US, EU and Japan ground Dreamliners

Federal officials say they are temporarily grounding Boeing's 787 Dreamliners until the risk of possible battery fires is addressed. (Jan. 16)

With its new plane ordered to stay on the ground, Boeing Co. confronts a full-fledged crisis as it struggles to regain the confidence of passengers and the airline customers who stood by the 787 Dreamliner during years of cost overruns and delivery delays.

A second major incident involving "a potential battery fire risk'' prompted the Federal Aviation Administration on Wednesday to temporarily ground all 787s operated by U.S. carriers until it is determined that the lithium-ion batteries on board are safe.

The order affects United Airlines, which is the first U.S. customer. The FAA gave no indication how soon the plane could resume flying.

On Thursday, the European Aviation Safety Agency followed suit, grounding all Dreamliners in Europe.

Japanese airlines grounded their 787s Wednesday after an emergency landing and five days after the FAA and U.S. Transportation Secretary Ray LaHood declared that the flying public is safe on Dreamliners. When it offered those assurances Friday, however, the FAA also announced a comprehensive review of the 787's design, manufacture and assembly.

Ethiopian Airlines grounded its four 787s Thursday for "precautionary inspection."

The grounding represents a significant setback for Chicago-based Boeing, which is marketing the fuel-efficient, mainly carbon-composite jetliner as a vision of the future of commercial passenger aviation. The development of the plane was marred by long production and delivery delays, but it is selling well and has customers around the world.

"We stand behind its overall integrity. We will be taking every necessary step in the coming days to assure our customers and the traveling public of the 787's safety and to return the airplanes to service," Jim McNerney, Boeing's chairman and chief executive, said in a statement. He said Boeing is working with the FAA to find answers as quickly as possible.

Chicago-based United Airlines has six 787s, but it has been flying only one on flights between O'Hare International Airport and Houston. The airline said Wednesday night that it will accommodate customers on other planes. The domestic 787 flights were to end in late March, when United's first 787s were to begin serving international routes. 

United said it "will work closely with the FAA and Boeing on the technical review as we work toward restoring 787 service."

Foreign carriers are not affected by the FAA order, but LOT Polish Airlines canceled its inaugural flight celebration at O'Hare on Wednesday night, even before the flight landed from Warsaw.

"We just think it would be inappropriate to go ahead with the activities," said Frank Joost, regional sales director of the Americas for LOT. He described the FAA grounding of 787 flights as a "surprise."

LOT also canceled the Dreamliner's return flight to Warsaw. Passengers hoping to depart on the 9:55 p.m. flight said they were disappointed. Many were rebooked on Lufthansa through Munich.

Suzy Zaborek, 27, of Chicago was at Chicago O'Hare on Wednesday night waiting for her father to arrive from Poland aboard the 787. He came home early specifically to ride on the inaugural flight.

Zaborek had not been following the Dreamliner woes in recent weeks and the dramatic groundings on Wednesday.

"I'm glad I didn't know because I wouldn't have let him get on on of those," she said.

The FAA decision to ground all U.S.-registered 787s was the direct result of an in-flight incident involving a battery earlier in the day in Japan, FAA officials said. It followed another 787 battery fire that occurred Jan. 7 on the ground in Boston.

Both failures resulted in the release of flammable materials, heat damage, smoke and the potential for fire in the electrical compartments, the FAA said.

"Before further flight, operators of U.S.-registered Boeing 787 aircraft must demonstrate to the FAA that the batteries are safe," the regulatory agency said. The statement said the FAA will work with Boeing and airlines "to develop a corrective action plan to allow the U.S. 787 fleet to resume operations as quickly and safely as possible."

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FAA grounds all Dreamliners

The U.S. Federal Aviation Administration said on Wednesday it would temporarily ground Boeing Co.'s 787s after a second incident involving battery failures caused one of the Dreamliner passenger jets to make an emergency landing in Japan.

The FAA said airlines would have to demonstrate that the lithium ion batteries involved were safe before they could resume flying Boeing's newest commercial airliner, but gave no details on when that could occur.

Boeing could not be immediately reached for comment.

All Nippon Airways Co. said instruments aboard a domestic flight indicated a battery error, triggering emergency warnings. The incident was described by a transport ministry official as "highly serious" - language used in international safety circles as indicating there could have been an accident.

Boeing shares fell 2 percent in after-hours trading to $72.80 after the FAA announcement.

The 787, which has a list price of $207 million, represents a leap in the way planes are designed and built, but the project has been plagued by cost overruns and years of delays. Some have suggested Boeing's rush to get planes built after those delays resulted in the recent problems, a charge the company denies.

The use of new battery technology is among the cost-saving features of the 787, which Boeing says burns 20 percent less fuel than rival jetliners using older technology.

Lithium-ion batteries can catch fire if they are overcharged and, once alight, they are difficult to put out as the chemicals produce oxygen, Boeing's chief engineer for the 787, Mike Sinnett, told reporters last week. He said lithium-ion was not the only battery choice, but "it was the right choice."

In Asia, only the Japanese and Air India have the Dreamliner in service, but other airlines are among those globally to have ordered around 850 of the new aircraft.

Boeing has said it will at least break even on the cost of building the 1,100 new 787s it expects to deliver over the next decade. Some analysts, however, say Boeing may never make money from the aircraft, given its enormous development cost.

Any additional cost from fixing problems discovered by the string of recent incidents would affect those forecasts and could hit Boeing's bottom line more quickly if it has to stop delivering planes, analysts said.

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PC titans take notes from tablets to regain customers

SAN FRANCISCO (Reuters) - Personal computer makers, trying to beat back a tablet mania that's eating into their sales, are making what may be a last-ditch attempt to sway customers by mimicking the competition.

Many of the laptops to be unveiled around the world in coming months will be hybrids or "convertibles" - morphing easily between portable tablets and full-powered laptops with a keyboard, industry analysts say.

The wave of hybrids comes as Intel Corp and Microsoft Corp, long the twin leaders of the PC industry, prepare to report results this week and next. Wall Street is predicting flat to sluggish quarterly revenue growth for both, underscoring the plight of an industry that has struggled to innovate.

In 2013, some are hoping that will change.

With the release of Microsoft's touch-centric, re-imagined Windows 8 platform in October and more power-efficient chips from Intel, PC makers are trying to spark growth by focusing on creating slim laptops with touchscreens that convert to tablets and vice versa.

Microsoft, expanding beyond its traditional business of selling software, is expected this month to roll out a "Surface Pro" tablet compatible with legacy PC software developed over decades.

That's a major selling point for corporate customers like German business software maker SAP, which plans to buy Surface Pros for employees that want it, said SAP Chief Information Officer Oliver Bussmann.

"The hybrid model is very compelling for a lot of users," Bussmann told Reuters last week. "The iPad is not replacing the laptop. It's hard to create content. That's the niche that Microsoft is going after. The Surface can fill that gap."

Apple's iPad began chipping away at demand for laptops in 2010, an assault that accelerated with the launch of Amazon.com Inc's Kindle Fire and other Google Android devices like Samsung Electronics' Note.

With sales of PCs falling last year for the first time since 2001, this year may usher in a renaissance in design and innovation from manufacturers who previously focused on reducing costs instead of adding new features to entice consumers.

"People used to be able to just show up at the party and do well just because the market was going up," Lisa Su, a senior vice president at Advanced Micro Devices, which competes against Intel. "It's harder now. You can't just show up at the party. You have to innovate and have something special."

At last week's Consumer Electronics Show in Las Vegas, devices on display from Intel and others underscored the PC industry's plan to bet more on convertible laptops.

Lenovo's North America President Gerry Smith told Reuters last week that over the holidays he sold out of the company's "Yoga", a laptop with a screen that flips back behind its keyboard, and the "ThinkPad Twist", another lightweight laptop with a swiveling screen.

Intel itself showed off a hybrid prototype laptop dubbed "North Cape", housed in a thin tablet screen that attaches magnetically to a low-profile keyboard. And Asus showed a hefty 18-inch, all-in-one Windows 8 PC that converts to a tablet running Google's Android operating system.

Lenovo and Asus, which have both won positive reviews for their devices in recent months, increased their PC shipments by 14 percent and 17 percent respectively last year, according to Gartner.

"The number of unique systems that our partners have developed for Windows has almost doubled since launch. That gives an indication of how much innovation is going into the PC market," Tami Reller, chief financial officer of Microsoft's Windows unit, told Reuters.

FINGER-POINTING

To be sure, hybrids with detachable or twistable screens do not yet account for a significant proportion of global PC sales, and consumers still need to be sold on their benefits.

Previous attempts by PC makers to reinvigorate the market have had limited success. Pushed by Intel, manufacturers launched a series of slimmed down laptops early last year with features popular on tablets, like solid-state memory.

They were too expensive, often at more than $1,000 apiece, and failed to arrest the PC decline.

Microsoft's Windows 8 launch in October brought touchscreen features but failed to spark a resurgence in PC sales many manufacturers had hoped for. A round of finger-pointing ensued, with PC and chip executives blaming a shortage of touchscreen components and others saying it was the manufacturers that sharply underestimated consumer demand for touch devices.

Regardless, the entire PC ecosystem is onboard for 2013. Almost half of the Windows laptops rolled out this year may have touch screens. Of those, most will be in convertible form, according to IDC analyst David Daoud.

Further blurring the distinction between kinds of devices, about a quarter of upcoming Windows 8 gadgets will be tablets that can easily act as laptops with the help of keyboard accessories, he added.

But buyers may have to wait until the second half of the year to see many of them.

"The most likely scenario today is for the industry to have these products ready for the back-to-school season," Daoud said.

(Reporting and writing by Noel Randewich; Additional reporting by Poornima Gupta and Bill Rigby in Seattle; Editing by Tim Dobbyn)

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Story of Te'o girlfriend death apparently a hoax

SOUTH BEND, Ind. (AP) — A story about Manti Te'o's girlfriend dying of leukemia, which the Notre Dame All-American credited with inspiring him as he led the Fighting Irish to the BCS title game, turned out to be a hoax apparently perpetrated against the linebacker, the school said Wednesday.

The university issued a news release Wednesday after Deadspin.com reported it could find no record that Lennay Kekua ever existed.

The university said that Notre Dame coaches were informed by Te'o and his parents on Dec. 26 that Te'o had been the victim of what appeared to be a hoax. Someone using a fictitious name "apparently ingratiated herself with Manti and then conspired with others to lead him to believe she had tragically died of leukemia," the school said.

The university said "the proper authorities" are investigating a "very cruel deception to entertain its perpetrators." Notre Dame would not say who, specifically, was investigating the case.

The week before Notre Dame played Michigan State on Sept. 15, coach Brian Kelly told reporters that Te'o's grandmother and a friend had died. Te'o didn't miss the game. He said Kekua had told him not to miss a game if she died. Te'o turned in one of his best performances of the season in the 20-3 victory in East Lansing, and his playing through heartache became a prominent theme during the Irish's undefeated regular season.

Te'o went on the become a Heisman Trophy finalist, finishing second in the voting, and leading Notre Dame to its first appearance in the BCS championship.

Te'o and the Irish lost the title game to Alabama, 42-14 on Jan. 7. He has graduated and was set to begin preparing for the NFL combine and draft at the IMG Academy in Bradenton, Fla., this week.

Four days ago Te'o posted on his Twitter account: "Can't wait to start training with the guys! Workin to be the best! The grind continues! (hash)Future"

Te'o's mother did not immediately return a call seeking comment.

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Fox hires Dennis Kucinich as analyst

NEW YORK (AP) — Days before President Barack Obama‘s inauguration for a second term in office, Fox News Channel has signed Dennis Kucinich, one of his former opponents, to be a regular contributor.

Kucinich, a presidential candidate in 2004 and 2008 who ended 16 years in Congress two weeks ago, will make his debut as a Fox contributor on Thursday’s edition of “The O’Reilly Factor,” the network said Wednesday.

“I’ve always been impressed with Rep. Kucinich’s fearlessness and thoughtfulness about important issues,” Fox News Chairman Roger Ailes said. “His willingness to take a stand from his point of view makes him a valuable voice in our country’s debate.”

Fox is the nation’s top-ranked cable news network, particularly popular with Republicans. Its big-name Republican contributors include Karl Rove, Sarah Palin and John Bolton. Democrats in the Fox stable include Evan Bayh, Joe Trippi and Bob Beckel.

Kucinich was elected to the Cleveland city council at age 23 and, at 31, became one of the nation’s youngest mayors. He’s also been an Ohio state senator and run his own communications and marketing firm.

“Fox News has always provided me with an opportunity to share my perspective with its enormous viewership,” he said.

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Large study confirms flu vaccine safe in pregnancy

NEW YORK (AP) — A large study offers reassuring news for pregnant women: It's safe to get a flu shot.

The research found no evidence that the vaccine increases the risk of losing a fetus, and may prevent some deaths. Getting the flu while pregnant makes fetal death more likely, the Norwegian research showed.

The flu vaccine has long been considered safe for pregnant women and their fetus. U.S. health officials began recommending flu shots for them more than five decades ago, following a higher death rate in pregnant women during a flu pandemic in the late 1950s.

But the study is perhaps the largest look at the safety and value of flu vaccination during pregnancy, experts say.

"This is the kind of information we need to provide our patients when discussing that flu vaccine is important for everyone, particularly for pregnant women," said Dr. Geeta Swamy, a researcher who studies vaccines and pregnant women at Duke University Medical Center.

The study was released by the New England Journal of Medicine on Wednesday as the United States and Europe suffer through an early and intense flu season. A U.S. obstetricians group this week reminded members that it's not too late for their pregnant patients to get vaccinated.

The new study was led by the Norwegian Institute of Public Health. It tracked pregnancies in Norway in 2009 and 2010 during an international epidemic of a new swine flu strain.

Before 2009, pregnant women in Norway were not routinely advised to get flu shots. But during the pandemic, vaccinations against the new strain were recommended for those in their second or third trimester.

The study focused on more than 113,000 pregnancies. Of those, 492 ended in the death of the fetus. The researchers calculated that the risk of fetal death was nearly twice as high for women who weren't vaccinated as it was in vaccinated mothers.

U.S. flu vaccination rates for pregnant women grew in the wake of the 2009 swine flu pandemic, from less than 15 percent to about 50 percent. But health officials say those rates need to be higher to protect newborns as well. Infants can't be vaccinated until 6 months, but studies have shown they pick up some protection if their mothers got the annual shot, experts say.

Because some drugs and vaccines can be harmful to a fetus, there is a long-standing concern about giving any medicine to a pregnant woman, experts acknowledged. But this study should ease any worries about the flu shot, said Dr. Denise Jamieson of the Centers for Disease Control and Prevention.

"The vaccine is safe," she said.

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Online:

Medical journal: http://www.nejm.org

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Obama calls for research on media in gun violence

NEW YORK (AP) — Hollywood and the video game industry received scant attention Wednesday when President Barack Obama unveiled sweeping proposals for curbing gun violence in the wake of the Newtown, Conn., school shooting.

The White House pressed most forcefully for a reluctant Congress to pass universal background checks and bans on military-style assault weapons and high-capacity ammunition magazines like the ones used in the Sandy Hook Elementary massacre.

No connection was suggested between bloody entertainment fictions and real-life violence. Instead, the White House is calling on research on the effect of media and video games on gun violence.

Among the 23 executive measures signed Wednesday by Obama is a directive to the Centers for Disease Control and Prevention and scientific agencies to conduct research into the causes and prevention of gun violence. The order specifically cited "investigating the relationship between video games, media images and violence."

The measure meant that media would not be exempt from conversations about violence, but it also suggested the White House would not make Hollywood, television networks and video game makers a central part of the discussion. It's a relative footnote in the White House's broad, multi-point plan, and Obama did not mention violence in entertainment in his remarks Wednesday.

The White House plan did mention media, but suggested that any effort would be related to ratings systems or technology: "The entertainment and video game industries have a responsibility to give parents tools and choices about the movies and programs their children watch and the games their children play."

The administration is calling on Congress to provide $10 million for the CDC research.

The CDC has been barred by Congress to use funds to "advocate or promote gun control," but the White House order claims that "research on gun violence is not advocacy" and that providing information to Americans on the issue is "critical public health research."

Since 26 were killed by a gunman at Sandy Hook in December, some have called for changes in the entertainment industry, which regularly churns out first-person shooter video games, grisly primetime dramas and casually violent blockbusters.

The Motion Picture Association of America, the National Association of Broadcasters, National Cable & Telecommunications Association and the Independent Film & Television Alliance responded to Wednesday's proposal in a joint statement:

"We support the president's goal of reducing gun violence in this country. It is a complex problem, and as we have said, we stand ready to be a part of the conversation and welcome further academic examination and consideration on these issues as the president has proposed."

After the Newtown massacre, Wayne Pierre, vice-president of the National Rifle Association, attacked the entertainment industry, calling it "a callous, corrupt and corrupting shadow industry that sells and sows violence against its own people." He cited a number of video games and films, most of them many years old, like the movies "American Psycho" and "Natural Born Killers," and the video games "Mortal Kombat" and "Grand Theft Auto."

President Obama's adviser, David Axelrod, had tweeted that he's in favor of gun control, "but shouldn't we also question marketing murder as a game?"

Others have countered that the same video games and movies are played and watched around the world, but that the tragedies of gun violence are for other reasons endemic to the U.S.

The Entertainment Software Association, which represents video game publishers, referenced that argument Wednesday in a statement that embraced Obama's proposal.

"The same entertainment is enjoyed across all cultures and nations, but tragic levels of gun violence remain unique to our country," said the ESA. "Scientific research an international and domestic crime data point toward the same conclusion: Entertainment does not cause violent behavior in the real world."

Several R-rated films released after Newton have been swept into the debate. Arnold Schwarzenegger, the former California governor and action film star, recently told USA Today in discussing his new shoot-em-up film "The Last Stand": "It's entertainment. People know the difference."

Quentin Tarantino, whose new film "Django Unchained" is a cartoonish, bloody spaghetti western set in the slavery-era South, has often grown testy when questioned about movie violence and real-life violence. Speaking to NPR, Tarantino said it was disrespectful to the memory of the victims to talk about movies: "I don't think one has to do with the other."

In 2011, the Supreme Court rejected a California law banning the sale of violent video games to children. The decision claimed that video games, like other media, are protected by the First Amendment. In dissent, Justice Stephen G. Breyer claimed previous studies showed the link between violence and video games, concluding "the video games in question are particularly likely to harm children."

In the majority, Justice Antonin Scalia wrote that the government can't regulate depictions of violence, which he said were age-old, anyway: "Grimm's Fairy Tales, for example, are grim indeed."

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AP Entertainment Writer Derrik J. Lang contributed to this report from Los Angeles

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FAA grounds all Dreamliners

A United Airlines Dreamliner takes off from Los Angeles International Airport this month. (David McNew/Getty Images / January 16, 2013)

Reuters

5:37 p.m. CST, January 16, 2013

U.S. regulators grounded Boeing Co.'s 787 Dreamliner passenger jet Wednesday, saying a recent series of safety incidents meant urgent action was needed.

The U.S. Federal Aviation Administration said it would require airlines to demonstrate that the plane's cutting-edge batteries were safe before allowing further flights. It has notified regulators in other countries of its action as well.

Japan's two leading airlines already grounded their fleets of Boeing 787s on Wednesday after one of the Dreamliner passenger jets made an emergency landing, the latest in a series of incidents that have heightened safety concerns over a plane many see as the future of commercial aviation.

All Nippon Airways Co. said instruments aboard a domestic flight indicated a battery error, triggering emergency warnings. The incident was described by a transport ministry official as "highly serious" -- language used in international safety circles as indicating there could have been an accident.

Boeing shares fell 2 percent in after-hours trading to $72.80 after the FAA announcement.

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Obama to unveil gun violence measures

Facing powerful opposition to sweeping gun regulations, President Barack Obama will unveil his proposals Wednesday, barely over a month since the massacre of 20 children and six adults at Sandy Hook Elementary School in Newtown, Conn. (Jan. 15)

WASHINGTON (Reuters) - President Barack Obama will propose an assault weapons ban and better background checks for gun buyers on Wednesday as part of a package of proposals to curb gun violence one month after the Newtown school massacre.

The proposals will include executive and legislative measures, with the latter sure to face an uphill battle in Congress, where appetite for renewing an assault weapons ban is low.

Obama and Vice President Joe Biden, who led a task force that made recommendations on the issue, will present the measures at a White House event attended by children from around the country who wrote letters to the president about gun violence and school safety.

Obama will urge lawmakers to act quickly, White House spokesman Jay Carney told reporters.

"The president has made clear that he intends to take a comprehensive approach," Carney said at a briefing.

"There are specific legislative actions that he will continue to call on Congress to take, including the assault weapons ban, including a measure to ban high-capacity magazine clips, including an effort to close the very big loopholes in the background check system in our country," he said.

The proposals will be Obama's first major foray into gun control, despite several mass shootings that have occurred during his four years in office. Gun restrictions are a divisive issue in the United States, which constitutionally protects a citizen's right to bear arms.

Biden delivered his recommendations to Obama after a series of meetings with representatives from the weapons and entertainment industries requested by the president after the December 14 school shooting in Newtown, Connecticut, in which 20 children and six adults were killed.

The proposals are likely to touch on mental health and could address violence portrayed in video games.

Obama, who has said the day of the shooting was the worst of his presidency, said on Monday he would study the panel's ideas and then move forward "vigorously" on those that he endorsed, including some actions he could take without congressional approval.

A White House official said Obama had not endorsed all of the ideas put forward by Biden's team but declined to lay out specifics on what would be announced.

Obama has signaled his plan would include elements that did not require congressional approval. The president could take action to ban certain gun imports and bolster oversight of dealers.

A spokeswoman for Representative Jackie Speier, a lawmaker from California who was one of a group of Democrats who met with Biden about the issue on Monday, said his task force had identified 19 different options Obama could choose to implement through executive action.

"(Biden) did not indicate which or how many of those options the president will take up or present to the nation tomorrow," said the spokeswoman, Jenny Werwa.

NRA CLASH

The president's move is not the only action being taken on gun control nationwide. New York State lawmakers on Tuesday approved one of the toughest gun control bills in the United States and Governor Andrew Cuomo signed it into law.

The proposals are likely to draw ire from the National Rifle Association, a powerful lobbying group that is traditionally associated with Republicans. The NRA proposed having armed officials in schools throughout the country and has said the media and violent video games shared blame for the Sandy Hook Elementary School massacre, the second-deadliest school shooting in U.S. history.

There is little on which the Obama administration and NRA officials agree.

The White House is also pushing for the Senate to confirm a director for the Bureau of Alcohol, Tobacco, Firearms and Explosives, an agency that has been without a Senate-confirmed director since 2006.

Obama nominated Andrew Traver, a Navy veteran who ran the agency's Chicago division, for the job in November 2010, and again early in 2011. The NRA opposed Traver's nomination.

The Senate is in recess, and Obama could choose to make a recess appointment to fill the job. Such an appointment would likely rankle lawmakers, whose support Obama will need to get his proposals passed.

Though the chances of getting a ban on assault weapons appear low, the White House seems set on getting Obama's support of such a ban solidified in a legislative draft.

Gun control advocates are pressing the administration to keep up the pressure on the issue in the face of other policy priorities, including deficit reduction and immigration reform.

"In three months are we going to be talking about these issues? Because that's the only way you make any progress," said Neera Tanden, president of the Center for American Progress, a progressive-leaning advocacy group.

The organization, whose officials have close ties to the White House, released a report suggesting 14 legislative proposals and executive actions to reduce gun violence, including requiring a background check for all gun sales.

(additional reporting by Roberta Rampton, Mark Felsenthal, Matt Spetalnick and David Lawder; Editing by Doina Chiacu)

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Facebook rolls out friends-based search product

MENLO PARK, California (Reuters) - Facebook Inc took the wraps off a new search tool on Tuesday that lets people trawl their network of friends to find everything from restaurants to movie recommendations, an improvement that's likely to increase competition with review websites like Yelp and potentially even Google Inc.

The so-called graph search marks the company's biggest foray into online search to date, though it displays only information within the walls of the social network rather than links to sites available across the Internet.

Mark Zuckerberg, Facebook's 28-year-old founder and chief executive, introduced the new product at the company's first major product launch since a rocky initial public offering in May.

"Graph search is designed to take a precise query and return to you the answer, not links to other places where you might get the answer," Zuckerberg told reporters at its Menlo Park, California, headquarters. "What you've seen today is a really different product from anything else that's out there."

Facebook shares, which have climbed 15 percent since the start of the year, slid 3 percent Tuesday to just above $30. The product news fell short of some of the most optimistic predictions, which included speculation that the social network would introduce its own smartphone or an Internet search engine.

Dubbed "graph search" because Facebook refers to its growing content, data and membership as the "social graph," the function will be available at first only as a "beta," or trial, for just hundreds of thousands of its billion-plus users.

It will let users browse mainly photographs, people, places and members' interests. Zuckerberg stressed that people can sort through only content that has been shared with them, addressing potential privacy concerns.

Shares in Yelp dived more than 6 percent on fears that Facebook's new friends-based search concept will begin to draw users away from the popular reviews site, which also lets people maintain a circle of trusted friends. Google stock held steady.

Some analysts said Facebook may be taking a tiny step toward eventually challenging Google on its home turf, but said that was a much more challenging undertaking and a long-term possibility at best.

Zuckerberg stressed that the new graph search did not encompass Internet searches, Google's specialty.

Sterne Agee analyst Arvind Bhatia said the product was inevitable. "We think this will enable them to expand beyond display ads and ultimately compete with Google," he said.

THE PROMISE AND THE THREAT

The world's largest online social network, Facebook is moving to regain Wall Street's confidence after the IPO and concerns about its long-term financial prospects.

Zuckerberg said the company is working on making money from users who are migrating to mobile devices. He said he could foresee a business in search over time, but analysts advised caution. Facebook has come under fire numerous times for unclear privacy guidelines.

While Tuesday's revelation fell short of some of the wilder guesses about what Facebook planned to reveal in its highest-profile news briefing since its market debut, analysts said it was overdue for a well-rounded search tool, given its current inadequacies.

Zuckerberg promised that users will be able to tailor their searches, specifying music and restaurants that their friends like, for instance, or their favorite dentist. The reverse is also possible, such as discovering friends who have an interest in a particular topic.

"You need to be able to ask the query - like, who are my friends in San Francisco?" Zuckerberg said. "It's going to take years and years to index the whole map of the graph and everything we have out there. We'll start rolling it out very slowly. We're looking forward to getting it into more people's hands over coming weeks and months."

Wedbush Securities analyst Michael Pachter argued that recommendations from trusted friends were more valuable than from strangers on the Web.

Forrester analyst Nate Elliott was less sanguine. "Facebook's worst nightmare is a static social graph; if users aren't adding very many new friends or connections, then their personal network becomes less and less active over time," he said. "Terrifyingly for Facebook, that threat is very real: We haven't seen significant growth in the average number of friends per user recently."

(Additional reporting by Malathi Nayak in San Francisco and Himank Sharma in Bangalore, writing and editing by Edwin Chan; Editing by Phil Berlowitz and Prudence Crowther)

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