Einhorn scores legal victory vs. 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.

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 #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 for 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, did not respond to a request for comment.

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 and Carol Bishopric)

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Courtney Lopez: Gia Thinks Our Dog Is Having a Baby

Mom & Babies
Celebrity Baby Blog

02/22/2013 at 01:00 PM ET

Denise Truscello/Wireimage

Mario Lopez is a man of his word.

Following a December wedding, the EXTRA host declared he and wife Courtney would get to work expanding their family immediately — and he wasn’t kidding.

In January, the couple discovered they were indeed expecting.

“Mario and I are so excited to add to our family! I found out a month ago and surprised Mario with the good news at breakfast,” Courtney tells PEOPLE.

But the proud parents aren’t the only ones gearing up for a new addition. Big sister Gia Francesca, 2, already has babies on the brain.

“Gia kind of understands that there is a baby in my belly,” Courtney notes. “She also told me our dog Julio has a baby in his belly — so who knows!”

Despite a bumpy start — “I had a rough couple of weeks when I first found out,” she shares — the mom-to-be is feeling better and already sporting quite the blossoming belly. “I am showing so much faster this time around,” she says.

And with warmer weather on the way, Courtney will be swathing her bump in floor-length frocks — but plans on foregoing a few fashion ensembles from her past.

“I love being pregnant in the summer! I live in maxi dresses,” she says. “Looking back at my first pregnancy, there are certain things that I wore and I have no idea why. I looked horrible and I won’t do that again!”

Originally from Pittsburgh, the expectant mama is thrilled to have settled down with her growing family on the West Coast. Her only wish? That her children will one day enjoy a winter wonderland.

“I don’t miss the East Coast at all — especially the humidity,” she explains. “The one thing I do want my children to experience from an early age is snow. There is nothing like being a kid playing in the snow.”

– Anya Leon

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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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U.S., Japan agree on approach to Trans-Pacific Partnership talks

WASHINGTON (Reuters) - The United States and Japan on Friday agreed on language aimed at giving Japanese Prime Minister Shinzo Abe political cover to bring the world's third-largest economy into negotiations on a U.S.-led free trade agreement in the Asia Pacific region.

In a carefully worded statement following Abe's meeting with President Barack Obama, the two countries reaffirmed that "all goods would subject to negotiation" if Japan joins the talks with the United States and 10 other countries.

At the same time, the statement leaves open a possible outcome to the Trans-Pacific Partnership, or TPP, talks where the Japan could still protect its rice sector and the United States could keep duties on Japanese autos.

"Recognizing that both countries have bilateral trade sensitivities, such as certain agricultural products for Japan and certain manufactured products for the United States, the two governments confirm that, as the final outcome will be determined during the negotiations, it is not required to make a prior commitment to unilaterally eliminate all tariffs upon joining the TPP negotiations," the statement said.

Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, called the joint statement "a big step forward" in the process of determining whether Japan will join TPP talks, which members hope to finish this year.

"The United States and Japan agreed that the deal has to be comprehensive, but you don't commit to the final terms before you even get into the negotiations," Schott said.

But Representative Sander Levin, the top Democrat on the powerful House of Representatives Ways and Means Committee, called the statement "worrisome" and warned any agreement that includes Japan would not pass Congress unless it truly pries open that country's farm and automotive markets.

Abe, who is on his first trip to Washington since taking office in December, has vowed to revive Japan's economy with an expansive monetary policy, big spending and structural reform.

Joining the TPP talks could help with the third task by exposing Japanese companies and farmers to more competition.

But Japanese rice and other farmers who have long enjoyed high tariff protections are opposed to Tokyo entering the talks, and Abe curried their favor during his campaign last year by promising not to unilaterally agree to eliminate tariffs on certain sensitive products.

The current TPP members - United States, Canada, Mexico, Australia, New Zealand, Chile, Peru, Singapore, Malaysia, Vietnam and Brunei - have pledged to negotiate an agreement that eliminates tariffs in as many areas as possible.

To accomplish that goal they have agreed not to exclude any sectors or products from the negotiations.

That stance also worries Ford Motor Co and the United Auto Workers, which have pressured the Obama administration not to allow Japan into the talks until Tokyo makes reforms to open its market to more auto imports.

Although Japan already has no auto tariffs, Ford and the UAW argue that the country relies on regulatory and other non-tariff barriers to keep out auto imports.

The U.S.-Japan joint statement said the two governments would continue their discussions on the possibility of Japan joining the TPP talks.

"While progress has been made in these consultations, more work remains to be done," in areas such as autos and insurance, the joint statement said.

A final decision to allow Japan into the negotiations would have to be made by all the current TPP members.

Additionally, the White House would have to give Congress 90 days notice before starting talks with Japan.

(Additional reporting by Mark Felsenthal; Editing by David Brunnstrom and Eric Walsh)

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BBC Portrayed as Top-Heavy, Bickering and Dysfunctional

LONDON — A senior press officer for the British Broadcasting Corporation darkly volunteers to “drip poison” to discredit a BBC reporter he suspects of having leaked embarrassing information. The woman in charge of the corporation’s news divisions accuses Newsnight, a public-affairs program she oversees, of being out of touch and “sneery” toward rival BBC shows.

And, as investigators seek to uncover why the corporation canceled a Newsnight broadcast alleging that a once-beloved BBC personality who had recently died had in fact been a serial pedophile who preyed on vulnerable girls, everyone involved is scrambling to deflect blame onto someone else.

These and other unflattering details about the inner workings of Britain’s public broadcaster emerged Friday when the BBC released some 3,000 pages of internal documents — e-mails, memos and transcripts of interviews — from an external investigation into why the program, about the BBC presenter Jimmy Savile, had been canceled.

In all, the documents painted a picture of a highly dysfunctional, top-heavy organization divided into discrete, rival factions, and weighed down by mistrust, poor communication, buck-passing and internecine squabbling.

There were no startling revelations; all those came out in the so-called Pollard report into the Savile affair, which was published in December and which concluded that there were deep structural problems in the BBC. But the supporting documents released Friday shed light on just what Nick Pollard, who prepared the report, meant by his scathing critique, said John Whittingdale, chairman of the House of Commons culture and media committee.

“It demonstrates the extent of unhappiness within the BBC structure, the frustration at the bureaucratic nature of the management, and the generally poor state of morale,” Mr. Whittingdale said in a television interview.

Referring to the fact that material in some of the newly released documents was blacked out, apparently because of concerns that it might give rise to lawsuits, Mr. Whittingdale added: “The fact that so much of the evidence can’t be published, because we are told the lawyers have advised it could be defamatory, in a sense tells its own story.”

Large portions of the testimony of Jeremy Paxman, a blunt-talking Newsnight host who is known for his testy and combative interview style, for instance, are blacked out in places where it appears he is about to make personal remarks about other people.

And in an annoyingly tantalizing instance, Peter Horrocks, director of global news, declares: “It is no secret that ...” What follows has been redacted, however, so that it is in fact a secret.

Lord McAlpine, a former Tory cabinet minister who, in another debacle at Newsnight, was unjustly accused of being a pedophile in a report that was broadcast, said that the BBC should not have left out any material. “The BBC is not the Secret Service, for Christ’s sake,” he told The Daily Telegraph.

But the BBC defended the redactions. Tim Davie, the acting director general, said that “97 percent plus of all the thousands of pages are out there.”

In an interview with an off-camera interlocutor that was broadcast on the BBC Web site, Mr. Davie continued: “We are not redacting or taking out material that is embarrassing or uncomfortable to the BBC. We have simply taken out stuff that external lawyers saw as a clear risk.”

He did not make himself available for interviews with other news organizations on Friday — indeed, no one from the BBC did. That strategy was roundly ridiculed by the broadcaster’s rivals.

On Twitter, Ben de Pear, editor of Channel 4 News, said that over his career he had successfully coaxed interviews out of Robert Mugabe of Zimbabwe and Mahmoud Ahmadinejad of Iran. “We are still trying for Tim Davie,” he said.

Much of the material focused on who said what to whom, and when, during Newsnight’s investigations into the allegations against Mr. Savile — and during the subsequent decision to cancel the broadcast. But there were also general interviews with many key figures in the corporation about what was wrong and how to fix it.

The testimony of Lord Patten, chairman of the BBC Trust, was particularly sharp, as he described the chaotic flow of information, the preponderance of high-ranking officials (the BBC had “more senior leaders than China,” he said) and the general mistrust within the corporation. “Is a lesson I should take from this that I can’t believe it when I’m told things by the next director general, that I have to query everything he says or the director of news says to me or whatever?” he asked rhetorically.

No, he said in response. “With the next director general I won’t — or his senior colleagues — I won’t begin every conversation on the assumption that he or she or they may not be telling me the whole truth,” he said. “I will want to be more convinced that there is a structure in place which ensures that the truth is being told.”

Lark Turner contributed reporting from London, and Matthew Purdy from New York.

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Goldman: PlayStation 4 could send Sony into a ‘downward spiral’

Count Goldman Sachs analyst Takashi Watanabe as being pessimistic on the PlayStation 4′s chances for success. Per Business Insider, Watanabe has penned a new research note that casts doubt not only on Sony’s (SNE) new console specifically, but on the gaming console business as a whole. Specifically, Watanabe thinks that smartphones and tablets are poised to erode consoles’ installed base because more people can get their gaming fix through cheap games such as Angry Birds and Cut the Rope rather than spending $ 60 to buy the latest version of Call of Duty. This lower installation base leads to negative reinforcement where developers are less likely to invest in developing top-notch games for the platform, which further erodes consumers’ willingness to shell out cash for the console.

[More from BGR: The insane pricing of the new HTC One]

“We see little reason for developers to produce top titles for platforms with a low installed base,” he writes. “In turn there is a danger the installed base will not grow because the content lineup is weak.”

[More from BGR: Google unveils $ 1,300 touch-enabled Chromebook Pixel [video]]

Just this week, mobile app data firm App Annie released a new report in conjunction with research firm IDC showing that mobile games for the first time ever generated more revenue than console games in the fourth quarter of 2012, so Watanabe certainly has some legitimate reasons to be concerned about the future upside of dedicated gaming consoles. Combine this with the fact that Nintendo (NTDOY) Wii U sales have absolutely tanked in the past few weeks, and it’s easy to see why there’s a lot of anxiety around the console industry at the moment.

This article was originally published on BGR.com

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Cirque Du Soleil Announces New Michael Jackson-Themed Show in Las Vegas

By Mark Gray

02/21/2013 at 09:15 PM EST

The logo

Courtesy Cirque du Soleil

The King of Pop will live in Vegas!

The long-rumored Cirque Du Soleil show based on the music of Michael Jackson was formally announced Thursday afternoon.

Premiering June 29 at Las Vegas's Mandalay Bay, the show, Michael Jackson ONE, will run 90 minutes and will feature more than 60 dancers and aerialists performing to Jackson's best known music.

Executives say the show will be different from the current Cirque Du Soleil show Immortal, which features Jackson's music.

Jackson friend and choreographer Jamie King said, "Everything [Jackson] does is with a childlike heart. For Michael, every day was fresh, every day was new, every day had to be bigger and better than the last one."

Tickets for the general public go on sale March 7.

Which Jackson song are you most excited to see performed in the show? Sound off in the comments below!

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APNewsBreak: Govs to hear Oregon health care plan

SALEM, Ore. (AP) — Oregon Gov. John Kitzhaber will brief other state leaders this weekend on his plan to lower Medicaid costs, touting an overhaul that President Barack Obama highlighted in his State of the Union address for its potential to lower the deficit even as health care expenses climb.

The Oregon Democrat leaves for Washington, D.C., on Friday to pitch his plan that changes the way doctors and hospitals are paid and improves health care coordination for low income residents so that treatable medical problems don't grow in severity or expense.

Kitzhaber says his goal is to win over a handful of other governors from each party.

"I think the politics have been dialed down a couple of notches, and now people are willing to sit down and talk about how we can solve the problem" of rising health care costs, Kitzhaber told The Associated Press in a recent interview.

Kitzhaber introduced the plan in 2011 in the face of a severe state budget deficit, and he's been talking for two years about expanding the initiative beyond his state. Now, it seems he's found people ready to listen.

Hospital executives from Alabama visited Oregon last month to learn about the effort. And the U.S. Department of Health and Human Services announced Thursday that it's giving Oregon a $45 million grant to help spread the changes beyond the Medicaid population and share information with other states, making it one of only six states to earn a State Innovation Model grant.

Kitzhaber will address his counterparts at a meeting of the National Governors Association. His talk isn't scheduled on the official agenda, but a spokeswoman confirmed that Kitzhaber is expected to present.

"The governors love what they call stealing from one another — taking the good ideas and the successes of their colleagues and trying to figure out how to apply that in their home state," said Matt Salo, director of the National Association of Medicaid Directors.

There's been "huge interest" among other states in Oregon's health overhaul, Salo said, not because the concepts are brand new, but because the state managed to avoid pitfalls that often block health system changes.

Kitzhaber persuaded state lawmakers to redesign the system of delivering and paying for health care under Medicaid, creating incentives for providers to coordinate patient care and prevent avoidable emergency room visits. He has long complained that the current financial incentives encourage volume over quality, driving costs up without making people healthier.

Obama, in his State of the Union address this month, suggested that changes such as Oregon's could be part of a long-term strategy to lower the federal debt by reigning in the growing cost of federally funded health care.

"We'll bring down costs by changing the way our government pays for Medicare, because our medical bills shouldn't be based on the number of tests ordered or days spent in the hospital — they should be based on the quality of care that our seniors receive," Obama said.

The Obama administration has invested in the program, putting up $1.9 billion to keep Oregon's Medicaid program afloat over the next five years while providers make the transition to new business models and incorporate new staff and technology.

In exchange, though, the state has agreed to lower per-capita health care cost inflation by 2 percentage points without affecting quality.

The Medicaid system is unique in each state, and Kitzhaber isn't suggesting that other states should adopt Oregon's specific approach, said Mike Bonetto, Kitzhaber's health care policy adviser. Rather, he wants governors to buy into the broad concept that the delivery system and payment models need to change.

That's not a new theory. But Oregon has shown that under the right circumstances massive changes to deeply entrenched business models can gain wide support.

What Oregon can't yet show is proof the idea is working — that it's lowering costs without squeezing on the quality or availability of care. The state is just finishing compiling baseline data that will be used as a basis of comparison.

One factor driving the Obama administration's interest in Oregon's success is the president's health care overhaul. Under the Affordable Care Act, millions more Americans will join the Medicaid rolls after Jan. 1, and the health care system will have to be able to absorb the influx of patients in a logistically and financially sustainable way.

The federal government will pay 100 percent of the costs for those additional patients in the first three years before scaling back to 90 percent in 2020 and beyond.

"There are a lot of governors who are facing the same challenges we're facing in Oregon," Kitzhaber said. "They recognize that the cost of health care is something they're going to have to get their arms around."

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Wall Street ends lower on growth worries

NEW YORK (Reuters) - U.S. stocks fell for a second straight day on Thursday and the S&P 500 posted its worst two-day loss since November after reports cast doubt over the health of the U.S. and euro-zone economies.

But a late-day rally helped stocks erase some of their losses with most of the pullback concentrated in the technology- heavy Nasdaq. The move suggested investors were still willing to buy on dips even after the sharp losses in the last session.

In Europe, business activity indexes dealt a blow to hopes that the euro zone might emerge from recession soon, showing the downturn across the region's businesses unexpectedly grew worse this month.

"The PMI numbers out of Europe were really a blow to the market," said Jack De Gan, chief investment officer at Harbor Advisory in Portsmouth, New Hampshire. "The market was expecting signs that recovery is still there, but the numbers just highlighted that the euro-zone problem is still persistent."

U.S. initial claims for unemployment benefits rose more than expected last week while the Federal Reserve Bank of Philadelphia said its index of business conditions in the U.S. mid-Atlantic region fell in February to the lowest in eight months.

Gains in Wal-Mart Stores Inc shares helped cushion the Dow. The shares gained 1.5 percent to $70.26 after the world's largest retailer reported earnings that beat expectations, though early February sales were sluggish.

The Dow Jones industrial average <.dji> fell 46.92 points, or 0.34 percent, to 13,880.62 at the close. The Standard & Poor's 500 Index <.spx> lost 9.53 points, or 0.63 percent, to 1,502.42. The Nasdaq Composite Index <.ixic> dropped 32.92 points, or 1.04 percent, to close at 3,131.49.

The two-day decline marked the U.S. stock market's first sustained pullback this year. The Standard & Poor's 500 has fallen 1.8 percent over the period and just managed to hold the 1,500 level on Thursday. Still, the index is up 5.3 percent so far this year.

The abrupt reversal in markets, which started on Wednesday after minutes from the Federal Reserve's January meeting suggested stimulus measures may end earlier than thought, looks set to halt a seven-week winning streak for stocks that had lifted the Dow and the S&P 500 close to all-time highs.

Wall Street will soon face another test with the upcoming debate in Washington over the automatic across-the-board spending cuts put in place as part of a larger congressional budget fight. Those cuts, set to kick in on March 1 unless lawmakers agree on an alternative, could depress the economy.

Semiconductor stocks ranked among the weakest of the day, pressuring the Nasdaq as the Philadelphia Semiconductor Index <.sox> fell 1.8 percent. Intel Corp fell 2.3 percent to $20.25 while Advanced Micro Devices lost 3.7 percent to $2.60 as the S&P 500's biggest percentage decliner.

The Dow also got a helping hand from personal computer maker Hewlett-Packard Co , which rose 2.3 percent to end the regular session at $17.10. The company was scheduled due to report first-quarter results after the closing bell.

Shares of Boeing Co rose 1.6 percent to $76.01 as a senior executive was set to meet with the head of the U.S. Federal Aviation Administration on Friday and present a series of measures to prevent battery failures that grounded its 787 Dreamliner fleet, according to a source familiar with the plans.

In other company news, shares of supermarket operator Safeway Inc jumped 14.1 percent to $22.97 after the company reported earnings that beat expectations.

Shares of VeriFone Systems Inc tumbled nearly 43 percent to $18.24 after the credit-card swipe machine maker forecast first- and second-quarter profits well below expectations.

Of the 427 companies in the S&P 500 that have reported results so far, 69.3 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data through Thursday morning.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

Berry Petroleum Co jumped 19.3 percent to $46.02 after oil and gas producer Linn Energy LLC said it would buy the company in an all-stock deal valued at $4.3 billion, including debt. Linn Energy shares advanced 2.8 percent to $37.68.

About two stocks fell for everyone that rose on the New York Stock Exchange and Nasdaq. About 7.64 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, well above the 20-day moving average of around 6.6 billion shares.

(Editing by Jan Paschal)

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Embezzlement Scandal Threatens Spain’s Royal Family

MADRID — The Web site of the Spanish royal family features pictures of the king, Juan Carlos I, in a blue sash, his bejeweled wife, Queen Sofía, and the couple’s three glamorous children. But most of the photographs of the dashing Duke of Palma, the king’s son-in-law, were scrubbed from the site last month.

The duke’s official biography was also banished from the site. And for more than a year, the royal family has barred the duke, a former Olympic handball player named Iñaki Urdangarin, from attending official family functions.

With a multitude of graft cases undermining Spaniards’ faith in just about every institution of government, an intensifying investigation aimed at Mr. Urdangarin has placed the palace under siege as well, and left the nation’s aging monarch and his aides struggling to quell the crisis.

Mr. Urdangarin, 45, who is married to the king’s youngest daughter, Cristina, 47, is scheduled to testify on Saturday before an investigating judge over allegations that he embezzled millions of euros after leveraging his blue-blood connections to gain inflated, no-bid contracts from regional politicians for his nonprofit sports foundation, Instituto Nóos.

The royal family has tried mightily to distance itself from the investigation. Officially, the palace has insisted that the king knew nothing about the foundation activities of Mr. Urdangarin, who has pledged to prove his innocence. It publicly maintains that Juan Carlos ordered his son-in-law to abandon the troubled foundation in 2006, a year before dubious financial dealings surfaced.

But last weekend, the duke’s former business partner, Diego Torres, who is also under investigation, told a judge that the duke made no move without palace approval, and he turned over nearly 200 e-mails to support his claim. Many of those e-mails have now surfaced in the Spanish news media. Others were provided to The New York Times by a person close to the legal process who did not want to be identified for fear of retribution.

The e-mails suggest that the palace was concerned about what was going on at the sports charity well before it has acknowledged, and began pressuring Mr. Urdangarin to leave it at a time when investigators now say he and his partner were involved in inflating contracts and moving money offshore. Despite the palace’s insistence that the king had little to do with his son-in-law, the e-mails show that the king was monitoring his affairs. They include boasts by Mr. Urdangarin about the king’s backing of sponsorships for events he was organizing.

The e-mails do not indicate any wrongdoing by the king. But they have brought the scandal to the palace doorstep, further tarnishing a monarchy that has come under scrutiny as Spaniards suffer through an economic downturn and as corruption cases — including envelopes of cash handed out to top politicians — stoke their resentment over the privileges and special connections that have insulated Spain’s elite from the same pain.

Meanwhile, the king and his courtiers have been working aggressively at damage control. Over the past 10 days, the king, his attendants and the Spanish intelligence service have been pressuring the suspected sources of leaks and approaching top newspaper executives to tone down coverage of the investigation, according to people with ties to the palace and some of Spain’s leading newspapers.

Top editors at leading newspapers like El País and ABC, a loyal supporter of the monarchy, have denied being pressured.

The e-mails obtained by The Times suggest that the worries over potential harm to the palace are not new. Some show the palace searching relentlessly for a way to steer Mr. Urdangarin away from the sports foundation, scouring for a new job for him through a blue-chip network of contacts in 2004, two years before it has publicly acknowledged.

As the hunt extended into 2005, the duke complained about mounting pressures to avoid conflicts of interest. “We have been suffering a permanent surge of press releases, not always precise concerning our professional and private lives,” he wrote in stilted English in an e-mail to an associate, Corinna Sayn-Wittgenstein.

Ms. Sayn-Wittgenstein, a German princess through a former marriage, has described her role as an unpaid adviser and friend of the king, dismissing reports in the Spanish news media that they had a romantic relationship.

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