Einhorn case against Apple rests on unusual legal tactic

NEW YORK (Reuters) – Hedge fund star David Einhorn wants to force Apple Inc to share some of its huge cash reserves with investors, but his lawsuit rests on a U.S. securities rule that has little legal precedent.

Einhorn’s Greenlight Capital sued the iPad and iPhone maker in U.S. District Court in Manhattan on Thursday to try to prevent Apple from eliminating preferred stock from its charter. The suit is part of Einhorn’s bid to pressure Apple to use some of its $ 137 billion in cash to issue perpetual preferred shares that pay dividends to existing shareholders.

The suit contends Apple violated Securities and Exchange Commission rules that prohibit companies from “bundling” unrelated matters into a single proposal for a shareholder vote.

Establishing that Apple violated the rules could be tricky. Little to no case law exists on the question and the SEC’s own rule is relatively general with little guidance, legal experts said.

Still, James Cox, a professor at Duke University School of Law, thinks Einhorn “has a hell of good case.”

“I think he’s got Apple in the crosshairs,” he added, saying that it “strikes me as a fairly dramatic case of bundling.”

The hedge fund manager is seeking an injunction to block a February 27 shareholder vote on the proposal, saying Apple violated Section 14 of the Securities Exchange Act of 1934. Arguments are to be heard before U.S. District Judge Richard Sullivan on February 22. Apple has until February 15 to file a response with the court.

The proxy proposal at issue, Proposal No. 2, seeks to amend Apple’s articles of incorporation in three ways: by providing for majority voting for directors, establishing a par value for Apple stock and eliminating its ability to issue preferred stock.

Einhorn is represented by law firm Akin Gump Strauss Hauer & Feld, Greenlight’s long-time outside counsel. No lawyer for Apple is yet listed on the court docket and a representative declined to say who would represent Apple in the case.

On Friday, the California Public Employees Retirement System, the biggest U.S. public pension fund and owner of 2.7 million Apple shares, and influential proxy voting firm ISS Proxy Advisory Services both urged investors to vote in favor of the shareholder proposal in question.

“All shareholders should have a vote,” Anne Simpson, CalPERS Senior Portfolio Manager and Director for Corporate Governance said on CNBC. “We don’t want the board cutting a deal on the side with a hedge fund out of fear of a lawsuit that will cancel the annual meeting.

“This is a big issue that needs to be thought through carefully and we want the board to come to all shareholders and give a chance to have their voice heard.

ISS, which issues recommendations on how shareholders should vote on proxy proposals, generally believes the “bundling” of proposals was not in the best interest of shareholders, but supported the elimination of “blank check” preferred shares due to their potential to be misused as a takeover defense.

“Though many investors have viewed Apple’s cash holdings as excessive and wanted to see more of it returned to shareholders, that view may not be universally held: other investors may prefer to see the cash (or at least a large portion of it) deployed for investments and acquisitions,” it said in its Friday statement.

HOW WILL APPLE RESPOND?

It is unclear how Apple will respond in its formal reply to the lawsuits. On Thursday, Apple said Einhorn’s lawsuit was misguided and that adoption of Proposal No. 2 would not preclude preferred share issuances in future.

“Currently, Apple’s articles of incorporation provide for the issuance of ‘blank check’ preferred stock by the Board of Directors without shareholder approval,” Apple said. “If Proposal #2 is adopted, our shareholders would have the right to approve the issuance of preferred stock.”

Einhorn, a well-known short-seller and Apple gadget fan, said in an interview with CNBC the company harbored a “Depression-era” mentality that led it to hoard cash and invest only in the safest, lowest-yielding securities.

Apple nearly went broke in the 1990s before Steve Jobs returned and engineered a sensational turnaround, with products such as the iPhone and iPad that became must-haves for consumers around the world. The company’s near-death experience has led Apple to be exceptionally conservative with its cash.

Greenlight in its complaint said it supports two of the proposals, but not getting rid of preferred stock. Einhorn deems preferred stock superior to dividends or share buybacks and has separately put forward a proposal for an issuance of Apple preferred stock with a perpetual 4 percent dividend.

But as Apple’s proxy proposal is structured, Greenlight said, shareholders have “no choice but to either vote in favor of an amendment they oppose, or against an amendment they support.”

Few lawsuits have ever been filed challenging proposals under the rules, a situation some legal experts attributed to the normally passive nature of shareholders.

“In most cases you’re not going to get a lot of complaining about bundling,” said Brian Slipakoff, special counsel at law firm Duane Morris in Philadelphia.

In one of the few related lawsuits, the 2nd U.S. Circuit Court of Appeals in New York in 1999 recognized an implied private right of action by shareholders suing over alleged anti-bundling rule violations.

That precedent could back Einhorn in his legal standing to bring the case. The appeals court ruling was cited by Greenlight in additional court papers filed late on Thursday.

Francis Vasquez, a lawyer with the law firm White & Case who is not involved in the case, said Apple might argue that because the stockholder proposals in Proposal 2 are all amendments to the charter, they are properly related.

The California company has another five proposals up for a vote, which are not being challenged by Einhorn and do not involve amending Apple’s charter. Those measures focus on matters such as director elections and executive compensation.

“Apple’s first argument likely is going to be, ‘Look, these are all amendments we put in one place, they don’t have to do with the other items,’” Vasquez said.

The anti-bundling rules date from 1992. John Coffee, a professor at Columbia Law School, said the idea was to “prevent managements from bribing shareholders with a sweetener into voting for a proposal they would otherwise reject.”

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; Editing by Martha Graybow, Tiffany Wu, Tim Dobbyn and Todd Eastham)

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Minka Kelly: 'I'm Not Worthy' of Acting with Oprah

By Jennifer Cress

02/08/2013 at 07:40 PM EST

Minka Kelly as Jacqueline Kennedy Onassis

Pacific Coast News

It's intimidating enough to play Jackie O, but Minka Kelly felt even more pressure to perform when she found out who was joining the cast of her latest film, The Butler.

"I'm not worthy. I feel so lucky and grateful. I was like, 'What am I doing here?!' " Kelly tells PEOPLE of starring alongside Robin Williams, Forest Whitaker, John Cusack, Vanessa Redgrave, Jane Fonda and more in the upcoming film, which tells the story of a butler who served eight presidents.

The movie also features another major star: the one and only Oprah Winfrey. "I didn't get to meet Oprah because our shooting schedules were different, but she's a pretty loved lady," Kelly says. "I have yet to hear a bad thing about her!"

Kelly found that the most difficult part of playing Jackie Kennedy was nailing the former first lady's distinct accent. "I think she spoke in a way she thought she should speak, so getting that down was hard. There's a musicality and rhythm to the way she speaks," Kelly explains. "I went to sleep listening to her."

Another tough task? Slipping into the retro costumes. "My body is so different from her because I have curves, so fitting into those vintage clothes was actually really hard," she shares. "Also it was hot – and there was a lot of wool!"

Jennifer Graylock / Getty

But Kelly had no issue slipping into the stunning Oscar de la Renta gown (left) she strutted down the runway in at the Red Dress Collection fashion show in N.Y.C. on Wednesday night. The actress walked for the second year in a row in honor of The Heart Truth campaign, which encourages women to monitor their heart health.

For the month of February, Diet Coke will donate $1 for every person who uploads a heart-inspired photo to Twitter or Instagram using the hashtag #showyourheart. Visit to dietcoke.com/showyourheart for more information.

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Southern diet, fried foods, may raise stroke risk

Deep-fried foods may be causing trouble in the Deep South. People whose diets are heavy on them and sugary drinks like sweet tea and soda were more likely to suffer a stroke, a new study finds.

It's the first big look at diet and strokes, and researchers say it might help explain why blacks in the Southeast — the nation's "stroke belt" — suffer more of them.

Blacks were five times more likely than whites to have the Southern dietary pattern linked with the highest stroke risk. And blacks and whites who live in the South were more likely to eat this way than people in other parts of the country were. Diet might explain as much as two-thirds of the excess stroke risk seen in blacks versus whites, researchers concluded.

"We're talking about fried foods, french fries, hamburgers, processed meats, hot dogs," bacon, ham, liver, gizzards and sugary drinks, said the study's leader, Suzanne Judd of the University of Alabama in Birmingham.

People who ate about six meals a week featuring these sorts of foods had a 41 percent higher stroke risk than people who ate that way about once a month, researchers found.

In contrast, people whose diets were high in fruits, vegetables, whole grains and fish had a 29 percent lower stroke risk.

"It's a very big difference," Judd said. "The message for people in the middle is there's a graded risk" — the likelihood of suffering a stroke rises in proportion to each Southern meal in a week.

Results were reported Thursday at an American Stroke Association conference in Honolulu.

The federally funded study was launched in 2002 to explore regional variations in stroke risks and reasons for them. More than 20,000 people 45 or older — half of them black — from all 48 mainland states filled out food surveys and were sorted into one of five diet styles:

—Southern: Fried foods, processed meats (lunchmeat, jerky), red meat, eggs, sweet drinks and whole milk.

—Convenience: Mexican and Chinese food, pizza, pasta.

—Plant-based: Fruits, vegetables, juice, cereal, fish, poultry, yogurt, nuts and whole-grain bread.

—Sweets: Added fats, breads, chocolate, desserts, sweet breakfast foods.

—Alcohol: Beer, wine, liquor, green leafy vegetables, salad dressings, nuts and seeds, coffee.

"They're not mutually exclusive" — for example, hamburgers fall into both convenience and Southern diets, Judd said. Each person got a score for each diet, depending on how many meals leaned that way.

Over more than five years of follow-up, nearly 500 strokes occurred. Researchers saw clear patterns with the Southern and plant-based diets; the other three didn't seem to affect stroke risk.

There were 138 strokes among the 4,977 who ate the most Southern food, compared to 109 strokes among the 5,156 people eating the least of it.

There were 122 strokes among the 5,076 who ate the most plant-based meals, compared to 135 strokes among the 5,056 people who seldom ate that way.

The trends held up after researchers took into account other factors such as age, income, smoking, education, exercise and total calories consumed.

Fried foods tend to be eaten with lots of salt, which raises blood pressure — a known stroke risk factor, Judd said. And sweet drinks can contribute to diabetes, the disease that celebrity chef Paula Deen — the queen of Southern cuisine — revealed she had a year ago.

The National Institute of Neurological Disorders and Stroke, drugmaker Amgen Inc. and General Mills Inc. funded the study.

"This study does strongly suggest that food does have an influence and people should be trying to avoid these kinds of fatty foods and high sugar content," said an independent expert, Dr. Brian Silver, a Brown University neurologist and stroke center director at Rhode Island Hospital.

"I don't mean to sound like an ogre. I know when I'm in New Orleans I certainly enjoy the food there. But you don't have to make a regular habit of eating all this stuff."

___

Marilynn Marchione can be followed at http://twitter.com/MMarchioneAP

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Asian shares inch higher on solid China trade data

TOKYO (Reuters) - Asian shares edged up on Friday after China's trade data for January handily beat forecasts to underscore a recovery trend, but prices were capped by investors seeking to book profits before next week's Chinese new year holidays.

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> edged up 0.2 percent, wiping earlier losses when bearish sentiment was carried over from overnight after European Central Bank President Mario Draghi noted risks still facing the euro zone economy. The pan-Asian index rose to a 18-month high on Monday.

China said its exports grew 25.0 percent in January from a year ago, the strongest showing since April 2011 and well ahead of market expectations for a 17 percent rise, while imports also beat forecasts, surging 28.8 percent on the year.

"China's economic conditions are improving and the trade data confirms the continuation of a recovery trend. Not just the trade data but retail, production and investment flows clearly show that the economy bottomed out in the third quarter last year," said Hirokazu Yuihama, a senior strategist at Daiwa Securities in Tokyo.

U.S. stocks edged lower while disappointing results from French drugmaker Sanofi sent European shares down to 2013 closing lows.

Australian shares rose 0.5 percent while South Korean shares <.ks11> climbed 0.6 percent, on track to reverse six losing sessions as investors bought up auto shares after recent declines.

Japan's Nikkei stock average <.n225> fell 1.4 percent as investors took profits from the index's surge to a its highest level since October 2008 on Wednesday. <.t/>

"Asian markets are undergoing a pre-holiday adjustment, keeping prices top-heavy, with many opting to book profits. Prices have gained sharply over the past months, so a correction is healthy. But the upward trend in Asian equities markets remains intact," Daiwa's Yuihama said.

EURO STEADIES

The euro was off its two-week lows hit the previous session as investors took Draghi's comments as signalling concerns about the euro and Europe's growth outlook, boosting the dollar <.dxy> to a one-month high against a basket of key currencies.

The euro edged up 0.1 percent to $1.3410, after slumping to a two-week low of $1.33705 on Thursday, but still below a 14-1/2-month high against of $1.3711 hit last week.

The ECB kept interest rates at a record low 0.75 percent at its policy meeting on Thursday. Draghi said the ECB will monitor the economic impact of a strengthening euro, feeding expectations the currency's climb could open the door to an interest rate cut.

While Draghi said the exchange rate was not a policy target but is important for growth and price stability, he also noted the euro's appreciation was a sign of returning confidence in the currency.

Spain sold more debt than planned on Thursday, auctioning over 18 percent of its full-year medium- and long-term funding target. The strong demand indicated easing worries about Madrid's financing ability despite political uncertainty over a corruption scandal.

The yen remained near lows against the dollar and the euro.

Data showed on Friday Japan logged a current account deficit for a second straight month in December, resulting in its smallest annual surplus on record in 2012, with evidence of deteriorating trade balances supporting the yen's weakening trend.

"Japan will remain a nation of current account surpluses but the surplus will not be as high as it used to be," said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.

The dollar eased 0.1 percent to 93.53 yen after reaching 94.075 yen, its highest since May 2010 on Wednesday. The euro inched up 0.1 percent to 125.43 yen, having hit its strongest since April 2010 of 127.71 yen on Wednesday.

"Currencies are increasingly becoming part of the policy debate...In the case of the EUR, we believe that the bullish 'overshooting' trend will remain intact as ECB policy continues to promote an asset market friendly environment," Morgan Stanley said in a note.

Morgan Stanley added that the anticipation of the Bank of Japan taking bolder easing steps is set to keep the weak yen trend going, supporting global risk appetite.

U.S. crude futures and Brent were both up 0.2 percent to $96.01 a barrel and $117.48 respectively.

London copper added 0.5 percent to $8,241 a tonne.

(Editing by Eric Meijer)

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Lens Blog: Sirkka-Liisa Konttinen's Photos of Her Newcastle Neighborhood

On clear days in Newcastle-Upon-Tyne, a small yet bustling working-class city in northeast England, the view from the hills of Byker can be spectacular. That shabby neighborhood’s rows of brick houses and terraced streets overlook a historic city center, the river and sometimes far beyond.

Those vistas were rare in 1969, when Sirkka-Liisa Konttinen, a 21-year-old Finnish photographer, arrived. The landscape was cloaked in an industrial fog belched from the coal and shipbuilding industries.

Despite the grayness, the laughter and vivacity that radiated from this close-knit community appealed to Ms. Konttinen. It welcomed a young foreigner whose presence stoked curiosity, but also generosity. They joked with her in pubs. Some of the older women took her under their wing — she kindled a protective instinct in them.

“People were baffled by my choice to live there,” Ms. Konttinen recalled. “Not that many people had any idea where Finland was, but if they did, they thought it such a beautiful clean country, and why would I choose to come to Byker?”

She had ventured there because of Amber Collective, a progressive documentary project that she helped found, which chronicled the lives of working people in northeast England. The group was formed in London by a handful of students who made a film following Vietnam War demonstrations at Grosvenor Square that turned violent. Titled “All You Need Is Dynamite,” it was just a student effort, but its makers found they shared a philosophy.

Before long, they had relocated to Newcastle.

The city was in decline. Urban planners sought flashy new development projects, and some sections, like Byker, were scheduled for demolition. Ms. Konttinen was unaware that she was documenting a place that was about to disappear. Not drawn to gloomy topics, she found the place spirited and interesting.

“Initially, I don’t think we ever thought that we need to document it because it will be the only thing left for people to remember the place and what the area was like,” she said. “I personally have never felt that that was my mission.”

The Amber Collective has produced an enormous amount of material, dating back decades, that is focused on the communities of northeast England, although Ms. Konttinen’s Byker pictures are probably the collective’s best-known project. That work was published as a book in 1983; Amber also released a film companion of the same name, and in 2011 her documentation was registered with the Unesco U.K. Memory of the World. For the first time in a commercial art space, photographs from the series will be shown in the United States, on view at the L. Parker Stephenson Gallery from Feb. 15 through May 11. Ms. Konttinen will also deliver a lecture at the International Center for Photography on Feb. 13.

In recent years, she returned to Byker. The new Byker is changed — more on that Friday — and the changes required her to reconsider her approach when she decided to photograph it. The newer project, “Byker Revisited,” is a result of a far more collaborative endeavor. Not that she hadn’t collaborated in other ways with a subject before. Her 1971 photo of Heather (Slide 3) brought about one such relationship.

“I heard music coming from a derelict house,” she said. “This was one of the last terraces before the final demolition, and there were no steps left to the house, but upstairs I heard music, piano, coming out the windows.”

She entered the house, climbing a rickety staircase to where the music was coming from. She found a girl, Heather, “playing the piano, banging the notes that were kind of stuck and unstuck.”

Ms. Konttinen and Heather started talking, and Ms. Konttinen taught her a simple tune.

“I told her if she ever wanted to come and play, she could come and play it again on my piano,” Ms. Konttinen said. Heather showed up a few days later, with her little brother. On Ms. Konttinen’s piano, they played the tune together.

---

Friday: Returning to Byker, in color.

Photographs from “Byker” will be on view at the L. Parker Stephenson Gallery from Feb. 15 through May 11. Ms. Konttinen will also deliver a lecture at the International Center for Photography on Feb. 13.

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Is It OK to Use Kickstarter to Make Money?

Three weeks early and $ 359,630 short, Björk’s Kickstarter project to make an Android version of the Icelandic superstar’s iOS-only educational Biophilia app has been canceled because few people wanted to give charity to a rich person. Kickstarter doesn’t bill itself as crowd-sourced philanthropy, rather describing itself as a “funding platform for creative projects.” But since the beginning, the spirit of the site has involved patronizing a ”creator [who] couldn’t get money through traditional channels,” as Rob Walker explained in a 2011 New York Times Magazine profile of the then-new company. So, the people took it as an abuse of the system when a famous person like Björk, who has enough money to buy herself a penthouse in Brooklyn Heights goes on there soliciting nearly $ 600,000. But it’s not like Björk is the first established rich person to go on there asking for money. Legendary video game designer Tim Schafer, for example, got $ 3.3 million to make his next game, and established designers have also had luck, too.

RELATED: With Multimillion Dollar Pebble Watch, Kickerstarter Really Grows Up

But, this time, something was different. The people have no sympathy for the failure of a millionaire. “A moment’s silence for multimillionaire Björk who couldn’t convince the public to fund her latest whim,” tweeted one particularly upset Mancunian DJ, echoing the sentiments of others who don’t approve of a “super high status persons using Kickstarter.” Even before she stepped away from the ambitious project, people questioned the move, with tweets like “something tells me @bjork probably has the resources to fund porting her paid music app without crowdfunding” and “struggling up-and-coming artist Björk launches a Kickstarterproject? Seriously?” All of a sudden it’s not OK for rich people to make money on Kickstarter again. What changed?

RELATED: What the Future of Our Crowd-Funded Products Will Look Like

The crowd-funding platform has combined elements of philanthropy and commerce, but these days one side can be emphasized more than other. In Jenna Wortham’s profile of the company in 2009, The New York Times described Kickstarter as a place where “Patrons Support Artists on the Web.” Two years later,  Wired‘s Carly Adler described it as a sort of a public research and development unit, calling it “a lab for daring prototypes and ingenious products.”  

RELATED: ‘Fifty Shades’ Outpaces Potter; Authors’ Drunk Texts Imagined

Kickstarter co-Founder Yancey Strickler explained how the service lived between those two poles to Walker. “Money demands answers,” he said. “People want to put money into things that they think will be successful, and to be successful you have to participate in the market, and the market has very specific rules.” At times, the market rewarded good ideas, like the multimillion dollar Pebble smartwatch. But it didn’t take too long for people to realize that money begets more money. Soon, bigger players with better PR and marketing came to the platform and succeeded, as Technology Review‘s David Zax laments: 

What I love about Kickstarter is that any scrappy entrepreneur with an idea can go out there and get funding for his back-of-napkin vision. When you look at the two most successful Kickstarter campaigns to date (here, the runner-up), they involve established or semi-established companies whose promotional videos wear their production value on their sleeve. These aren’t rogue designers, tinkerers, or DIY “makers.” And this isn’t, in a meaningful sense, a kick-start–it’s a 90-yard punt.

Kickstarter entered most people’s consciousness around this time, when it focused more on commercial success. The funding of huge projects like Pebble and that Tim Schafer project led to a saturation of crap on the site from people just trying to get rich quick. And it made some especially mad because it felt like people hitting friends up for money, not a deserved artist seeking philanthropy. The site has turned into more of an online panhandling forum, as Ryan Tate writing for Gawker explained last year, than the people’s republic of crowd-funding for the greater good. 

RELATED: Everything to Know About the Dan Harmon, Charlie Kaufman Kickstarter

Perhaps this huge Björk failure is the manifestation of those feelings. She should have succeeded, with her well produced Kickstarter video touting a project tied to an album with both commercial and critical success. It shouldn’t have mattered that Björk has a ton of her own money, she played by the market rules Strickler talked about. But, it didn’t work out like that. Perhaps that’s because her project, which mixed philanthropy with art, reminded people that the site was once for “starving artist” types, not for rich people to use as PR for their charities.  

Wireless News Headlines – Yahoo! News

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American Idol: Early Favorites Eliminated in Hollywood

TV Watch

American Idol

By Steve Helling

02/07/2013 at 10:30 PM EST

From left: Randy Jackson, Mariah Carey, Ryan Seacrest, Nicki Minaj and Keith Urban

Michael Becker/FOX.

At the beginning of Thursday's American Idol, there were 43 men left in the competition. The next hour was a bloodbath, with many tears and a few tantrums – as well as some standout performances. Curtis Finch Jr., for example, performed a version of Christina Perri's "Jar Of Hearts" that was arguably the strongest of the evening. It may be the season's most overdone song, yet Finch successfully infused it with a rising gospel vibe.

Like every reality show, the contestants learned valuable life lessons as they fought to stay in the game. Here are five:

1. Never Let Them See You Sweat
Paul Jolley looked like he was going to throw up when he took the stage. "I'm so nervous," he said as he fought back tears. The judges watched quietly as he pulled himself together and gave a strong performance of Carrie Underwood's "Blown Away." He advanced, but not before Nicki Minaj criticized him for showing his nerves. "You walked out so defeated and that really irritated me," she said. "Just give us one minute of professionalism."

2. Be Funny and Unexpected
Admit it: It was kind of funny watching Gurpreet Singh Sarin nail "Georgia On My Mind." The judges liked him, perhaps because he doesn't fit any mold. Neither does Charlie Askew, who worked his quirky awkwardness into an intriguing version of Gotye's "Somebody that I Used To Know," complete with a spoken-word intro. "I am obsessed with you," Minaj said, prompting Askew to respond, "Baby, I could say the same thing." She ate it up.

3. Too Much of A Good Thing Can Be Lethal
Matheus Fernandes, one of the standouts from the Los Angeles auditions, was eliminated after a shaky rendition of Kelly Clarkson's "Stronger." The 4'9" contestant made one too many self-depreciating comments about his height, prompting Minaj to say, "Sometimes things can go from being inspiring to becoming you wanting a pity party." When Carey called him a "good person," his face said it all – Fernandes knew he wouldn't be advancing to the next round. In contrast, Lazaro Arbos said nary a word about his stutter, yet he advanced easily, despite an unspectacular rendition of Lady Gaga's "Edge of Glory."

4. If You Lose, Lose Gracefully
The night's "Sour Grapes Award" goes to Papa Peachez, who performed a karaoke-worthy version of Gaga's "Yoü and I." Minaj was unimpressed. "I'm so disappointed," she said. "I don't know why you chose that song." After he was eliminated, Peachez decided he didn't want to win American Idol, after all. "This isn't the competition for me," he said. "I just don't like singing other people's songs."

5. Big Risks Can Reap Big Rewards
Nick Boddington was eliminated in Las Vegas last season, so he came back determined to take some risks. He accompanied himself on the piano while singing Grace Potter's "Stars." It was a strong performance that the judges loved.

After the dust settled, 28 contestants remained. The judges corralled them onto the stage and announced that they would eliminate eight more male contestants next week, after the ladies' auditions.

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New whooping cough strain in US raises questions

NEW YORK (AP) — Researchers have discovered the first U.S. cases of whooping cough caused by a germ that may be resistant to the vaccine.

Health officials are looking into whether cases like the dozen found in Philadelphia might be one reason the nation just had its worst year for whooping cough in six decades. The new bug was previously reported in Japan, France and Finland.

"It's quite intriguing. It's the first time we've seen this here," said Dr. Tom Clark of the Centers for Disease Control and Prevention.

The U.S. cases are detailed in a brief report from the CDC and other researchers in Thursday's New England Journal of Medicine.

Whooping cough is a highly contagious disease that can strike people of any age but is most dangerous to children. It was once common, but cases in the U.S. dropped after a vaccine was introduced in the 1940s.

An increase in illnesses in recent years has been partially blamed on a version of the vaccine used since the 1990s, which doesn't last as long. Last year, the CDC received reports of 41,880 cases, according to a preliminary count. That included 18 deaths.

The new study suggests that the new whooping cough strain may be why more people have been getting sick. Experts don't think it's more deadly, but the shots may not work as well against it.

In a small, soon-to-be published study, French researchers found the vaccine seemed to lower the risk of severe disease from the new strain in infants. But it didn't prevent illness completely, said Nicole Guiso of the Pasteur Institute, one of the researchers.

The new germ was first identified in France, where more extensive testing is routinely done for whooping cough. The strain now accounts for 14 percent of cases there, Guiso said.

In the United States, doctors usually rely on a rapid test to help make a diagnosis. The extra lab work isn't done often enough to give health officials a good idea how common the new type is here, experts said.

"We definitely need some more information about this before we can draw any conclusions," the CDC's Clark said.

The U.S. cases were found in the past two years in patients at St. Christopher's Hospital for Children in Philadelphia. One of the study's researchers works for a subsidiary of Johnson & Johnson, which makes a version of the old whooping cough vaccine that is sold in other countries.

___

JournaL: http://www.nejm.org

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Boeing working on 787 battery changes for fire risk: WSJ

(Reuters) - Boeing Co is working on battery design changes that would minimize fire risks on its grounded 787 Dreamliner and could have the passenger jet flying again as soon as March, the Wall Street Journal reported on Wednesday.

Separately, U.S. aviation regulators said they would allow Boeing to make a one-off 787 flight from Texas to the aircraft maker's facility in Washington State, under strict conditions. Boeing said the plane, scheduled for delivery to China Southern Airlines , would be a "ferry" flight - used to relocate a plane without carrying passengers or conducting tests.

Regulators around the world grounded the technologically advanced 787 in mid-January after a battery fire in Boston and a second incident involving a battery on a flight in Japan.

Boeing is looking at changes within the 787's lithium-ion battery to keep heat or fire from spreading, though technical details have not yet been finalized or approved, the Wall Street Journal reported, citing unnamed government and industry officials. One of the paper's sources added that, under a best-case scenario, passenger flights could resume in March.

The Dreamliner's launch customer All Nippon Airways Co Ltd , which has the biggest fleet of the 250-seat planes, said it will cancel 1,887 flights, affecting more than 25,000 passengers, from March 1 to 30. The airline said on Thursday it had no information on Boeing's latest battery plans.

Boeing declined to comment on the newspaper report. GS Yuasa Corp , the Japanese firm that makes batteries for the 787, also declined to comment.

INVESTIGATIONS ONGOING

Air safety investigators from the United States and Japan have been investigating the battery incidents for three weeks. On Wednesday, the head of the U.S. National Transportation Safety Board (NTSB) said it was "probably weeks away" from completing its probe.

The NTSB is conducting the U.S. probe with help from Boeing, GS Yuasa, the Federal Aviation Administration (FAA) and battery experts from other U.S. federal agencies. No one has yet identified what caused the battery failures.

In Tokyo, one official said Japanese regulators had not been notified of any breakthrough in the U.S. battery investigation. "The investigation will continue as scheduled. Resuming flights in March ... seems far too optimistic to me," said the official who didn't want to be named as the investigation is ongoing.

One source familiar with the investigation told Reuters that Boeing engineers sprang into action "almost immediately" after the first battery incident to ensure the company could meet special FAA-approved conditions to allow lithium-ion batteries on the aircraft. "They can't afford to sit around with their planes on the ground," said the source, who was not authorized to speak publicly.

Boeing was pursuing multiple solutions to mitigate and contain a fire if one started in the batteries, part of a determined effort to get the 787s back in the air while a more permanent solution - possibly even a different battery - was explored.

Three or four different approaches would be pursued to ensure the batteries did not breach their containment systems, even if they caught fire, said the source.

"FERRY" FLIGHT

Boeing asked the FAA this week for permission to conduct new test flights of the 787, suggesting it is making progress in finding a solution to the problems, but the government agency has not yet announced a decision.

While that request is pending, the FAA said on Wednesday it would allow a one-time 787 "ferry" flight. The plane, with a minimum crew, would have to land immediately if the flight computer displays any battery-related messages. It was not immediately clear when the flight would take place.

Some 50 Dreamliners have been grounded while investigators try to solve the battery mystery.

Japan Airlines Co Ltd said this week it will talk to Boeing about compensation for the 787's grounding, which it expects to cost nearly $8 million from lost earnings through March. ANA has said it would seek compensation from Boeing once the amount of damages was clearer.

JAL said on Thursday it was also unaware of any Boeing plans to test new batteries.

(Reporting by Andrea Shalal-Esa in Washington, Bill Rigby in Seattle, Peter Henderson in San Francisco and Mari Saito in Tokyo; Editing by Gary Hill, Bernard Orr, Eric Walsh, Andre Grenon and Ian Geoghegan)

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Japan Spends Heavily to Keep Whaling Industry Afloat, Report Says

TOKYO — A wildlife conservation group said in a report on Wednesday that Japan has been propping up its whaling industry with nearly $400 million in tax money in recent years, stepping up subsidies even as consumption of whale meat here has slumped.

The report, compiled by the International Fund for Animal Welfare, in Yarmouth Port, Mass., challenges assertions by the Japanese government that whaling is a tradition with wide support among Japanese consumers.

Instead, government figures tallied in the report paint a picture of a struggling industry employing fewer than 1,000 people and dependent on public handouts, including money meant for reconstruction after the devastating earthquake and tsunami of March 2011.

Most Japanese consumers have turned away from whale meat. The industry shipped just 5,000 tons in 2011, compared with 233,000 tons at the peak in 1962, according to data from the Ministry of Agriculture, Forestry and Fisheries. Demand this year is so low that the industry has cut its planned shipments by half, to 2,400 tons.

“Whaling is unprofitable, and survives only with substantial subsidies, something cultural and nationalist arguments for whaling obscure,” said Patrick Ramage, the director of the animal welfare fund’s whale program. He said the country would be better off economically and ecologically if it promoted whale-watching tourism instead of hunting whales.

Japan’s Fisheries Agency declined to comment on the report, saying it had not yet studied its contents.

But an official, speaking on the condition of anonymity, said there was “nothing wrong with these subsidies, which fund an important program,” though it was “not the government’s responsibility to make whaling economically viable.”

A world moratorium on commercial whaling took effect in 1986, but Japan has taken advantage of an exception allowing whaling for research purposes to continue hunting, though environmental activists who chase whaling boats have made those hunts increasingly difficult. Japan has captured and killed more than 14,000 whales since the moratorium began.

The meat from the whales is sold off as “byproducts” of research, and it makes its way to supermarkets, restaurants and even school lunches. A government Web site says the most popular whale dishes are fried whale, whale sashimi and medium-rare whale steak.

According to figures from the Institute of Cetacean Research, the nonprofit organization set up to run the whaling program, income from whale meat has failed to cover the costs of whaling for the past five years. So subsidies have been increased, and some disaster aid has been diverted to the industry, prompting a public outcry.

The dire financial picture prompted the government to announce a plan last year to cut costs by reducing the annual catch and to sell more whale meat directly to schools for lunches. But experts doubt that those measures will make the whaling industry self-sufficient again. 

“The Japanese government has desperately defended whaling for years, but the question has increasingly become: for what?” said Yusuke Saskata, a professor of environmental economics at Kinki University in Osaka. “Supporting whaling culture is one thing, but maintaining whaling at this scale makes no sense.”

Hisako Ueno contributed research.

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