DealBook: Einhorn Sues Apple Over Plan to Discard Preferred Stock

9:02 p.m. | Updated

Wall Street has had a long romance with Apple. Now one of the company’s best-known investors is saying: I love you, but you need to change.

The surprising declaration by the billionaire hedge fund manager David Einhorn adds to the growing dissatisfaction with Apple and its once soaring stock.

On Thursday, Mr. Einhorn urged his fellow shareholders to block a plan by Apple to scrap a certain class of stock. He says that the move limits the company’s ability to use its enormous war chest — some $137 billion in cash — to reward investors.

The campaign is an unusually aggressive one for Mr. Einhorn, who came to fame betting against Lehman Brothers. To thwart the proposal, Mr. Einhorn is suing Apple in Federal District Court in Manhattan, claiming that it violated securities rules by tying the plan with two other initiatives that he sees as good corporate governance.

The standoff sets up an unusual clash between two sides who can each claim a huge following on Wall Street. In one corner is Apple, whose stock’s almost unearthly growth has bewitched investors across the globe — at least until recently. In the other is Mr. Einhorn, widely regarded as an intelligent investor whose moves inspire legions of copycats. His merely asking a few questions on an earnings call for Herbalife, a nutritional supplement company, last May prompted a plunge in its shares.

So far, each side has remained cordial. Mr. Einhorn called Apple “phenomenal” and contended that his campaign had nothing to do with its recent stock decline. His firm, Greenlight Capital, currently holds 1.3 million shares, now worth nearly $609 million.

“We own more Apple today than we ever have before,” he said in a telephone interview. “We’re optimistic about the company’s prospects, and think too much bad news has been priced in.”

In a response, Apple said that it “welcomes” Mr. Einhorn’s views and added that its management and its board were actively discussing how to return more cash to shareholders.

But the spat underlines recent hand-wringing over Apple, whose stock has proved vulnerable in recent weeks. Over the decade that ended in late September, its share price soared an astounding 18,749 percent, to more than $700. Scores of hedge funds bought into the stock, riding its coat tails to bolster their own returns.

Since about Sept. 21, however, Apple’s stock price has tumbled almost 33 percent, closing on Thursday at $468.22. (Even so, its market capitalization stands at $439.7 billion, making Apple the most valuable public company in the world.)

As the shares have fallen, the volume of criticism has risen.

“Because the stock has sold off from its high, and because Apple’s earnings have declined for the first time in a decade, you’ll hear people become more vocal,” said Walter Piecyk Jr., an analyst at BTIG Research.

Since at least 2005, no shareholder has conducted a formal campaign against an Apple management proposal, according to the data provider FactSet.

Mr. Einhorn’s main concern is Apple’s cash hoard, which is bigger than Intel’s entire market value. Shareholders have long complained that the cash, invested in the likes of Treasury bonds, is increasingly a drag on the stock price and should either be invested in new opportunities for growth or returned to them.

Last spring, the company announced a plan to return $45 billion to shareholders over three years, in the form of share buybacks and a dividend for its common stock. But that will hardly make a dent in a cash pile that swelled by $117 million a day during its most recent quarter.

Mr. Einhorn on Thursday compared Apple to his grandmother, whose experience surviving the Great Depression molded her into an extreme saver who did not leave voice mail messages for fear of using extra cellphone minutes. The company’s own near-death experience in 1997, he said, left a similarly profound scar on its corporate psyche.

As an alternative, he has been proposing since last May what he calls a “win-win” for Apple and its investors. The company, he says, could issue $50 billion in preferred shares to existing shareholders, which would carry a roughly 4 percent annual dividend. Over time, Apple could issue more preferred stock and increase its overall payouts.

The idea, which Mr. Einhorn said had been discussed within his firm for some time, would reward shareholders while ensuring that Apple would spend that additional cash over time. He raised the idea with company executives, including Apple’s chief financial officer, Peter Oppenheimer, over several months, but was rebuffed.

Mr. Einhorn became more aggressive after seeing Apple’s proposal to eliminate so-called blank check preferred stock from its corporate charter. The move would prohibit it from issuing preferred stock without shareholder approval. To Mr. Einhorn, that would sharply limit options for “unlocking value.”

He was further irked by Apple’s tying the plan with two others that he said he would ordinarily support.

In its statement, Apple said that its proposal was actually aimed at making itself more responsive to investors. It added that the plan would not prevent the introduction of precisely the kind of initiative that Mr. Einhorn had discussed.

At least one major investor has sided with Apple. Calpers, the giant California public employee pension fund that is the company’s 43rd-biggest shareholder, said in a statement that the proposal “significantly strengthens share owner rights and deserves full support.”

For his part, Mr. Einhorn said he planned on trying to persuade other shareholders. And he has reconciled himself to Apple’s days of meteoric growth now lying in the past.

“It’s not going to grow 80 percent a year,” he said of the company, “but that doesn’t mean it’s going to go bankrupt.”

David Einhorn's Lawsuit Against Apple by

A version of this article appeared in print on 02/08/2013, on page B1 of the NewYork edition with the headline: Investor Sues Apple Over Plan For Stocks.

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India Ink: Calls Grow Louder for Politician Accused of Rape to Resign

KOCHI— Demands for a fresh investigation of an Indian politician accused of raping a teenager in 1996 gained momentum after the young woman’s mother urged the Congress Party’s leader to dismiss the lawmaker.

As a teenager, a woman from a small town called Suryanelli in Kerala was allegedly abducted and raped by 42 men over a period of 40 days in January and February of 1996. Among the suspects the girl identified was P.J. Kurien, then a member of Parliament and now the deputy chairman of the upper house of Parliament.

In an emotionally charged letter to Sonia Gandhi, the president of Congress Party, the woman’s mother called for Mr. Kurien, a Congress member, to be dismissed from his position in the Rajya Sabha.

“We believe that Mr. P.J. Kurien has exerted undue influence over the investigating officials in order to escape from the clutches of law, and he had succeeded in that,” she said in the letter, dated Thursday.

She also asked Mrs. Gandhi how Mr. Kurien could be allowed to preside over the legislative debate on criminal law amendments for tougher rape laws.

In a country outraged by the gang-rape of a 23-year-old physiotherapy student in Delhi and by the authorities’ failure to prevent and punish crimes against women, this latest rape case is being seen as yet another example of India’s slow justice system, where cases languish in courts for years. It has also focused attention on official corruption, which allows the wealthy and politically connected to influence police investigations.

For the last 17 years, the Kerala rape case has been winding its way through India’s judicial system. On Jan. 31, the Supreme Court ordered a retrial, overturning the acquittal of a majority of the 42 suspects in 2005 by the Kerala High Court, which said that the girl had not tried to escape.

The girl alleged that Mr. Kurien had raped her at a government guest house in the southern town of Kumily. But police failed to include him on the list of men she had accused, so she filed a private complaint before a magistrate in 1999, said Sureshbabu Thomas, a special prosecutor for the case against the rest of the men.

Mr. Kurien filed a petition to dismiss the case in the lower court, which rejected his request. He then filed his appeal with the Kerala High Court, which said there was insufficient evidence against Mr. Kurien. The state government of Kerala appealed to the Supreme Court, which sided with Mr. Kurien.

“All the others who were named by the victim had to appear in the court, but P.J. Kurien did not,” K.V. Bhadra Kumari, a women’s rights activist and a lawyer, said in a phone interview. “Let him also be tried and let the law take its course.”

The Kerala government has refused to investigate Mr. Kurien, saying that his case has been cleared by the Supreme Court, but that has only enraged those who want Mr. Kurien to stand trial.

Opposition leaders in Kerala, Mr. Kurien’s home state, disrupted state legislative assembly proceedings Friday, demanding that Mr. Kurien resign. Angry protests were also held in Kerala’s capital city of Thiruvananthapuram.

Mr. Kurien has refused to step down. “I have already offered myself for judicial scrutiny in 1990s. Why should I do so again?” Mr. Kurien told an Indian television channel NDTV. “Then the High Court and Supreme Court had exonerated me. A fresh investigation will be contempt of court.”

Kerala, one of the few states in India where women outnumber men, is considered one of India’s most progressive states because of its high literacy rates: 93.91 percent overall, and a female literacy rate of 91.98 percent. It also has a much higher rate of reported rapes than the national average and has one of the highest rates of reported crimes against women among India’s 26 states.

K. Ajitha, a former member of the Naxal movement who now serves as a director of Anweshi, a woman’s organization that fights gender-based violence, said that one of the crucial problems is that there is a well-connected criminal network in the state, which protects political leaders and influential people when they are accused of rape.

“The organized mafia traps young adolescent girls by spreading its tentacles to all fields — the political leadership, the police, the judiciary,” she said. “So a rape victim rarely receives justice.”

Two of Kerala’s most publicized cases of sexual assault, known in the media as the “Suryanelli” and the “Vithura” after the hometowns of the victims, have been pending for years.

The trial of the 45 men accused in the Vithura case, where a girl was allegedly gang raped in 1995, is still under way 18 years after the crime was first reported. The victim, now in her early 30s, has requested the courts to discontinue the trial, saying it was traumatic to relive the incidents over and over again. The Kerala High Court, however, has rejected the request.

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DealBook: Einhorn to Sue Apple Over Plan to Discard Preferred Stock

The hedge fund magnate David Einhorn has long been known as a fervent fan of Apple. But he is making an unusually public stand to oppose a move by the company: a lawsuit.

His hedge fund, Greenlight Capital, said on Thursday that it was suing Apple in an effort to block a move that would eliminate preferred shares. In a letter to fellow stockholders, Mr. Einhorn said the move to amend the company’s charter would unnecessarily limit the technology giant’s ability to create value for shareholders and called on them for support.

“This is an unprecedented action to curtail the company’s options,” he wrote in the letter. “We are not aware of any other company that has ever voluntarily taken this step.”

The stated goal of the legal action is technical, based on an accusation that Apple is violating securities rules by bundling several shareholder initiatives in one proposal. But underneath it lies deeper dissatisfaction with the company.

Activists have taken on increasingly bigger targets in recent years, including the likes of Hess and Procter & Gamble. But no one has dared to take on the onetime darling of the hedge fund community.

The opposition by Mr. Einhorn is the latest sign of investor ire with a company whose stock price in recent years had been almost unearthly in its gains. That growth attracted Greenlight, which now holds 1.3 million shares – a stake of more than $590 million – and a wide array of hedge funds that hitched their investment performance to Apple’s rising star.

Over the last several months, however, shares in Apple have tumbled, leaving many with a sour taste in their mouths. In a letter to Greenlight investors last month, Mr. Einhorn joked that some of his fund’s stumbles were because “our apple was bruised.”

On Thursday, however, he took a more adversarial tone.

Mr. Einhorn praised Apple as “a phenomenal company filled with talented people creating iconic products that consumers around the world love.” But he expressed deep dissatisfaction over how Apple was managing its finances, complaining that the company’s enormous $137 billion cash hoard was shortchanging shareholders.

It appears that the move by Apple to eliminate preferred shares in its charter is the final straw. Mr. Einhorn said he had called upon the company to issue existing shareholders a perpetual preferred stock that would pay out a dividend. In one suggested outcome, the company would initially distribute $50 billion carrying a 4 percent annual dividend, and then issue more over time.

Mr. Einhorn said he had raised the issue with Apple executives several times, only to be rejected.

As Apple’s share price has fallen – it is down more than 26 percent over the last six months – Mr. Einhorn has said shareholders are owed more.

“The recent, severe underperformance of Apple’s shares, which are down approximately 35 percent from their peak valuation, underscores the need for the company to apply the same level of creativity used to develop revolutionary technology for its consumers to unlock the value of its strong balance sheet for its shareholders,” he wrote in the letter.

On CNBC, Mr. Einhorn likened Apple, whose near-collapse in 1997 profoundly scarred the company, to his his grandmother, who survived the Great Depression. Both have adopted tendencies to amass far more cash than they need, instead of putting it to more productive investments.

Apple is like “someone who’s gone through traumas,” the hedge fund magnate said. “They sometimes feel they can never have cash.”

Mr. Einhorn also protested that Apple was tying the preferred stock proposal to two other initiatives he supported: allowing for simple majority voting for directors and establishing a par value for common stock.

Shares in Apple were up slightly in early-morning trading on Thursday, at $457.57. That remains well below its 52-week high of $705.07.

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Well: Think Like a Doctor: A Confused and Terrified Patient

The Challenge: Can you solve the mystery of a middle-aged man recovering from a serious illness who suddenly becomes frightened and confused?

Every month the Diagnosis column of The New York Times Magazine asks Well readers to sift through a difficult case and solve a diagnostic riddle. Below you will find a summary of a case involving a 55-year-old man well on his way to recovering from a series of illnesses when he suddenly becomes confused and paranoid. I will provide you with the main medical notes, labs and imaging results available to the doctor who made the diagnosis.

The first reader to figure out this case will get a signed copy of my book, “Every Patient Tells a Story,” along with the satisfaction of knowing you solved a case of Sherlockian complexity. Good luck.

The Presenting Problem:

A 55-year-old man who is recovering from a devastating injury in a rehabilitation facility suddenly becomes confused, frightened and paranoid.

The Patient’s Story:

The patient, who was recovering from a terrible injury and was too weak to walk, had been found on the floor of his room at the extended care facility, raving that there were people out to get him. He was taken to the emergency room at the Waterbury Hospital in Connecticut, where he was diagnosed with a urinary tract infection and admitted to the hospital for treatment. Doctors thought his delirium was caused by the infection, but after 24 hours, despite receiving the appropriate antibiotics, the patient remained disoriented and frightened.

A Sister’s Visit:

The man’s sister came to visit him on his second day in the hospital. As she walked into the room she was immediately struck by her brother’s distress.

“Get me out of here!” the man shouted from his hospital bed. “They are coming to get me. I gotta get out of here!”

His brown eyes darted from side to side as if searching for his would-be attackers. His arms and legs shook with fear. He looked terrified.

For the past few months, the man had been in and out of the hospital, but he had been getting better — at least he had been improving the last time his sister saw him, the week before. She hurried into the bustling hallway and found a nurse. “What the hell is going on with my brother?” she demanded.

A Long Series of Illnesses:

Three months earlier, the patient had been admitted to that same hospital with delirium tremens. After years of alcohol abuse, he had suddenly stopped drinking a couple of days before, and his body was wracked by the sudden loss of the chemical he had become addicted to. He’d spent an entire week in the hospital but finally recovered. He was sent home, but he didn’t stay there for long.

The following week, when his sister hadn’t heard from him for a couple of days, she forced her way into his home. There she found him, unconscious, in the basement, at the bottom of his staircase. He had fallen, and it looked as if he may have been there for two, possibly three, days. He was close to death. Indeed, in the ambulance on the way to the hospital, his heart had stopped. Rapid action by the E.M.T.’s brought his heart back to life, and he made it to the hospital.

There the extent of the damage became clear. The man’s kidneys had stopped working, and his body chemistry was completely out of whack. He had a severe concussion. And he’d had a heart attack.

He remained in the intensive care unit for nearly three weeks, and in the hospital another two weeks. Even after these weeks of care and recovery, the toll of his injury was terrible. His kidneys were not working, so he required dialysis three times a week. He had needed a machine to help him breathe for so long that he now had to get oxygen through a hole that had been cut into his throat. His arms and legs were so weak that he could not even lift them, and because he was unable even to swallow, he had to be fed through a tube that went directly into his stomach.

Finally, after five weeks in the hospital, he was well enough to be moved to a short-term rehabilitation hospital to complete the long road to recovery. But he was still far from healthy. The laughing, swaggering, Harley-riding man his sister had known until that terrible fall seemed a distant memory, though she saw that he was slowly getting better. He had even started to smile and make jokes. He was confident, he had told her, that with a lot of hard work he could get back to normal. So was she; she knew he was tough.

Back to the Hospital:

The patient had been at the rehab facility for just over two weeks when the staff noticed a sudden change in him. He had stopped smiling and was no longer making jokes. Instead, he talked about people that no one else could see. And he was worried that they wanted to harm him. When he remained confused for a second day, they sent him to the emergency room.

You can see the records from that E.R. visit here.

The man told the E.R. doctor that he knew he was having hallucinations. He thought they had started when he had begun taking a pill to help him sleep a couple of days earlier. It seemed a reasonable explanation, since the medication was known to cause delirium in some people. The hospital psychiatrist took him off that medication and sent him back to rehab that evening with a different sleeping pill.

Back to the Hospital, Again:

Two days later, the patient was back in the emergency room. He was still seeing things that weren’t there, but now he was quite confused as well. He knew his name but couldn’t remember what day or month it was, or even what year. And he had no idea where he was, or where he had just come from.

When the medical team saw the patient after he had been admitted, he was unable to provide any useful medical history. His medical records outlined his earlier hospitalizations, and records from the nursing home filled in additional details. The patient had a history of high blood pressure, depression and alcoholism. He was on a long list of medications. And he had been confused for the past several days.

On examination, he had no fever, although a couple of hours earlier his temperature had been 100.0 degrees. His heart was racing, and his blood pressure was sky high. His arms and legs were weak and swollen. His legs were shaking, and his reflexes were very brisk. Indeed, when his ankle was flexed suddenly, it continued to jerk back and forth on its own three or four times before stopping, a phenomenon known as clonus.

His labs were unchanged from the previous visit except for his urine, which showed signs of a serious infection. A CT scan of the brain was unremarkable, as was a chest X-ray. He was started on an intravenous antibiotic to treat the infection. The thinking was that perhaps the infection was causing the patient’s confusion.

You can see the notes from that second hospital visit here.

His sister had come to visit him the next day, when he was as confused as he had ever been. He was now trembling all over and looked scared to death, terrified. He was certain he was being pursued.

That is when she confronted the nurse, demanding to know what was going on with her brother. The nurse didn’t know. No one did. His urinary tract infection was being treated with antibiotics, but he continued to have a rapid heart rate and elevated blood pressure, along with terrifying hallucinations.

Solving the Mystery:

Can you figure out why this man was so confused and tremulous? I have provided you with all the data available to the doctor who made the diagnosis. The case is not easy — that is why it is here. I’ll post the answer on Friday.

---

Rules and Regulations: Post your questions and diagnosis in the comments section below.. The correct answer will appear Friday on Well. The winner will be contacted. Reader comments may also appear in a coming issue of The New York Times Magazine.

Read More..

Well: Think Like a Doctor: A Confused and Terrified Patient

The Challenge: Can you solve the mystery of a middle-aged man recovering from a serious illness who suddenly becomes frightened and confused?

Every month the Diagnosis column of The New York Times Magazine asks Well readers to sift through a difficult case and solve a diagnostic riddle. Below you will find a summary of a case involving a 55-year-old man well on his way to recovering from a series of illnesses when he suddenly becomes confused and paranoid. I will provide you with the main medical notes, labs and imaging results available to the doctor who made the diagnosis.

The first reader to figure out this case will get a signed copy of my book, “Every Patient Tells a Story,” along with the satisfaction of knowing you solved a case of Sherlockian complexity. Good luck.

The Presenting Problem:

A 55-year-old man who is recovering from a devastating injury in a rehabilitation facility suddenly becomes confused, frightened and paranoid.

The Patient’s Story:

The patient, who was recovering from a terrible injury and was too weak to walk, had been found on the floor of his room at the extended care facility, raving that there were people out to get him. He was taken to the emergency room at the Waterbury Hospital in Connecticut, where he was diagnosed with a urinary tract infection and admitted to the hospital for treatment. Doctors thought his delirium was caused by the infection, but after 24 hours, despite receiving the appropriate antibiotics, the patient remained disoriented and frightened.

A Sister’s Visit:

The man’s sister came to visit him on his second day in the hospital. As she walked into the room she was immediately struck by her brother’s distress.

“Get me out of here!” the man shouted from his hospital bed. “They are coming to get me. I gotta get out of here!”

His brown eyes darted from side to side as if searching for his would-be attackers. His arms and legs shook with fear. He looked terrified.

For the past few months, the man had been in and out of the hospital, but he had been getting better — at least he had been improving the last time his sister saw him, the week before. She hurried into the bustling hallway and found a nurse. “What the hell is going on with my brother?” she demanded.

A Long Series of Illnesses:

Three months earlier, the patient had been admitted to that same hospital with delirium tremens. After years of alcohol abuse, he had suddenly stopped drinking a couple of days before, and his body was wracked by the sudden loss of the chemical he had become addicted to. He’d spent an entire week in the hospital but finally recovered. He was sent home, but he didn’t stay there for long.

The following week, when his sister hadn’t heard from him for a couple of days, she forced her way into his home. There she found him, unconscious, in the basement, at the bottom of his staircase. He had fallen, and it looked as if he may have been there for two, possibly three, days. He was close to death. Indeed, in the ambulance on the way to the hospital, his heart had stopped. Rapid action by the E.M.T.’s brought his heart back to life, and he made it to the hospital.

There the extent of the damage became clear. The man’s kidneys had stopped working, and his body chemistry was completely out of whack. He had a severe concussion. And he’d had a heart attack.

He remained in the intensive care unit for nearly three weeks, and in the hospital another two weeks. Even after these weeks of care and recovery, the toll of his injury was terrible. His kidneys were not working, so he required dialysis three times a week. He had needed a machine to help him breathe for so long that he now had to get oxygen through a hole that had been cut into his throat. His arms and legs were so weak that he could not even lift them, and because he was unable even to swallow, he had to be fed through a tube that went directly into his stomach.

Finally, after five weeks in the hospital, he was well enough to be moved to a short-term rehabilitation hospital to complete the long road to recovery. But he was still far from healthy. The laughing, swaggering, Harley-riding man his sister had known until that terrible fall seemed a distant memory, though she saw that he was slowly getting better. He had even started to smile and make jokes. He was confident, he had told her, that with a lot of hard work he could get back to normal. So was she; she knew he was tough.

Back to the Hospital:

The patient had been at the rehab facility for just over two weeks when the staff noticed a sudden change in him. He had stopped smiling and was no longer making jokes. Instead, he talked about people that no one else could see. And he was worried that they wanted to harm him. When he remained confused for a second day, they sent him to the emergency room.

You can see the records from that E.R. visit here.

The man told the E.R. doctor that he knew he was having hallucinations. He thought they had started when he had begun taking a pill to help him sleep a couple of days earlier. It seemed a reasonable explanation, since the medication was known to cause delirium in some people. The hospital psychiatrist took him off that medication and sent him back to rehab that evening with a different sleeping pill.

Back to the Hospital, Again:

Two days later, the patient was back in the emergency room. He was still seeing things that weren’t there, but now he was quite confused as well. He knew his name but couldn’t remember what day or month it was, or even what year. And he had no idea where he was, or where he had just come from.

When the medical team saw the patient after he had been admitted, he was unable to provide any useful medical history. His medical records outlined his earlier hospitalizations, and records from the nursing home filled in additional details. The patient had a history of high blood pressure, depression and alcoholism. He was on a long list of medications. And he had been confused for the past several days.

On examination, he had no fever, although a couple of hours earlier his temperature had been 100.0 degrees. His heart was racing, and his blood pressure was sky high. His arms and legs were weak and swollen. His legs were shaking, and his reflexes were very brisk. Indeed, when his ankle was flexed suddenly, it continued to jerk back and forth on its own three or four times before stopping, a phenomenon known as clonus.

His labs were unchanged from the previous visit except for his urine, which showed signs of a serious infection. A CT scan of the brain was unremarkable, as was a chest X-ray. He was started on an intravenous antibiotic to treat the infection. The thinking was that perhaps the infection was causing the patient’s confusion.

You can see the notes from that second hospital visit here.

His sister had come to visit him the next day, when he was as confused as he had ever been. He was now trembling all over and looked scared to death, terrified. He was certain he was being pursued.

That is when she confronted the nurse, demanding to know what was going on with her brother. The nurse didn’t know. No one did. His urinary tract infection was being treated with antibiotics, but he continued to have a rapid heart rate and elevated blood pressure, along with terrifying hallucinations.

Solving the Mystery:

Can you figure out why this man was so confused and tremulous? I have provided you with all the data available to the doctor who made the diagnosis. The case is not easy — that is why it is here. I’ll post the answer on Friday.

---

Rules and Regulations: Post your questions and diagnosis in the comments section below.. The correct answer will appear Friday on Well. The winner will be contacted. Reader comments may also appear in a coming issue of The New York Times Magazine.

Read More..

I.H.T. Special: Social Media Firms Move to Capitalize on Popularity in Middle East

Suhaib Salem/Reuters

Egyptian protesters look at Facebook during a demonstration in Cairo on January 14.

DUBAI — For its most recent advertising push, the Saudi Arabian telecommunications giant Mobily did not turn to the street or television to engage with customers. Mobily paid to promote itself on Twitter.

The use of social media exploded during the Arab Spring as people turned to cyberspace to express themselves. On the back of that, social media networks, including Twitter, Facebook and LinkedIn, have moved into the region commercially, setting up offices to sell advertising products to companies like Mobily, which has over 200,000 Twitter followers, to capitalize on the growing audience.

“In Saudi, social media gets everyone talking to everyone, which is something we just don’t have in the streets here,” said Muna AbuSulayman, a Saudi development consultant and formerly a popular television talk show host, who has over 100,000 followers on Twitter.

“It’s a unique opportunity that lets people have conversations in a boundary-less way that wasn’t possible before,” Ms. AbuSulayman said. “In addition to promoting social and political discussion, it carries a powerful economic incentive for businesses, too.”

The rise of social media in the Arab world is changing the game for regional advertisers, pushing growth in digital advertising in a part of the world where traditional methods like television and print advertising have so far remained dominant.

Digital advertising in the Middle East and North Africa accounts for only about 4 percent of the region’s total advertising spending, at a value of $200 million, according to the most recent available estimate, but it has become the fastest-growing media platform in the region, said a study by the business services firm Deloitte Touche Tohmatsu, published in 2011. Deloitte’s Arab Media Outlook projected growth in digital advertising spending in the region of 35 percent a year over the next three years, generating about $580 million across the region by 2015.

“The fact is that consumers are online, so brands need to be online,” said Reda Raad, chief operating officer of TBWA\Raad, the Middle East arm of the global advertising agency TBWA. “The use of digital channels has continued to increase dramatically after the Arab Spring and advertising on social media has become a highly targeted, cost-efficient way of communicating with consumers.”

Major brands, including Pepsi Arabia, are taking note. Saudi Arabia has the highest number of Twitter users in the Arab world, holding 38 percent of the region’s two million users, according to a report by the Dubai School of Government’s Arab Social Media Report released in June. In the past year alone, the number of Twitter users in the Arab world tripled, according to Shailesh Rao, Twitter’s vice president for international operations.

Thanks to the platform’s popularity in Saudi Arabia, Egypt, Kuwait and the United Arab Emirates, Arabic is now the fastest-growing language on the Twitter platform.

“We prioritized a list of regions where we wanted to have a business presence, and the Mideast rises toward the top because the region’s user base is one of the fastest-growing in the world,” Mr. Rao said during an interview. “This represents a huge opportunity for brands looking for a large audience that is rapidly growing.”

Twitter has formed a partnership with the Egyptian digital advertising company Connect Ads to market and sell advertising services across the Middle East and North Africa region. Connect Ads will offer brand managers and marketers Twitter’s products, which include promoted tweets, promoted accounts and promoted trends.

Through these, a brand can reach broad Twitter audiences or more narrowly defined geographic or demographic segments. They can even target users of specific smartphone brands, like iPhones. Brands that have signed up so far include Mobily, Pepsi Arabia, the resort company Atlantis The Palm, and the events portal Dubai Calendar.

“Companies can learn a few things about their customers by optimizing for country and targeting those with specific interests,” said Mohamed El Mehairy, managing director of Connect Ads.

“They can probably uncover this type of information through market research,” he added, but it would come “at a higher expense and with more time and effort.”

This article has been revised to reflect the following correction:

Correction: February 7, 2013

A previous version of this article misspelled the name of the advertising agency TBWA. It is TBWA, not TWBA.

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Court Urged to Reverse a Ruling on Terror

The Obama administration on Wednesday urged a federal appeals court to overturn a sweeping ruling by a district judge that blocked the government from enforcing a statute related to the indefinite detention without trial of terrorism suspects.

Appearing before a three-judge panel of the Court of Appeals for the Second Circuit, in Manhattan, Robert M. Loeb, a Justice Department lawyer, said a lawsuit challenging the statute should be dismissed because those who brought it — including a former reporter for The New York Times, Christopher Hedges, who interacts with terrorist groups for his reporting, and several supporters of the antisecrecy group WikiLeaks — had no real-world risk of being detained.

“The plaintiffs’ claims all fail at the outset,” Mr. Loeb said, asserting that the plaintiffs had failed to show an “objectively reasonable fear of being placed in long-term detention.”

But lawyers for the plaintiffs, Carl J. Mayer and Bruce Afran, insisted that their clients had legal standing to challenge the statute — a provision of the National Defense Authorization Act of 2012 — because it interfered with their right to free speech by creating a basis to fear that they might be placed in military detention on the basis of their activities.

The provision authorizes the detention of people who are part of or “substantially supported” Al Qaeda or “associated forces.” When Congress enacted it, lawmakers said the statute merely reaffirmed, and did not expand, the existing detention powers granted a decade earlier in the authorization to use military force against the perpetrators of the Sept. 11, 2001, terrorist attacks.

But lawmakers did not specify whether Americans could be detained without trial and were vague about what kind of conduct was off limits. In September, Judge Katherine B. Forrest of Federal District Court ruled that Congress had expanded the government’s detention powers, saying the 2001 version did not cover mere supporters. A portion of her ruling suggested that the government could be held in contempt if it detained anyone under that theory.

The Obama administration appealed, arguing that her ruling was wrong and put a cloud over its existing detention authority for prisoners picked up in the Afghanistan war zone.

On Wednesday, Judge Raymond J. Lohier, an appellate court judge, pressed Mr. Loeb about whether there had been any authority before the 2011 statute that allowed the government to detain people based upon “substantial support” of a terrorist group.

“To my knowledge it has never been applied that way,” Mr. Loeb replied.

Another judge on the panel, Lewis Kaplan, questioned whether there could be any guarantee that the current policy limits on powers would always be in place.

“The executive branch has been known occasionally to change its mind, isn’t that true?” he asked.

David Rivkin, a lawyer representing three lawmakers, including Senator John McCain, Republican of Arizona, argued that the statute should be upheld because Congress, presidents of both parties and other judges had agreed that the government has, and should have, indefinite detention powers in the war against Al Qaeda.

“The political branches are speaking in unison,” Mr. Rivkin said.

Charlie Savage contributed reporting from Washington.

This article has been revised to reflect the following correction:

Correction: February 7, 2013

An earlier version of this article misstated the fiscal year of the National Defense Authorization Act whose indefinite detention provision is being challenged. It is 2012.

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Postal Service Plans to End Saturday Delivery

Jim Wilson/The New York Times

A postal worker delivered mail in San Francisco last year.

WASHINGTON — The Postal Service is expected to announce on Wednesday morning that it will stop delivering letters and other mail on Saturdays, but continue to handle packages, a move the financially struggling agency said would save about $2 billion annually as it looks for ways to cut cost.

The agency has long sought Congressional approval to end mail delivery on Saturdays. But Congress, which continues to work on legislation to reform the agency, has resisted. It is unclear how the agency will be able to end the six-day delivery of mail without Congressional approval.

News of the move was first reported by CBS News.

The announcement, which is expected at a Wednesday morning news conference, comes as the agency continues to lose money, mainly due to a 2006 law which requires it to pay about $5.5 billion a year into a future retiree health benefit fund. Last year, for the first time, the agency defaulted on two payments after it had reached its borrowing limit from the Treasury Department. The Postal Service also continues to see a decline in mail volume as more people shift to electronic forms of communication like e-mail and online bill paying services. Packaging is one of the few areas where the agency is seeing growth.

While many business and postal unions have generally opposed ending Saturday delivery, most Americans support the move.

A New York Times/CBS News poll last year found that about 7 in 10 Americans say they would favor the change as a way to help the post office deal with billions of dollars in debt. The Postal Service continues to suffer losses of $36 million a day and is headed for projected losses of about $21 billion a year by 2016. Last year, the Postal Service had a net loss of $15.6 billion.

The American Postal Workers Union, which represents about 220,000 workers and retirees, said the plan to end six-day delivery will add to the agency’s financial problems.

“The A.P.W.U. condemns the Postal Service’s decision to eliminate Saturday mail delivery, which will only deepen the agency’s congressionally manufactured financial crisis,” said Cliff Guffey, president of the union.

This article has been revised to reflect the following correction:

Correction: February 6, 2013

An earlier version of this article misstated the news organization that first reported the Postal Service’s plans to end Saturday service. It was CBS News, not The Associated Press.

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Ipswich Journal: Paul Mason Is One-Third the Man He Used to Be

Paul Nixon Photography

Paul Mason in 2012, two years after gastric bypass surgery stripped him of the unofficial title of “the world’s fattest man.”

IPSWICH, England — Who knows what the worst moment was for Paul Mason — there were so many awful milestones, as he grew fatter and fatter — but a good bet might be when he became too vast to leave his room. To get him to the hospital for a hernia operation, the local fire department had to knock down a wall and extricate him with a forklift.

That was nearly a decade ago, when Mr. Mason weighed about 980 pounds, and the spectacle made him the object of fascinated horror, a freak-show exhibit. The British news media, which likes a superlative, appointed him “the world’s fattest man.”

Now the narrative has shifted to one of redemption and second chances. Since a gastric bypass operation in 2010, Mr. Mason, 52 years old and 6-foot-4, has lost nearly two-thirds of his body weight, putting him at about 336 pounds — still obese, but within the realm of plausibility. He is talking about starting a jewelry business.

“My meals are a lot different now than they used to be,” Mr. Mason said during a recent interview in his one-story apartment in a cheerful public housing complex here. For one thing, he no longer eats around the clock. “Food is a necessity, but now I don’t let it control my life anymore,” he said.

But the road to a new life is uphill and paved with sharp objects. When he answered the door, Mr. Mason did not walk; he glided in an electric wheelchair.

And though Mr. Mason looks perfectly normal from the chest up, horrible vestiges of his past stick to him, literally, in the form of a huge mass of loose skin choking him like a straitjacket. Folds and folds of it encircle his torso and sit on his lap, like an unwanted package someone has set there; more folds encase his legs. All told, he reckons, the excess weighs more than 100 pounds.

As he waits to see if anyone will agree to perform the complex operation to remove the skin, Mr. Mason has plenty of time to ponder how he got to where he is. He was born in Ipswich and had a childhood marked by two things, he says: the verbal and physical abuse of his father, a military policeman turned security guard; and three years of sexual abuse, starting when he was 6, by a relative in her 20s who lived in the house and shared his bed. He told no one until decades later.

After he left school, Mr. Mason took a job as a postal worker and became engaged to a woman more than 20 years older than him. “I thought it would be for life, but she just turned around one day and said, ‘No, I don’t want to see you anymore — goodbye,’ ” he said.

His father died, and he returned home to care for his arthritic mother, who was in a wheelchair. “I still had all these things going around in my head from my childhood,” he said. “Food replaced the love I didn’t get from my parents.” When he left the Royal Mail in 1986, he said, he weighed 364 pounds.

Then things spun out of control. Mr. Mason tried to eat himself into oblivion. He spent every available penny of his and his mother’s social security checks on food. He stopped paying the mortgage. The bank repossessed their house, and the council found them a smaller place to live. All the while, he ate the way a locust eats — indiscriminately, voraciously, ingesting perhaps 20,000 calories a day. First he could no longer manage the stairs; then he could no longer get out of his room. He stayed in bed, on and off, for most of the last decade.

Social service workers did everything for him, including changing his incontinence pads. A network of local convenience stores and fast-food restaurants kept the food coming nonstop — burgers, french fries, fish and chips, even about $22 worth of chocolate bars a day.

“They didn’t deliver bags of crisps,” he said of potato chips. “They delivered cartons.”

His life became a cycle: eat, doze, eat, eat, eat. “You didn’t sleep a normal sleep,” he said. “You’d be awake most of the night eating and snacking. You totally forgot about everything else. You lose all your dignity, all your self-respect. It all goes, and all you focus on is getting your next fix.”

He added, “It was quite a lonely time, really.”

He got infections a lot and was transported to the hospital — first in a laundry van, then on the back of a truck and finally on the forklift. For 18 months after a hernia operation in 2003, he lived in the hospital and in an old people’s home — where he was not allowed to leave his room — while the local government found him a house that could accommodate all the special equipment he needed.

This article has been revised to reflect the following correction:

Correction: February 6, 2013

The headline on an earlier version of this article misstated Paul Mason’s current weight relative to what he weighed nearly a decade ago. He is now about one-third of the weight he was then, not two-thirds.

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State of the Art: Microsoft’s Surface Pro Works Like a Tablet and a PC

For decades, Microsoft has subsisted on the milk of its two cash cows: Windows and Office. The company’s occasional ventures into hardware generally haven’t ended well: (*cough*) Zune, Kin Phone, Spot Watch (*cough*).

But the new Surface Pro tablet, which goes on sale Saturday, seemed to have more going for it than any Microsoft hardware since the Xbox.

Everybody knows what a tablet is, right? It’s a black touch-screen slab, like an iPad or an Android tablet. It doesn’t run real Windows or Mac software — it runs much simpler apps. It’s not a real computer.

But with the Surface Pro ($900 for the 64-gigabyte model, $1,000 for a 128-gig machine), Microsoft asks: Why not?

The Surface Pro looks like a tablet. It can work like a tablet. You can hold it in one hand and draw on it with the other. It even comes with a plastic stylus that works beautifully.

But inside, the Pro is a full-blown Windows PC, with the same Intel chip that powers many high-end laptops, and even two fans to keep it cool (they’re silent). As a result, the Pro can run any of the four million Windows programs, like iTunes, Photoshop, Quicken and, of course, Word, Excel and PowerPoint.

The Surface Pro is beautiful. It’s clad in matte-black metal, beveled at the edges like a Stealth helicopter. Its connectors immediately suggest its post-iPad capabilities, like a memory-card slot for expanded storage. The screen is bright and beautiful, with 1080p high-definition resolution (1,080 by 1,820) — but when you connect the tablet to a TV or desktop monitor, it can send out an even bigger, sharper picture (2,550 by 1,440). There’s one USB 3.0 jack in the tablet, and a second ingeniously built into the power cord, so you can charge your phone as you work. Or you can connect anything you’d connect to a PC: external drives, flash drives, keyboard, mouse, speakers, cameras and so on.

Are you getting it? This is a PC, not an iPad.

As though to hammer home that point, Microsoft has endowed the Surface Pro with two unusual extras that complete the transformation from tablet to PC in about two seconds.

First, this tablet has a kickstand. It’s a thin metal flap that disappears completely when closed, but holds the tablet at a nice angle when you’re working or watching a movie.

Second, you can buy Microsoft’s now-famous keyboard cover. There are two models, actually. One is about as thick as a shirt cardboard. You can type on it — slowly — but you’re tapping drawings of keys, not actual keys. It’s called the Touch Cover ($100 with Surface purchase).

The other keyboard, the Type Cover ($130) is thicker — a quarter-inch — but its keys really travel, and it has a trackpad. You can really type on this thing.

Either keyboard attaches to the tablet with a powerful magnetic click. For tablet use, you can flip either keyboard around to the back; it disables itself so you don’t type gibberish by accident.

And if you really want to go whole hog with the insta-PC idea, you should also spring for the matching Touch Wedge mouse. It’s a tiny $40 cordless wedge, not much bigger than the AA battery that powers it, with supercrisp buttons and a touch surface on top for scrolling.

Now, when I wrote a first-look post on my blog last month , I was surprised by the reader reactions. Over and over, they posted the same argument:

“For that money, I could buy a very nice lightweight laptop with a dedicated keyboard and much more storage. Why should I buy Surface Pro when I can have more for less?”

Why? Because the Surface Pro does things most laptops can’t do. Like it weighs two pounds, with touch screen. Or work in portrait orientation, like a clipboard. Or remain comfortable in one hand as you make medical rounds, take inventory or sketch a portrait. Or stay in a bag as it goes through airport security (the TSA says tablets are O.K. to stay in).

You also hear: “But haven’t there been full-blown PC tablets before?”

Yes, there are a couple. But without the kickstand and keyboard cover, they can’t change instantly into a desktop computer.

So it’s true: for this much money, you could buy a very nice laptop. You could also buy a five-day cruise, a Gucci handbag or 250 gallons of milk. They just happen to be different beasts.

All right then: the Surface Pro is fast, flexible and astonishingly compact for what it does; that much is unassailable. But in practice, there are some disappointments and confusions.

E-mail: pogue@nytimes.com

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