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Einhorn Turns Up the Heat on $AAPL as He Wins a Court Battle tp Block a Shareholder Vote

“David Einhorn’s Greenlight Capital Inc. winning a court order blocking an upcoming Apple Inc. (AAPL) shareholder vote increases pressure on the iPhone maker to return some of its growing cash hoard to investors.

U.S. District Judge Richard Sullivan in Manhattan yesterday granted Greenlight’s request to stop a Feb. 27 vote that would require shareholder approval before the company could issue a new class of preferred shares. Following the ruling, Apple said it would pull the proposal from its shareholder meeting.

Einhorn has used the lawsuit to drum up support among fellow investors to get Apple to return some of its $137.1 billion incash and investments back to shareholders. The push comes as Apple’s stock has declined 36 percent from a record in September on concern that growth is slowing.

“It’s a shame that you have to go through the legal system, but we’re happy that there is a real message being sent to management that they should consider an alternative strategy” for the cash, said Keith Goddard, president of Capital Advisors Inc., an Apple investor who supported Einhorn’s lawsuit.

Apple has been grappling with investor criticism about its cash for years. Near bankruptcy before co-founder Steve Jobs returned to the company in 1997, the cash balance swelled from successful products such as the iPod, iPhone and iPad. While the company tried to address the matter last year by announcing a dividend, investors such as Einhorn have been seeking more.

Preferred Shares….”

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DOJ to Join Lawsuit Against Lance Doping Armstrong

“Lance Armstrong faces a powerful new adversary — the United States government.

The Justice Department will notify a federal court Friday that it is joining one of his former racing teammates in suing him for using performance-enhancing drugs during the Tour de France, legal sources told NBC News.

The government is signing on to a lawsuit filed two years ago by Floyd Landis, one of Armstrong’s former Tour de France teammates who has already admitted cheating. Among its claims: Landis saw Armstrong store and then re-inject his own blood to boost his performance, and Armstrong twice gave Landis banned hormones before races.

The government’s legal theory in joining the lawsuit is that when Armstrong agreed to race for the U.S. Postal Service team a decade ago in the Tour de France, he defrauded the government, violating its strict ban on illegal drugs, all the while claiming he did not use them….”

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‘Secret’ Informal Car Defect Probes More Common

“Remember Ford and Firestone’s Safety Problems? Well they are live and kicking, but you need a FOIA request to know this….

Herman Ray Evans was killed when the tread separated on his 2001 Ford Explorer’s tire, the vehicle rolled over into the median and he was ejected, according to the Daphne, Ala,. police crash report.

Evans was in one of at least 15 fatal tire-related crashes last year in Ford Explorers and Mercury Mountaineers, according to news reports. In Evans’ crash, the police department did not find fault with the tiremaker or Ford Motor.

But from April 2002 through 2009, there were 375 similar deaths in mostly older-model Explorers and Mountaineers — nearly four times the number that led to the Ford/Firestone fiasco in 2000, according to an analysis of federal fatality data by the research firm Quality Control Systems. Still, neither the National Highway Traffic Safety Administration nor Ford Motor recalled the vehicles.

In a statement, Ford said it reviewed this issue with NHTSA and found the Explorer “has no unique tire issues.” Ford says “numerous government safety agencies and independent organizations” have confirmed the Explorer’s safety.

Although Ford is required to tell NHTSA about claims it receives about serious injuries and deaths in its vehicles — and NHTSA can investigate them — information about the probes and many of the injuries and deaths is only available to the public and news media through a Freedom of Information Act request. Even then, manufacturers can request the information they submit to the agency be kept confidential.

That’s in sharp contrast to all the information posted on NHTSA’s website about potential defects, injuries and deaths for the agency’s official safety investigations. But informal investigations — where weeks or months can go by before potential problems are brought to the public’s attention — are becoming more common. And that has ramifications for car buyers, who may not learn the vehicles they own or are considering buying have quietly raised safety concerns at NHTSA and among automakers.

Other examples…”

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$UAL Will Drop the Dreamliner for the Next Couple of Months

“United Airlines (UAL) is keeping the Boeing 787 Dreamliner on the ground at least until May 12.

Investigators are still trying to figure out what caused a battery fire and another battery problem last month.

“We are taking the 787 out of our schedule through June 5, except for Denver-Narita, which will tentatively launch on May 12,” said a United spokesperson in a statement on Thursday…..”

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$GS Client Caught Up in the $HNZ Insider Trading Case

“The saga of the Heinz call option insider trade, first profiled here, and the Goldman trail, also first observed here (“Does GS stand for Goldman Sachs one wonders”), just got even more fun as revelations that it was none other than a client of Goldman’s Private Wealth group out of Zurich that hit the buy key on those thousands in call options one day ahead of the announcement. From Reuters: “A Goldman Sachs private wealth client is the holder of the Swiss account at the center of an investigation into insider trading in H.J. Heinz Co options, regulators said in a court filing late Wednesday.” Alas, and as before, the question of who leaked the inside information to this Goldman client still remains unanswered.

The U.S. Securities and Exchange Commission filed a lawsuit against unknown traders last week, alleging they used a Goldman account in Zurich to buy an unusual amount of Heinz options the day before the ketchup maker agreed to sell itself for $23 billion.


In an SEC application to freeze the defendants’ assets, dated February 15 but filed with the court Wednesday, staff attorney David Brown said the commission had been told by Goldman that “the account holder is a Goldman Sachs Private Wealth client in Switzerland.” …”

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Shareholder Group Calls for the Split of Jamie Dimon’s Position at $JPM

“Jamie Dimon of J.P. Morgan Chase & Co. (NYSE: JPM) used to be a Teflon CEO. Now we have a shareholder action looking to split the role of chairman and chief executive for the bank. You just could not speak poorly of him as he was the one American CEO of all the banking giants during the meltdown and Great Recession that could keep claiming that his bank and his depositors were safe. That was all before the London Whale trade scandal of 2012.

While that London Whale trading issue was a serious flaw and a serious mistake, the reality is that it was nowhere close to being anything more than a charge against earnings. It caused trading losses but did not cause the bank to get into counter-party trouble, nor did it trigger any “real” regulatory bank financial ratio concerns. That being said, this was a media fiasco that Dimon effectively lost a lot of his credibility.

J.P. Morgan Chase is the largest of the money center banks by market cap, barely over Wells Fargo & Co. (NYSE: WFC), but it dwarfs Wells Fargo on a total asset basis. We have received email communications from a group with $820 million in combined J.P. Morgan shares calling for stronger and more independent governance and oversight of the largest bank in America. This will be a proxy fight. Here is the report….”

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Austerity Kills Bulgarian Government


“SOFIA, Bulgaria—The European economic crisis felled its latest political victim on Wednesday as Bulgaria’s government resigned from office after days of nationwide protests against austerity, high electricity prices and official corruption.

“We have dignity and honor. It is the people who put us in power and we give it back to them today,” Prime Minister Boyko Borisov told parliament in an announcement that shocked Bulgarians even after days of swelling protests.

Mr. Borisov said the threat of protests turning violent spurred his decision. “I cannot stand looking at a bloody Eagles’ Bridge,” he said, referring to the iconic intersection in downtown Sofia that was the scene of clashes between police and protesters on Tuesday. “Every drop of blood is a shame for us.” …”

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Will the Union for $BA Go on Strike?

“The union for Boeing’s engineers and technical workers is counting ballots Tuesday on a contract offer and whether to authorize a strike.

The union, Society of Professional Engineering Employees in Aerospace, is recommending that members reject the offer because it would not provide pensions to new employees. They would have a 401k retirement plan instead. The union calls that unacceptable….”

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$AAPL Says They Were Hit With Malware

“Apple said Tuesday that Mac computers were the target of a cyber attack conducted by the same hackers that targetedFacebook last week.

(Read MoreFacebook Reveals Hack Attack, Says User Data Not Compromised )

“Apple has identified malware which infected a limited number of Mac systems through a vulnerability in the Java plug-in for browsers. The malware was employed in an attack against Apple and other companies, and was spread through a website for software developers. We identified a small number of systems within Apple that were infected and isolated them from our network. There is no evidence that any data left Apple. We are working closely with law enforcement to find the source of the malware,” the company said in a statement to CNBC.

In separate hacking attacks Tuesday, Jeep’s Twitter account was also breached.

The hackers took over Jeep’s account and sent unofficial tweets. The hackers also wrote on Jeep’s Twitter account that the company was being sold to Cadillac.

Cadillac said in a tweet shortly after the attack on Jeep’s Twitter account that it was not connected to the hack…..”

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Reader’s Digest Files for Bankruptcy Again

“Executives at Reader’s Digest must be hoping that the magazine’s second trip to bankruptcy court in under four years will be its last.

The magazine’s parent, RDA Holding, filed for Chapter 11 protection late on Sunday in another effort to cut down the debt that has plagued the pocket-size publication for years. The company is hoping to convert about $465 million of its debt into equity held by its creditors.

In a court filing, Reader’s Digest said it held about $1.1 billion in assets and just under $1.2 billion in debt. It has provisionally lined up about $105 million in financing to keep it afloat during the Chapter 11 case….”

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Nestle Pulls Some Pasta Products Off the Shelves as Horse Meat is Discovered


“BERLIN (AP) — The world’s biggest food and drinks maker Nestle SA has become the latest company to pull some of its products off European shelves after they were found to contain undeclared horse meat.

The company, based in Vevey, Switzerland, said in a statement late Monday that it withdrew some of its beef pasta ready meals from sale after tests conducted two days earlier detected horse DNA.Nestle said it increased its surveillance after reports emerged last month of mislabeled products being sold in Britain.

“Our tests have found traces of horse DNA in two products made from beef supplied by H.J. Schypke,” Nestle said in a statement. “The levels found are above the one percent threshold the U.K.’s Food Safety Agency uses to indicate likely adulteration or gross negligence.” …”

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DEUTSCHE BANK: Communism Is Alive In America

“Bilal Hafeez, Deutsche Bank‘s Global Head of FX Strategy, recently gave a speech at the bank’s annual Chinese New Year Dinner in London earlier this week.

Hafeez took a sweeping tour across the global economic landscape, examining the big stories in the United States, Europe, and China.

With regard to China, Hafeez focused on the obvious need for the country to rebalance from a centralized, investment-driven model to a more consumption-driven economy.

What followed after that may not be as obvious: Hafeez advanced an interesting parallel between the U.S. economy and the communist ideal.

An excerpt from the speech is included below:

You may think that the US is the antithesis of the Marxist ideal. You may be mistaken.

In the Communist Manifesto published in 1848, Karl Marx and Friederich Engels demanded a list of immediate actions that capitalist economies should follow on the path to communism. What were they? Free education, well the US has that. Progressive tax system: which the US has. Curbs on inheritance: which the US has. Fair labour laws: which the US has….”

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John Chambers Says He Will Not Make Acquisitions or Hire U.S. Workers Until the Tax Code is Changed

” $CSCO  has $46 billion in cash, but CEO John Chambers says he is no longer willing to use it to acquire U.S. companies.

That’s because 80 percent of that cash is stored in overseas accounts and if Cisco spends it in the U.S., the company will have to fork over 35 percent in taxes.

For years, he has been trying to get the U.S. to change that tax rule. He’s said before that this prevents him from hiring more U.S. workers.

But now he’s said he’s also stopped shopping for acquisition targets in the U.S., too.

That’s a blow, as Cisco has historically been a company that acquires like crazy.

Cisco is not the only company hording cash overseas to avoid taxes. U.S. companies have about $1.7 trillion offshore. For instance, Microsoft‘s keeps about 87 percent of its $66.6 billion stored outside the U.S.; Oracle, 80 percent of its $31.6 billion; and Apple about 68 percent of its $121.3 billion, reports CNBC’s Jon Fortt.….”

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Airbus Choose Conventional Battery Over Lithium Ion

“PARIS (Reuters) – Airbus has dropped lithium-ion batteries of the type that forced the grounding ofBoeing’s 787 Dreamliner and will use traditional nickel-cadmium batteries in its crucially important next passenger jet, the A350.

The European planemaker said on Friday it had taken the decision to adopt the batteries used on existing models such as the A380 superjumbo in order to prevent delays in the A350’s entry to service next year.

Reuters had reported that Airbus was considering such a move to limit the risks surrounding the development of its $15 billion airliner.

“We want to mature the lithium-ion technology but we are making this decision today to protect the A350’s entry-into-service schedule,” an Airbus spokeswoman said.

Industry executives, insurance companies and safety officials had told Reuters the technology’s predictability was being questioned at senior levels as investigators struggle to find the cause of incidents that led to the grounding of Boeing’s 787 Dreamliner.

These included a fire on board a parked 787 in Boston and an in-flight problem on another plane in Japan.

The A350 is due to enter service in the second half of 2014 compared with an initial target of 2012 when it was launched as Europe’s answer to the lightweight 787 Dreamliner.

The industry’s fear is that the failure to identify the “root cause” of the burning battery incidents leaves too much uncertainty over whether regulators will certify planes as safe when relying on the powerful but temperamental power packs….”

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Oscar Pistorius is Charged With Shooting Girlfriend for Valentines Day

“Oscar Pistorius was one of the biggest stars of this past summer’s Olympic games in London.

The double-amputee sprinter from South Africa performed far better than anyone had expected, overcoming incredible adversity.

Now everything has been turned upside down.

The shocking news today is that he has been arrested for allegedly murdering his girlfriend, model Reeva Steenkamp, at his home in South Africa.

The circumstances are unclear and disputed. There were initial reports that he may have mistaken Steenkamp for a burglar. And according to one report, this may have been the result of a Valentine’s Day surprise.

Just yesterday, Steenkamp tweeted about having something up her sleeve…”

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$AAPL Vows to Fight Greenlight Capital

Apple Inc. said it will fight Greenlight Capital Inc.’s bid to bar the company from adopting a measure restricting its ability to issue preferred stock.

The maker of iPhones and MacBooks filed a response yesterday in U.S. District Court in New York to the request made by Greenlight in its lawsuit.

“The proposed injunction would harm the public interest,” and should be denied, Apple said in the filing. The measure “gives common shareholders greater power — the right to approve issuance of preferred shares,” Apple said.

Greenlight founder David Einhorn has said the tech company should issue high-yielding preferred stock to provide more value to shareholders from a $137 billion stockpile of cash. The measure up for vote would eliminate “Apple’s power to issue preferred stock,” Greenlight said in the company’s complaint.

The hedge fund claimed Cupertino, California-based Apple unfairly grouped the preferred share measure with other matters to be voted on at a meeting Feb. 27, violating the U.S. Securities and Exchange Commission “unbundling rules.”

Apple said in its filing that it’s not violating SEC rules and that the move only eliminates so-called “blank check” preferred stock provisions. Without the provisions, preferred shares could still be offered as long as investors approve the change, according to Apple.

‘No Injury’…”

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Italy Police Detain Monte Paschi’ss Former Finance Chief

“Italian police detained Gianluca Baldassarri, former finance chief at Banca Monte dei Paschi di Siena SpA, as prosecutors investigated possible financial crimes at Italy’s third-largest bank.

Police detained Baldassarri, 51, in Milan today because of evidence and to ensure he doesn’t flee, a police official said by phone. Baldassari was taken into custody on an accusation of obstructing regulatory activity related to derivatives transactions. He was detained after he allegedly sought to sell securities for about 1 million euros ($1.3 million), sparking concern he may leave the country, the official said.

Prosecutors in Siena are investigating whether some former Monte Paschi executives committed crimes of market manipulation, fraud, false accounting and obstruction of regulatory activity tied to derivatives trades during the purchase of Banca Antonveneta SpA, people with knowledge of the probe have said.

Chief Executive Officer Fabrizio Viola and ChairmanAlessandro Profumo are seeking to restore investors’ confidence in the world’s oldest bank and profitability amid allegations former management hid losses from three derivatives transactions, labeled Alexandria, Santorini and Nota Italia….”

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Tim Cook Spits on David Einhorn’s Lawsuit, Calling It a Side Show

Apple’s CEO Tim Cook on Tuesday rebutted criticism that his company was too tight-fisted with the $137 billion in cash it has amassed over the years, saying the tech giant “does not have a Depression-era mentality” preventing it from returning money to shareholders.

Wading into a controversy that was bought to a head last week by fund manager David Einhorn, Cook touted his company’s investment in product development and research. The CEO rejected the basis of a lawsuit filed by Einhorn that the fund manager asserts will restrict Apple’s ability to distribute its excess cash to its investors.

(Read more: Apple Pushes Back Against Einhorn Allegations of Cash Hoarding)

“Frankly I find it bizarre that we would find ourselves being sued for doing something that’s good for shareholders,” Cook told the Goldman Sachs’ Technology and Internet Conference. He branded Einhorn’s lawsuit as a “a silly sideshow.”

Countering Einhorn’s pointed criticism that the company was behaving like his cash-hoarding grandmother who lived through the Depression, Cook said his company invested $10 billion in capital expenditures last year, and would do the same this year.

“We do have some cash, but it’s a privilege to be in this position …where we can seriously consider returning additional cash to our shareholders.”

He nevertheless said that Apple would “thoroughly consider” Einhorn’s proposal to return cash to shareholders….”

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China Continues to Invade Corporate America

“The Chinese are coming, the Chinese are coming. And they’re snapping up U.S. companies along the way.

Chinese entities agreed last year to spend more than $10 billion buying all or part of 46 companies here, according to Dealogic. That value exceeds all the deals inked from 2009 through 2011 combined, The Wall Street Journal reports.

In addition, Chinese firms announced $23 billion worth of deals for Canadian companies or stakes in 2012.

China is staying away from big companies and ones involved with defense or important technologies to avoid rejection by the U.S. government, after some earlier failures.

Most of the concerns China is targeting are small — under $500 million — and closely held in order to increase the odds of being approved.

Last week, the government approved Wanxiang America’s purchase of battery maker A123 Systems for $257 million.

“You just need to understand the rules, follow the rules, be very transparent and let them make the decision,” says Pin Ni, president of Wanxiang America, who started the U.S. offshoot of China’s Wanxiang Group out of a home office in Chicago.

Among the biggest deals last year was one to sell the movie-theater chain AMC Entertainment Holdings to Wanda Group for $700 million….”

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