Republicans and Democrats still hadn't reached a budget compromise — but investors were betting that they would — after President Barack Obama said that a compromise was "within sight," but not finalized. Without a budget agreement, millions of Americans face the prospect of higher taxes and the government would be forced to slash spending, measures that would probably push the economy into recession, economists say.
Assuming a budget deal is reached in a reasonable amount of time, investors will be more comfortable owning stocks in 2013, allowing valuations to rise, says Tanious.
Stocks in the S&P 500 index are currently trading on a price-to-earnings multiple of about 13.5, compared with the average of 17.9 since 1988, according to S&P Capital IQ data. A lower-than-average ration suggests that stocks are cheap.
The stock market will also likely face less drag from the European debt crisis this year, said Steven Bulko, the chief investment officer at Lombard Odier Investment Managers. While policy makers in Europe have yet to come up with a comprehensive solution to the region's woes, they appear to have a better handle on the region's problems than they have for quite some time.
"There is still some heavy lifting that needs to be done in Europe," said Bulko. Now, though, "we are dealing with much more manageable risk than we have had in the past few years."
Next year may also see an increase in mergers and acquisitions as companies seeks to make use of the cash on their balance sheets, says Jarred Kessler, global head of equities at broker Cantor Fitzgerald.
While the number of M&A deals has gradually crept higher in the past four years, the dollar value of the deals remains remains well short of the total reached five years ago. U.S. targeted acquisitions totaled $964 billion through Dec. 27, according to data tracking firm Dealogic. That's slightly down from last year's total of $1 trillion and about 40 percent lower than in 2007, when deals worth $1.6 trillion were struck.
M&A deals are good for stock prices because the acquiring company typically pays a premium for the one it's buying.
Falling interest rates also set off a rally in the bond market. Concerns about swings in stock prices prompted investors to switch money out of stocks and into bond funds. If investors decide that the bond rally may be nearing an end, that flow of funds may be reversed, providing a support for stocks.
"Equities are the best house in a bad neighborhood," says Cantor's Kessler. "Bonds are, not priced to euphoria, but they are definitely rich compared to equities right now."
Not all investors are as sanguine about the prospects for 2013.
The rally in stocks in 2012 had less to do with company earnings and the economy and more to do with monetary stimulus from the Federal Reserve and other central banks around the world, says David Wright, a managing director and co-founder at Sierra Investment Management in Santa Monica, Calif.
Federal Reserve Chairman Ben Bernanke announced Sept. 13 that the central bank would add another round to its bond-purchase program, known as "quantitative easing" on Wall Street, which is intended to lower borrowing costs and boost growth. Speculation that more stimulus was coming had pushed the S&P 500 index to 1,466, its highest close of the year, a day earlier. The Dow peaked for the year at 13,610, Oct. 5.
"The Fed has done everything it can do and is probably pretty close to having used its last bullet," said Wright. "It's been a good year for stocks, but we think that's an artifact of monetary stimulus."
This year's peaks in the Dow and the S&P 500 won't be surpassed in 2013 and stocks may even slump in the first quarter, as investors lower their earnings expectations, Wright says. The money manager also says that any budget plan, regardless of the details, will be negative for stocks as it will involve higher taxes and lower government spending.
Wells Fargo Securities market analyst Gina Martin Adams also says companies will struggle in the first half of the year as the economy flirts with recession. Export growth is slowing and policymakers are struggling to come up with a plan to reduce the budget deficit.
The bank recommends that investors add to their holdings of financial and utilities stocks because low rates should help support steady earnings growth in the early part of the 2013. Financial stocks advanced 25 percent in 2012, making them the best performing industry group in the S&P 500. Utility stocks fell 3.4 percent, the worst performing of 10 industry groups in the index. The bank says investors should reduce their exposure to so-called consumer discretionary stocks, such as hotels and restaurant companies, because consumer spending will likely take a hit next year as taxes rise.
With a backdrop of historically low interest rates and an economy that still needs to address its fiscal imbalances, investors should remain realistic about the returns they are going to get from the stock market, says Darell Krassnoff, managing director at Bel Air Investment Advisors.

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Five Best Thursday Columns

Jonathan Cohn in The New Republic on Starbucks In hopes of inspiring latte-sipping lawmakers to reach a deal on the fiscal cliff, yesterday Starbucks started writing "come together" on every cup it sells in the DC area. Cute effort, right? More like misguided, argues Jonathan Cohn. He thinks the issue isn't about two warring parties reconciling—it's about convincing the Republicans to quit hijacking the negotiation process. "One party, the Democrats, is already acting responsibly. And one party, the Republicans, is not," Cohn writes. "Washington doesn't need two parties that can 'come together.' It needs one party to 'get it together.' Maybe [Starbucks CEO Howard] Schultz should put that on a coffee cup."

RELATED: When Zuck Met Medvedev

Jacob Sullum in Reason on mental health With so many voices crowding the debate around gun violence, which issue should we be focusing on to prevent another horrible mass shooting like the one at Sandy Hook Elementary—gun control or mental health? Jacob Sullum remains skeptical about the latter. "Even if the mental-health criteria for rejecting gun buyers (or for commitment) were expanded, there is little reason to think [mental health professionals] could distinguish between future Lanzas and people who pose no threat," Sullum writes, citing data that says around half of Americans will become mentally ill at one point in their lives.

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James Bessel in The New York Times on Hagel's pro-Israel critics One of the many camps that doesn't want to see Chuck Hagel become the Secretary of Defense includes the pro-Israel lobby. Groups like the Emergency Committee for Israel are already swinging at Hagel for remarks he made about the Jewish state years ago. "Support for the Jewish state remains strong among both parties on Capitol Hill and across the American electorate, and it won't disappear anytime soon," James Bessel writes. "But that support will wither if Aipac and other mainstream Jewish leaders don't forcefully reject the zealots in their midst."

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Leonid Bershidsky in Bloomberg View on Russia This time last year, Russia's dissidents seemed primed to remake the country, taming its corruption through massive protests. But 2012 hasn't seen those hopes borne out, argues Leonid Bershidsky. Instead, Vladimir Putin has squashed his opposition and launched "a new cold war" with the U.S. "By pushing back his opponents instead, Putin showed that, at 60, he still knows what cards to play with most Russians: traditional values, Orthodox Christianity, anti-Americanism," Bershidsky writes. "As a man deeply rooted in the Soviet past, he has fallen back on the old regime's tested recipes for suppressing dissent, and he has succeeded in annihilating the threat of peaceful revolution that seemed so real a year ago."

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William H. Janeway in the Los Angeles Times on venture capital When it comes to juggernauts like Facebook and Spotify, Silicon Valley venture capitalists might not have built that, but they would say such innovations wouldn't have gotten built without their money. But one venture capitalist—William H. Janeway—wants to give credit to who really built the platform for all this development: government. "My colleagues and I and the entrepreneurs whom we backed were all dancing on a platform constructed by the federal government," Janeway writes. "Government cannot play the role either of entrepreneur or venture capitalist in creating the low-carbon economy. But entrepreneurs and venture capitalists cannot build this new economy by themselves."

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Why Apple's First American-Made Mac Minis Wouldn't Create Jobs

If the latest rumors are true, Apple's made-in-America shift will be an extremely experimental, low-cost operation — and if you look at the supply chain, that may point to more of a symbolic gesture than a genuine engine of job creation. The whispers, which have increasingly better sourcing, now say the tech giant will move its Mac Mini production line from China's Foxconn to the the U.S., possibly near California or Tennessee, per the rumor site DigiTimes. It's still a rumor, of course, but it would make sense for Apple CEO Tim Cook to choose the cheapest and simplest of Macs in fulfilling what he promised earlier this month would be a move "to bring some production to the U.S. on the Mac." It's not going to be a massive Apple factory on these shores, not nearly. Here's why the market and the product specs will dictate less man power:
RELATED: Apple Still Isn't Doing a Very Good Job Creating U.S. Jobs
Low-demand equals low-supply equals a smaller operation. Apple does not break down individual Mac Mini sales in its quarterly reports, but DigiTimes guesses 2012 sales totaled somewhere around 1.4 million units. In one quarter last year, the company sold 1.48 desktop computers, which includes the Mac Mini, iMac, and Mac Pro. Say those sales divided equally; then over a year Apple would sell just under 2 million Mac Minis. Even with that higher estimate, it's a teeny-tiny number compared to the 3 million iPads (Minis and normals) it sold over one weekend in November.
RELATED: Apple Will Be Made in America, Finally
With demand relatively low, Apple won't have to run a huge operation in the U.S., which means fewer jobs necessary at any new or converted factory.
RELATED: Obama's Awkward Steve Jobs Reference at the State of the Union
Tiny product equals fewer parts equals a smaller operation. You can see from the photo above just how little the littlest, lowest-end Mac computer really is. The iFixit teardown for the latest Mac Mini takes 14 steps compared to the iMac, which takes 25. Meaning, the reverse — putting it back together — takes around that amount of work (plus, you know, factory speed), which may point to a much, much lower percentage of workers per product to get the new line of Minis built here.
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The smaller box also has fewer parts, some of which will come from American suppliers. (To get the "Made in America" stamp requires a certain amount of parts and labor built in and working on U.S. soil.)
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Perhaps Apple's making a smart choice by starting small, as TechCrunch's Darrell Etherington argues. All of this smallness means lower costs for Apple. It also means fewer possibilities for something to go wrong in the supply chain. Or you could take the cynical road, and see Apple's choice not as a test model for the future, but as a way for the company to say it makes something here. And then go back to China.

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Survey finds increase in e-reading, drop in paper

The tastes of the reading public are turning digital.
A Pew Internet Research Center survey released Thursday found that the percentage of Americans aged 16 and older who read an e-book grew from 16 percent in 2011 to 23 percent this year. Readers of traditional books dropped from 72 percent to 67 percent. Overall, those reading books of any kind dropped from 78 percent to 75 percent, a shift Pew called statistically insignificant.
Those owning an e-book device or tablet jumped from 18 percent to 33 percent, with much of that increase coming from last year's holiday season, when millions received Kindles, Nooks and other e-readers as gifts.
Awareness that libraries offer digital texts grew from 24 percent to 31 percent.
The telephone survey of 2,252 people aged 16 and older was conducted from Oct. 15 to Nov. 10. It has a sampling error margin of plus or minus 2.3 percentage points.

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New purported BlackBerry Z10 specs emerge: 1.5GHz processor, 2GB RAM, 8MP camera

Another week, another batch of purported leaks for Research In Motion’s (RIMM) first BlackBerry 10-powered Z10. BBin claims to have most of the Z10′s final specs confirmed and it is shaping up to be a powerful device. Rumored specs for the Z10 include a TI OMAP 4470 1.5GHz dual-core processor (Qualcomm Snapdragon MSM8960 for the U.S. and Canada), a 4.2-inch display (1,280 x 768 resolution), quad-band LTE, 2GB of RAM, 16GB or 32GB of internal storage, an 8-megapixel rear camera with LED flash, a 2-megapixel front camera, a microSD card slot, and an 1,800 mAh removable battery. On the connectivity side, the Z10 is also rumored to have NFC, Bluetooth 4.0, dual-band 802.11 a/g/n Wi-Fi, A-GPS, a Micro USB port and a Micro HDMI-out port. BlackBerry 10′s January 30th unveiling in New York City can’t come soon enough.

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Instagram gains users in December despite recent uproar as Zynga gets pecked to death by rivals

Zynga (ZNGA), the Facebook (FB) app behemoth, still reigns supreme on its most important platform. But the erosion of its dominant position continues as smaller rivals keep chipping away at its market share. On December 26, Zynga-owned Facebook applications had 267 million Monthly Active Users, down 20 million in two weeks. Far behind it followed Microsoft (MSFT) with 70 million MAU, King.com with 65 million MAU and Instagram with 43 million MAU.
[More from BGR: Samsung looks to address its biggest weakness in 2013]
But whereas Zynga lost nearly 7% of its Monthly Active Users in the two-week run-up to Christmas, Microsoft managed to inch up by 700,000 users, King.com by 600,000 users and Instagram by 2.1 million users.
[More from BGR: New purported BlackBerry Z10 specs emerge: 1.5GHz processor, 2GB RAM, 8MP camera]
Of course, the Facebook crackdown on aggressive customer acquisition techniques has limited the growth of all third-party app developers. But the most important of Zynga’s smaller rivals have been able to avoid the kind of MAU erosion that is now plaguing the Facebook app champion.
What really pops out from Christmas Facebook app trends is the way Instagram has been able to ride a wave of negative publicity to perky 5% monthly user growth over the past two weeks.
The tsunami of wrath and sarcasm unleashed on Twitter has not reversed Instagram’s momentum. It might even be possible that floating an outrageous-sounding privacy policy and then quickly reversing it could have simply increased Instagram’s brand recognition and piqued consumer interest among those who are not deeply involved in app trends.
This certainly adds some piquancy to the breathless commentary about Instagram’s “fatal blunder” and “possibly irreversible damage.

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TEXT-S&P summary: Bharti Airtel Ltd.

We assess Bharti's financial risk profile as "significant" because of the
company's high debt. For the six months ended Sept. 30, 2012, Bharti's
debt-to-capital ratio remained high at about 61.6%, and its ratios of
annualized funds from operations (FFO) to total debt and debt to EBITDA were
at 23% and 3.5x, respectively. The company's financial ratios were marginally
weaker than in the previous year. This was because of: (1) consolidation of
US$450 million of debt at Qualcomm India, the India broadband wireless
business of Qualcomm Inc. (not rated), which is 49% owned by Bharti; (2) a
depreciation of the Indian rupee (INR); and (3) weaker-than-expected operating
performance. However, increasing cash flows from revenue growth and an equity
offering at Bharti's majority-owned subsidiary Bharti Infratel Ltd. have
mostly offset the effects of the above factors.
We expect Bharti's financial ratios to be susceptible to regulatory
developments in India, especially related to changes in the costs for past and
future spectrum, and the company's response to such changes. The impact of
such changes on Bharti's cash flows is hard to determine because cash flows
are linked to prices derived from the spectrum auction and regulation.
However, our projected positive free operating cash flow could more than
offset such impact, especially with the lowering of the auction price in key
regions. This, combined with growing revenue, could help offset the limited
headroom in Bharti's financial ratios at the current rating level. We expect
Bharti's FFO-to-debt ratio to stay about 25% and its debt-to-EBITDA ratio at
close to 3x in the fiscal year ending March 31, 2014.
Bharti's "fair" business risk profile reflects the company's good market
position as well as above average regulatory and country and macroeconomic
risks in its key markets, particularly India. While regulatory uncertainty in
India has somewhat reduced with recent regulatory changes, policy is still
evolving. The uncertainty is regarding a one-time spectrum charge for spectrum
above 4.4 megahertz (MHz) from July 2008, spectrum re-farming in the 900MHz
frequency band, and license renewal over the next two to three years. Also, we
believe that the company's established position in India makes it less
vulnerable to regulatory uncertainty than some newer entrants.
Bharti's operating performance has been weaker than our expectations in the
past six months. But we believe the company's India business will gradually
improve over the next two to three years as competition moderates and pricing
pressure declines. This is on account of: (1) high penetration; (2) evolving
regulation, which has reduced the number of players; and (3) telecom operators
focus on improving profitability, especially with high spectrum costs, rather
than garnering market share. Bharti's EBITDA margins fell to 31% in the six
months ended Sept. 30, 2012, from 35% in fiscal 2012. The weaker performance
is despite revenue growing by 14%--led by the Africa business--during the same
period. Ongoing intense competition in India and slower-than-expected
improvement in the Africa business were key contributors to the decline in
EBITDA margins.
Bharti has a good market position as India's largest wireless operator. As of
June 30, 2012, the company has a subscriber market share of about 20%,
population coverage of more than 86%, and revenue market share of about 30%.
We expect Bharti to benefit from its strong market position in most African
markets. The company has 193.2 million subscribers in South Asia and 58.7
million in Africa as of Sept. 30, 2012. Bharti also benefits from good
diversity, with operations across South Asia and Africa in diverse business
lines.
Bharti Group owns more than 35% of Bharti, while Singapore Telecommunications
Ltd. (SingTel; A+/Stable/A-1; axAAA/axA-1+) owns 32.25%.
Liquidity
We assess Bharti's liquidity as "adequate," as defined in our criteria. We
expect the company's sources of liquidity to exceed its uses by more than 1.2x
over the next 12 months. Our liquidity assessment is based on the following
factors and assumptions:
-- Liquidity sources include cash and short-term investments of INR35
billion and unused credit facilities of about INR55 billion as of Sept. 30,
2012.
-- Sources also include our projected FFO of about INR190 billion over
the next 12 months and proceeds from Bharti Infratel's equity issuance of
about INR30 billion.
-- Uses of liquidity include debt of about INR146 billion maturing in the
next 12 months (including short-term debt that we expect the company to roll
over).
-- Maintenance and other capital expenditure of about INR80 billion and
projected dividend of about INR4.5 billion, even in case of stress.
-- We anticipate that net liquidity sources will remain positive even if
EBITDA declines by 20%.
Bharti has adequate headroom in its covenants.
We believe Bharti has good financial flexibility because of its strategic
relationship with SingTel, its investments in tower companies, and access to
financial markets and bank lines.
Bharti's foreign currency risk exposure is high, in our view. As of March 31,
2012, two-thirds of the company's debt is in foreign currency.
Correspondingly, only one-third of Bharti's revenue is in foreign currency.
This exposes the company to currency depreciation risk. However, most of
Bharti's debt matures in the second half of the loan period. Such a maturity
profile, along with the company's access to foreign currency funds from
capital markets and bank lines, somewhat offsets the risks of refinancing
foreign currency debt maturities. Bharti is also exposed to interest rate
risk, although it currently benefits from a low interest rate environment.
Outlook
The stable outlook reflects our expectation that Bharti will maintain its good
market position in India and improve its operating performance in Africa. We
anticipate that the company's ratio of debt to EBITDA will be below 3.5x in
the next 12 months.
We could lower the rating if: (1) Bharti's business risk profile deteriorates
due to regulatory changes, competitive pressures, or an increase in country
risk, particularly in Africa; or (2) the company's financial risk profile
weakens. A material increase in debt because of an acquisition or spectrum
auction, any other regulatory change, or a depreciation of the rupee could
weaken Bharti's financial risk profile. A ratio of debt to EBITDA of 3.5x or
more on a sustainable basis could indicate such weakening.
We could raise the rating if Bharti significantly improves its operating
performance, particularly in Africa, or undertakes strategic measures, such as
raising equity, that significantly improve its financial performance. A ratio
of debt to EBITDA of less than 2.5x on a sustainable basis could indicate such
improvement.

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