Android - Starting emulator in SDK tools / revision 12

I updated the Android SDK tools from revision 11 to revision 12, and the emulator now fails to start. When I try to run emulator.exe, I get:

invalid command-line parameter: Files\Android\android-sdk\tools/emulator-arm.exe.
Hint: use '@foo' to launch a virtual device named 'foo'.
please use -help for more information

The path to emulator.exe is C:\Program Files\Android\android-sdk\tools.

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