Horsemeat found in IKEA meatballs

PRAGUE/STOCKHOLM (Reuters) - Sweden's Ikea stopped nearly all sales of meatballs at its furniture store cafeterias across Europe after tests in the Czech Republic on Monday showed some contained horsemeat.

The world's No. 1 furniture retailer, known also for the signature restaurants at its huge out-of-town stores, said it was pulling all meatballs produced by its main supplier in Sweden after the tests showed horsemeat in its beef and pork meatballs.

A European scandal erupted last month when tests in Ireland revealed some beef products contained horsemeat, triggering recalls of ready-made meals in several countries and damaging confidence in Europe's vast and complex food industry.

Meatballs, a famous Swedish dish often served with mashed potatoes, gravy and lingonberry jam, have become a trademark for IKEA, which sells them hot from the in-store cafeterias and packaged off the shelf.

The vast majority of Ikea's meatballs are made by Sweden's Familjen Dafgard, which said on its website that it was investigating the situation and would receive further test results in coming days.

The withdrawals did not affect meatballs in Norway, Russia, nor some in Switzerland or Poland, which were made by other suppliers, said Ikea spokeswoman Ylva Magnusson at the company's headquarters in Helsingborg, southern Sweden.

"We are now getting to the bottom of this and making extra tests, but we have decided to stop the meatball sales for a few days, so that no one needs to worry, until we have the results," Magnusson said.

IKEA stores in the United States, Canada, Australia and Japan were unaffected as they too have other suppliers.

Besides the Czech Republic, the batch containing horsemeat had also been on sale in Britain, Portugal, Netherlands, Belgium, Slovakia, Hungary, France, Italy, Spain, Greece, Cyprus and Ireland.

Magnusson said the test results would determine the percentage of horsemeat in the specific batch of meatballs. There was no indication that any other batch had been affected.

Earlier this month, food manufacturer Findus was forced to recall thousands of packages of frozen beef lasagnes in Sweden after discovering they contained 60 to 100 percent horsemeat.

On the sidelines of a meeting in Brussels, Sweden's rural affairs minister Eskil Erlandsson called the test results awful.

"Consumers should know that what is labelled on the package should also be inside the package and nothing else," he told Reuters, adding that it may damage IKEA's reputation.

"All fraud has an impact on the reputation of a company, especially when you talk about meat or other foodstuffs."

However, he did not see a need for the European Union to enforce mandatory origin labels for processed meat.

In Italy, consumer rights group Codacons called for checks on all meat products sold by IKEA in the country.

"We are ready to launch legal action and seek compensation not only against the companies who are responsible but also those whose duty it was to protect citizens," Codacons President Carlo Rienzi said in a statement.

The Czech State Veterinary Administration had reported its findings to the EU's Rapid Alert System for Food and Feed, it said in a statement.

The inspectors took samples for DNA tests in IKEA's unit in the city of Brno from a product labelled as "beef and pork meatballs", it said.

(Additional reporting by Mia Shanley in Stockholm, Maria Pia Quaglia in Milan and Charlie Dunmore in Brussels; Writing by Anna Ringstrom; Editing by Tom Pfeiffer)

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Jimmie Johnson wins his second Daytona 500

Former NFL linebacker Ray Lewis talks about his son before the start of the Daytona 500. Lewis was the honorary starter for Sunday's race.

DAYTONA BEACH – Jimmie Johnson won the 55th running of the Daytona 500 Sunday at Daytona International Speedway. 

Dale Earnhardt Jr. was second followed by Mark Martin third.

"I really couldn't have done much without the help of Mark Martin," said Earnhardt. "We just didn't have enough to get a run on Jimmie."

Danica Patrick finished in eighth place, which was the highest finish by a female driver. 

500 MILES

Denny Hamlin took over the lead in the race and led for awhile.

The fifth caution of the day came out on Lap 172 after Jeff Burton’s No. 31 Chevrolet  hit the wall  and destroyed the front right side of his car, sending him to the garage.  During the yellow, Scott Speed took the top spot for a couple of laps before being forced to pit.

That opened the door for Brad Keselowski to take the top spot going into the restart on Lap 181. Michael Waltrip moved into second with Jimmie Johnson third. Marcos Ambrose made a big move up to fourth.

Patrick moved into third after Waltrip and Johnson dropped back into the pack.

Keselowski and Johnson battled in the front of the pack.

The sixth caution of the day came out on Lap 191 for debris on the racetrack in Turn 2.

The race restarted with six laps to go and Johnson held on to win the race. 

400 MILES

Matt Kenseth continued to lead the race.

On Lap 129, about a half dozen cars made their way into a green flag pit stop including Patrick. The stop reshuffled some of the running order as Hamlin and Clint Bowyer moved into second and third, respectfully behind Kenseth.

The fourth caution of the day came out after Brad Keslowski’s No. 2 Ford lost control of his car in Turn 3 and dropped down to the apron sending several other drivers into a nine-car pile-up which included Trevor Bayne, Carl Edwards, David Ragan and David Gilliland. The wreck also sent Austin Dillon and John Wise to the garage.

That left 26 cars on the lead lap at the restart of the race with 54 laps to go.

However, Kenseth’s day took a turn on Lap 149 when his No. 20 Toyota showed signs of smoke on the front, left side. It forced him to head to pit road and opened the door for Hamlin to grab the lead.

Kenseth’s Joe Gibbs Racing teammate, Kyle Busch was forced to head to pit road on the following lap. 

300 MILES

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Apple signals emerging-market rethink with India push

NEW DELHI/BANGALORE (Reuters) - As BlackBerry launches the first smartphone from its make-or-break BB10 line in India, one of its most loyal markets, the company faces new competition from a formidable rival that has long had a minimal presence in the country.

More than four years after it started selling iPhones in India, Apple Inc is now aggressively pushing the iconic device through installment payment plans that make it more affordable, a new distribution model and heavy marketing blitz.

"Now your dream phone" at 5,056 rupees ($93), read a recent full front-page ad for an iPhone 5 in the Times of India, referring to the initial payment on a phone priced at $840, or almost two months' wages for an entry-level software engineer.

The new-found interest in India suggests a subtle strategy shift for Apple, which has moved tentatively in emerging markets and has allowed rivals such as Samsung and Blackberry to dominate with more affordable smartphones. With the exception of China, all of its Apple stores are in advanced economies.

Apple expanded its India sales effort in the latter half of 2012 by adding two distributors. Previously it sold iPhones only through a few carriers and stores it calls premium resellers.

The result: iPhone shipments to India between October and December nearly tripled to 250,000 units from 90,000 in the previous quarter, according to an estimate by Jessica Kwee, a Singapore-based analyst at consultancy Canalys.

At The MobileStore, an Indian chain owned by the Essar conglomerate, which says it sells 15 percent of iPhones in the country, iPhone sales tripled between December and January, thanks to a monthly payment scheme launched last month.

"Most people in India can't afford a dollar-priced phone when the salaries in India are rupee salaries. But the desire is the same," said Himanshu Chakrawarti, its chief executive.

Apple, the distributors, retailers and banks share the advertising and interest cost of the marketing push, according to Chakrawarti. Carriers like Bharti Airtel Ltd, which also sell the iPhone 5, run separate ads.

India is the world's No. 2 cellphone market by users, but most Indians can't afford fancy handsets. Smartphones account for just a tenth of total phone sales. In India, 95 percent of cellphone users have prepaid accounts without a fixed contract. Unlike in the United States, carriers do not subsidize handsets.

Within the smartphone segment, Apple's Indian market share last quarter was just 5 percent, according to Canalys, meaning its overall penetration is tiny.

Still, industry research firm IDC expects the Indian smartphone market to grow more than five times from about 19 million units last year to 108 million in 2016, which presents a big opportunity.

Samsung Electronics dominates Indian smartphone sales with a 40 percent share, thanks to its wide portfolio of Android devices priced as low as $110. The market has also been flooded by cheaper Android phones from local brands such as Micromax and Lava.

Most smartphones sold in India are much cheaper than the iPhone, said Gartner analyst Anshul Gupta.

"Where the masses are - there, Apple still has a gap."

'I LOVE INDIA, BUT...'

Apple helped create the smartphone industry with the iPhone in 2007, but last year lost its lead globally to Samsung whose free Android software is especially attractive in Asia.

Many in Silicon Valley and Wall Street believe the surest way to penetrate lower-income Asian markets would be with a cheaper iPhone, as has been widely reported but never confirmed. The risk is that a cheap iPhone would cannibalize demand for the premium version and eat into Apple's peerless margins.

The new monthly payment plan in India goes a long way to expanding the potential market, said Chakrawarti.

"The Apple campaign is not meant for really the regular top-end customer, it is meant to upgrade the 10,000-12,000 handset guy to 45,000 rupees," he said.

Apple's main focus for expansion in Asia has been Greater China, including Taiwan and Hong Kong, where revenue grew 60 percent last quarter to $7.3 billion.

Asked last year why Apple had not been as successful in India, Chief Executive Tim Cook said its business in India was growing but the group remained more focused on other markets.

"I love India, but I believe that Apple has some higher potential in the intermediate term in some other countries," Cook said. "The multi-layer distribution there really adds to the cost of getting products to market," he said at the time.

Apple, which has partly addressed that by adding distributors, did not respond to an email seeking comment.

Ingram Micro Inc, one of its new distributors, also declined comment. Executives at Redington (India) Ltd, the other distributor, could not immediately be reached.

BlackBerry, which has seen its global market share shrivel to 3.4 percent from 20 percent over the past three years, is making what is seen as a last-ditch effort to save itself with the BB10 series.

The high-end BlackBerry Z10 to be launched in India on Monday is expected to be priced not far from the 45,500 rupees price tag for an iPhone 5 with 16 gigabytes of memory. Samsung's Galaxy S3 and Galaxy Note 2, Nokia's Lumia 920 and two HTC Corp models are the main iPhone rivals.

Until last year, Blackberry was the No. 3 smartphone brand in India with market share of more than 10 percent, thanks to a push into the consumer segment with lower-priced phones. Last quarter its share fell to about 5 percent, putting it in fifth place, according to Canalys. Apple was sixth.

($1 = 54.2000 Indian rupees)

(Additional reporting by Aradhana Aravindan in MUMBAI and Poornima Gupta in SAN FRANCISCO; Editing by Tony Munroe and Mark Bendeich)

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Johnson wins 2nd Daytona 500; Patrick finishes 8th

DAYTONA BEACH, Fla. (AP) — Jimmie Johnson has won his second Daytona 500, racing past defending NASCAR champion Brad Keselowski on the final restart, while Danica Patrick finished eighth.

Johnson wasn't challenged over the final six laps Sunday, adding another 500 title to go with his 2006 victory.

This time crew chief Chad Knaus can enjoy it — he was suspended by NASCAR for the first victory.

Dale Earnhardt Jr. made a late move to finish second, but didn't challenge his Hendrick Motorsports teammate for the victory. Mark Martin was third.

Patrick was third on the final lap, but faded in the flurry of late action. She became the first woman in history to lead laps in the Daytona 500, though, with her three laps out front.

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FDA approves new targeted breast cancer drug

WASHINGTON (AP) — The Food and Drug Administration has approved a first-of-a-kind breast cancer medication that targets tumor cells while sparing healthy ones.

The drug Kadcyla from Roche combines the established drug Herceptin with a powerful chemotherapy drug and a third chemical linking the medicines together. The chemical keeps the cocktail intact until it binds to a cancer cell, delivering a potent dose of anti-tumor poison.

Cancer researchers say the drug is an important step forward because it delivers more medication while reducing the unpleasant side effects of chemotherapy.

"This antibody goes seeking out the tumor cells, gets internalized and then explodes them from within. So it's very kind and gentle on the patients — there's no hair loss, no nausea, no vomiting," said Dr. Melody Cobleigh of Rush University Medical Center. "It's a revolutionary way of treating cancer."

Cobleigh helped conduct the key studies of the drug at the Chicago facility.

The FDA approved the new treatment for about 20 percent of breast cancer patients with a form of the disease that is typically more aggressive and less responsive to hormone therapy. These patients have tumors that overproduce a protein known as HER-2. Breast cancer is the second most deadly form of cancer in U.S. women, and is expected to kill more than 39,000 Americans this year, according to the National Cancer Institute.

The approval will help Roche's Genentech unit build on the blockbuster success of Herceptin, which has long dominated the breast cancer marketplace. The drug had sales of roughly $6 billion last year.

Genentech said Friday that Kadcyla will cost $9,800 per month, compared to $4,500 per month for regular Herceptin. The company estimates a full course of Kadcyla, about nine months of medicine, will cost $94,000.

FDA scientists said they approved the drug based on company studies showing Kadcyla delayed the progression of breast cancer by several months. Researchers reported last year that patients treated with the drug lived 9.6 months before death or the spread of their disease, compared with a little more than six months for patients treated with two other standard drugs, Tykerb and Xeloda.

Overall, patients taking Kadcyla lived about 2.6 years, compared with 2 years for patients taking the other drugs.

FDA specifically approved the drug for patients with advanced breast cancer who have already been treated with Herceptin and taxane, a widely used chemotherapy drug. Doctors are not required to follow FDA prescribing guidelines, and cancer researchers say the drug could have great potential in patients with earlier forms of breast cancer

Kadcyla will carry a boxed warning, the most severe type, alerting doctors and patients that the drug can cause liver toxicity, heart problems and potentially death. The drug can also cause severe birth defects and should not be used by pregnant women.

Kadcyla was developed by South San Francisco-based Genentech using drug-binding technology licensed from Waltham, Mass.-based ImmunoGen. The company developed the chemical that keeps the drug cocktail together and is scheduled to receive a $10.5 million payment from Genentech on the FDA decision. The company will also receive additional royalties on the drug's sales.

Shares of ImmunoGen Inc. rose 2 cents to $14.32 in afternoon trading. The stock has ttraded in a 52-wek range of $10.85 to $18.10.

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Oscars have clear favorites, wild-card MacFarlane

LOS ANGELES (AP) — Some firsts and other rarities are possible at Sunday night's Academy Awards. But if the Oscars could be just a little less predictable, the show might really be one for the record books.

Ben Affleck's "Argo" looks like it will uniquely claim best picture without a directing nomination, while "Lincoln" filmmaker Steven Spielberg and star Daniel Day-Lewis are favored to join exclusive lists of three-time Oscar winners.

If some longshots came in, the night could produce two more three-time acting winners — Sally Field from "Lincoln" and Robert De Niro for "Silver Linings Playbook."

We could also have the oldest or youngest acting winner ever — 86-year-old "Amour" star Emmanuelle Riva and 9-year-old Quvenzhane (Kwa-VEHN-ja-nay) Wallis of "Beasts of the Southern Wild."

The ABC television broadcast itself could set some fresh highs or lows. Oscar overseers keep talking about pacing and trimming fat from a ceremony that's dragged on interminably, approaching four and a half hours one year. Can they keep it tight and lively enough that viewers don't think about gouging out their eyes around the three-hour mark?

And what about host Seth MacFarlane? He's a classy, low-key guy in person, with an old-fashioned Sinatra-style singing voice that he'll no doubt put to use in a show that's shaping up as a music-heavy, Broadway-style celebration of cinema.

Yet MacFarlane's career is built on pushing the envelope — or crumpling it and tossing it in the trash — as he's tested the boundaries of good taste with such brazen shows as his animated series "Family Guy" and last summer's obscenity-laden blockbuster "Ted," which earned him a songwriting Oscar nomination.

The result could be a fun night for younger, hipper TV audiences that Oscar organizers are courting but a crude awakening for traditionalists who like their Academy Awards to lean more toward the sacred than the profane. Or it could be that MacFarlane makes the most of the thankless task of shepherding the Oscars, striking a nice balance between respecting Hollywood and poking fun at it.

"I think a little bit of that injected into the mix will go a long way, but I do also have to be mindful, in this instance, of not losing the audience that's there every year," MacFarlane said. "It's a different audience from my own, but I do have to be respectful that they will be watching."

So maybe it's an Oscar show that's shaken, but not stirred up too much. That might suit one of the evening's special honorees, British super-spy James Bond, whose adventures will be the subject of a tribute to mark the 50th anniversary of his first big-screen outing in "Dr. No." Adele will perform her Oscar-nominated title tune to last year's Bond tale "Skyfall," while the show features Shirley Bassey, who sang the Bond theme songs for "Goldfinger," ''Diamonds Are Forever" and "Moonraker."

The show presents a salute to movie musicals of the last decade, with "Chicago" Oscar winner Catherine Zeta-Jones and "Dreamgirls" winner Jennifer Hudson joining "Les Miserables" cast members that include best-actor nominee Hugh Jackman, supporting-actress front-runner Anne Hathaway, Russell Crowe, Helena Bonham Carter and Amanda Seyfried.

Oscar producers Craig Zadan and Neil Meron have lined up a bubbly mix of young and old Hollywood as presenters, performers and special guests — from Barbra Streisand, Michael Douglas and Jane Fonda to "Harry Potter" star Daniel Radcliffe, "Twilight" star Kristen Stewart, and Robert Downey Jr. and his superhero colleagues from "The Avengers."

Along with front-runners Day-Lewis as best actor for "Lincoln" and Hathaway as supporting actress for "Les Miserables," the other favorites are Jennifer Lawrence as best actress for "Silver Linings Playbook" and Tommy Lee Jones as supporting actor for "Lincoln."

Day-Lewis would be only the sixth performer to earn three or more Oscars and the first to win three times as best actor. "Lincoln" also could make Spielberg just the fourth filmmaker to win three or more directing trophies.

Affleck's thriller "Argo" is in line for best picture after winning practically every top prize at earlier honors. Hollywood was shocked that Affleck was snubbed for a directing nomination, possibly earning the film some sympathy votes, particularly from actors, who love it when one of their own succeeds behind the camera.

The story of how Hollywood, Canada and the CIA teamed up to rescue six Americans during the Iranian hostage crisis, "Argo" would become just the fourth film in 85 years to claim the top prize without a best-directing nomination and the first since 1989's "Driving Miss Daisy."

The best-picture prize typically ends the Oscar show, but this time, MacFarlane and Kristin Chenoweth will perform a closing number on the Dolby Theatre stage that producers Zadan and Meron called a "'can't miss' moment."

Keeping the wraps on whatever surprises they have in store has been a chore for them and MacFarlane.

"It's been difficult. The press, as you know, is very nosy and sneaky. They're always sniffing around trying to get any advance notice," MacFarlane said. "It's like (expletive) Christmas. Wait till Christmas morning. Don't spoil the surprise."

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AP Entertainment Writer Sandy Cohen contributed to this report.

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Promise, peril seen for crowd-funding investors

Crowd funding is widely seen as a revolutionary idea.

A 2012 federal law known as the JOBS Act opens the door to allowing small, privately owned businesses to market ownership stakes in their ventures to people over the Internet.

Companies will be able to sell up to $1 million in equity a year to ordinary investors without having to register the offering with the Securities and Exchange Commission or state regulators.

Before the average person can use crowd funding to stake a claim in a startup, the SEC still must draft rules that the Obama administration hopes will result in U.S. businesses growing and adding jobs. At the same time, the securities cop needs to include safeguards that protect less sophisticated individual investors drawn to inherently risky startups.

That's why equity crowd funding under JOBS, or Jumpstart our Business Startups, has some longtime regulators and securities lawyers squirming.

"It can be an invitation for fraudsters to steal money," Matthew Brown, a Katten Muchin Rosenman lawyer, said last month at a CFA Society of Chicago event at 1871, a center for digital startups in Chicago.

But Brown also noted that equity crowd funding also democratizes small-business financing, a process that historically has given access mostly to wealthier — or, as they're known in high-finance circles, "accredited" — investors.

"The world has changed dramatically, and who's to say who is smarter than anyone else?" Brown added.

Many existing crowd-funding platforms such as Kickstarter don't sell equity stakes in businesses to average investors. Rather, they give consumers the chance to donate money to an enterprise or to get an early or discounted crack at a new product. Since Kickstarter's launch in April 2009, more than $450 million has been pledged by more than 3 million people funding more than 35,000 projects, the New York-based company's website says.

Their acceptance suggests that consumers are willing to engage with companies on a deeper level. As such, enabling unaccredited consumers to invest in companies in small increments online has promise and could become part of the fundraising "ecosystem," says one Chicago entrepreneur.

Abe's Market, a Chicago-based e-commerce site selling natural and organic products from more than 1,000 suppliers, said it would consider crowd funding under the JOBS Act, saying it and its vendors have "die-hard fans" and "a core group of customers" who might like to invest in their vision.

Last month, Abe's raised $5 million from Carmel Ventures, Index Ventures, Beringea and Accel Partners, a Groupon backer. New backers include OurCrowd, a crowd-funding site for accredited investors.

"If you can get passionate people to invest in your business, you're not just gaining investors, you're gaining evangelists," Abe's Chief Executive Richard Demb said. "The challenge for any consumer brand is: How do you find not just customers, but the right customers who are going to tell their friends?"

But there would also be potential headaches for companies raising equity financing through crowd funding, he said.

"You have to make sure that expectations would be set fairly, that no one is putting their life savings into the investment, and that they don't also come back and become a challenge to manage as the business grows," Demb said. "You don't want someone who invested $250 to come back and say, 'I don't think we should expand to the West Coast.'"

Safeguards for average investors exist in the JOBS Act. They include capping nonaccredited individuals' crowd-funding investments at $2,000, or 5 percent of annual income or net worth of less than $100,000, whichever is greater.

Snapclass, launched a few weeks ago at 1871, provides software enabling businesses to provide training online. Co-founder Scott Mandel, who has financed the company himself, doesn't expect to take advantage of equity crowd funding in the future and instead would seek, say, venture capital funding.

"Not all checks are the same," said Mandel, previously a trader and professional poker player. "I'd want someone who could add more than just the cash, such as connections and experience and help with things that I'm not an expert in."

One of 1871's fastest-growing startups is MarkITx. It recently raised $1.2 million from wealthy individuals in its first fundraising round, has seven employees and is looking to add sales jobs. It's an online exchange for businesses wanting to buy and sell used information technology equipment, from iPads to Oracle servers.

"For us, it wouldn't be the sole way to raise money, but it definitely is a viable vehicle to look at raising money," MarkITx partner Marc Brooks said of equity crowd funding under the JOBS Act.

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Te'o tackles questions about 'embarrassing' hoax

INDIANAPOLIS –  Manti Te’o sounded like a man ready to move on with his life.

The former Notre Dame linebacker, who claimed to be a victim of a bizarre hoax involving an Internet-created girlfriend, fielded questions from a media horde Saturday at the NFL scouting combine and said he is beyond the personal embarrassment caused by the incident. But Te’o said he is still disappointed in himself for the harm he caused his family.

"The incident, I said all I needed to say about that," Te’o said. "How I’m handing it going forward, it’s doing what I’m doing right now: Focusing on the moment and focusing on football and the combine.

"Not everybody gets this opportunity to be here. I’m sure there are thousands and thousands of people who would like to be here in Indianapolis. So, just trying to enjoy the moment.’’

Te'o said he was surprised by the intensity of the interest in the hoax, calling the reaction "overwhelming" at times and said it was "definitely embarrassing."

Te’o was asked what teams are asking him about the incident.

"Just tell me the facts," he said. "They want to hear it from me. Just tell them basically what happened."

Te’o said the toughest part about the incident was seeing his family name essentially dragged in the mud. He got a call from his sister at one point saying his family back in Hawaii had to sneak into the house because of the media hovering in the yard.

"To know that my family was in this situation because of the actions that I committed was definitely the hardest part,’’ he said.

He was asked about not being forthcoming about the hoax from the start.

"It was a just whirlwind of stuff for me,’’ he said. "For me, you’re a 22-year-old – a 21-year-old at that time – and just trying to get your thoughts right, everything is just kind of chaos for a little bit. So you let the chaos die down and wait until everybody’s ready to listen.

"The way that we did it I felt worked best for me. I’m just very grateful for those who helped me get through that time because I think it went over as smoothly as it could.’’

More importantly, Te'o needs to show NFL teams how his poor performance against Alabama in the BCS national title game was just as much of an illusion.

"That's all on me," Te'o said of the Alabama game. "Alabama had a great game plan."

Te'o said he has received no indication from NFL teams that the incident will affect his draft status. He also said he didn't think it would affect how he is treated by future teammates.

Te’o said he met with the Houston Texans and Green Bay Packers in Indianapolis and still was scheduled to meet with 18 more teams. He hopes to answer some doubts about his performance against Alabama in the national title game when the linebackers start their workouts on Monday.

Te’o said he would not pursue any legal action against hoaxer Ronaiah Tuiasosopo, who admitted on national television falling for Te’o during their long-distance relationship.

"That’s the worst thing you can do,’’ he said. "Both families are going through chaos. ... If you forgive, you’ll get the majority of the blessings.’’

When the roughly 15-minute session ended, Te'o thanked the media for attending, then thanked his family and Notre Dame.

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Einhorn scores legal victory versus Apple in cash scuffle

NEW YORK (Reuters) - A U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with Apple Inc on Friday, blocking the iPhone maker from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

U.S. District Judge Richard Sullivan in Manhattan granted a motion by Einhorn's Greenlight Capital for a preliminary injunction stopping a vote on that proposal, scheduled for the company's February 27 stockholders' meeting.

The decision could hand Einhorn more leverage as he pursues his pitch for Apple to issue what he has called the "iPref": preferred stock with a perpetual dividend that he contends would reward investors and help boost the company's share price.

Greenlight sued Apple on February 7 as part of a broader pitch to unlock more of its $137 billion in cash. The hedge fund manager has lobbied Apple to issue preferred stock with a perpetual 4 percent dividend, and on Thursday made a direct appeal to shareholders on a teleconference.

Apple Chief Executive Tim Cook last week dismissed the lawsuit as a "silly sideshow."

The lawsuit itself challenged a measure called Proposal No. 2 that Apple put forward, which would eliminate its power to issue preferred shares without a shareholder vote.

At issue is Apple's "bundling" of that measure with two other unrelated matters into a single proxy proposal.

Greenlight said it supported two of the proposed amendments, but not the one on preferred shares.

In his ruling, Sullivan said Greenlight and another investor who also sued Apple "are likely to succeed on the merits and face irreparable harm if the vote on Proposal No. 2 is permitted to proceed."

"We are disappointed with the court's ruling. Proposal No. 2 is part of our efforts to further enhance corporate governance and serve our shareholders' best interests," Apple spokesman Steve Dowling said. "Unfortunately, due to today's decision, shareholders will not be able to vote on Proposal No. 2 at our annual meeting next week."

A spokesman for Greenlight called the ruling a "significant win for all Apple shareholders and for good corporate governance."

But not all shareholders were happy. California pension fund Calpers, a major Apple investor and public supporter of Apple's proposal, said implementation of "majority voting and shareholder approval for the issuance of new stock - preferred or otherwise - is worth waiting for."

"We encourage Apple to reintroduce these measures as soon as is practical so that all investors can be heard," Anne Simpson, Calpers' director of global governance, said in a statement.

BUNDLES

The ruling could be a warning for other companies when issuing proxy proposals, said James Cox, a professor at Duke University School of Law.

"It's going to make managers reluctant to bundle things together, because you're never going to know when you send them out if there's an Einhorn out there," he said.

The lawsuit was centered on a narrow issue of whether Apple violated U.S. Securities and Exchange Commission rules by "bundling" the preferred shares item with two other unrelated matters into one proxy proposal.

Greenlight's lawyers contended the SEC rules were intended to protect shareholders from being forced to vote for a proxy proposal involving materially different issues that the investors might not entirely support.

Apple had argued Proposal No. 2, which only dealt with amendments to its charter, constitute a single matter and wasn't bundled. Sullivan called the company's arguments "unavailing."

"Given the language and purpose of the rules, it is plain to the Court that Proposal No. 2 impermissibly bundles 'separate matters' for shareholder consideration," Sullivan wrote.

Judge Sullivan also found that Greenlight would be irreparably harmed without the injunction, since it would be forced to vote against its own interests. Denying Greenlight's motion would prevent it and other investors from exercising their rights to a fair vote, Sullivan said.

Sullivan separately declined to block a vote from going forward on a separate proxy proposal, Proposal No. 4, which sought an advisory "say on pay" vote on Apple executives' compensation.

The proposal had been challenged by investor Brian Gralnick of Pennsylvania, who contends Apple did not disclose enough details about how it made its compensation decisions.

Sullivan rejected that argument, saying Apple's disclosures were "plainly sufficient under SEC rules."

Arnold Gershon, a lawyer for Gralnick at Barrack, Rodos & Bacine, said he was "very pleased" with Sullivan's decision to the extent it enjoined the Proposal No. 2 vote, though said he would have to decide what to do next with regard to the say-on-pay proposal.

Sullivan directed the parties to submit a joint letter by March 1 outlining the next contemplated steps in this case.

Apple shares closed up 1.1 percent at $450.81 on Friday.

The case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900.

(Reporting by Nate Raymond in New York; Additional reporting by Poornima Gupta in San Francisco; Editing by Martha Graybow, Gary Hill, Leslie Adler, Carol Bishopric and Lisa Shumaker)

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Stewart wins at Daytona after scary last-lap crash

DAYTONA BEACH, Fla. (AP) — Tony Stewart won a chaotic Nationwide Series race at Daytona International Speedway that ended with a frightening last-lap crash that appeared to injure fans when rookie Kyle Larson's car sailed into the fence that separates the track from the seats.

The front end of Larson's car was ripped away, and a gaping hole was cut in the fencing. Pieces of the car sailed into the grandstands and emergency workers could be seen attending to fans.

Ambulance sirens were heard behind the stands, which were briefly shrouded in smoke from Larson's burning engine, which appeared to be wedged into the fence.

A subdued Stewart did not celebrate in Victory Lane.

"The important thing is what going on on the front-stretch right now," the three-time NASCAR champion said. "We've always known, and since racing started, this is a dangerous sport. But it's hard. We assume that risk, but it's hard when the fans get caught up in it.

"So as much as we want to celebrate right now and as much as this is a big deal to us, I'm more worried about the drivers and the fans that are in the stands right now because that was ... I could see it all in my mirror, and it didn't look good from where I was at."

Regan Smith was leading coming to the checkered flag when he was turned sideways into the wall. Cars began wrecking all over the track, and Larson's car went sailing into the fence.

Stewart slid through the wreckage to the win.

When Larson's car came to a stop, it was missing its entire front end. The 20-year-old, who made his Daytona debut this week, said he first thought of the fans.

"I hope all the fans are OK and all the drivers are all right," Larson said. "I took a couple big hits there and saw my engine was gone. Just hope everybody's all right."

He said he was along for the ride in the last-lap accident.

"I was getting pushed from behind, I felt like, and by the time my spotter said lift or go low, it was too late," Larson said. "I was in the wreck and then felt like it was slowing down and I looked like I could see the ground. Had some flames come in the cockpit, but luckily I was all right and could get out of the car quick."

It appeared fans were lined right along the fence when Larson's car sailed up and into it.

Shortly before the final three-lap sprint to the finish, Michael Annett was taken to a hospital for further evaluation after a 13-car accident with five laps remaining.

NASCAR said Annett was awake and alert, but undergoing further tests. That accident stopped the race for a red-flag of nearly 20 minutes.

The last-lap accident began when Smith tried to block defending Sprint Cup Series champion Brad Keselowski to preserve the win.

"I tried to throw a block, it's Daytona, you want to go for the win here," Smith said. "I don't know how you can play it any different other than concede second place, and I wasn't willing to do that today. Our job is to put them in position to win, and it was, and it didn't work out."

Keselowski watched a replay of the final accident, but said his first thoughts were with the fans. As for the accident, he agreed he tried to make a winning move and Smith tried to block.

"He felt like that's what he had to do, and that's his right. The chaos comes with it," Keselowski said. "I made the move and he blocked it, and the two of us got together and started the chain events that caused that wreck. First and foremost, just want to make sure everyone in the stands is OK and we're thinking about them."

Keselowski said the incident could cast a pall on Sunday's season-opening Daytona 500.

"I think until we know exactly the statuses of everyone involved, it's hard to lock yourself into the 500," Keselowski said. "Hopefully we'll know soon and hopefully everyone's OK. And if that's the case, we'll staring focusing on Sunday."

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