How Einhorn turned from Apple advocate to agitator

(Reuters) - Hedge fund star manager David Einhorn was arguably Apple Inc's biggest cheerleader on Wall Street with a stake worth about $600 million and an oft-cited prediction that the company's market value would hit $1 trillion some day.

So it was a shock on Thursday when Einhorn announced that he was suing Apple to get it to deploy its $137.1 billion cash pile more effectively and arrest a 35 percent drop in its share price from a record high logged last September.

Unknown to Wall Street, Einhorn had for months been imploring Apple's chief financial officer, Peter Oppenheimer, to have the company issue dividend-paying preferred shares to reward investors and juice the stock price.

Einhorn told Reuters he felt blindsided when he received Apple's January 7 annual proxy statement and saw that it contained a proposal that would make it more difficult for the company to issue preferred stock.

"We saw that the proxy came out and we saw they were planning to get rid of preferred and then we said, 'Wait a minute, we are not going to be able to bring this up again in a good way if we allow them to do this. So we should contest it now,'" Einhorn said in a phone interview.

Einhorn's $8 billion Greenlight Capital Inc on Thursday sued Apple in U.S. District Court in New York, asserting that its Proxy Proposal 2 would "restrict the board's ability to unlock the value on Apple's balance sheet.

The 44-year-old hedge fund manager, who made his name and fortune by predicting the collapse of Lehman Brothers, is also urging Apple shareholders to vote against the proxy proposal at the company's annual meeting on February 27.

Apple said in a statement that it will evaluate Greenlight's recommendation and denied that its proxy proposal was aimed at preventing the issuance of preferred stock. If Proxy Proposal 2 is adopted, Apple said it could still issue preferred stock as long as it obtained approval from shareholders.

But the extra hurdle, from Einhorn's point of view, was unacceptable and so he took the matter to Apple CEO Tim Cook.

The way Einhorn tells it, Cook was more receptive than his CFO and the two sides are still talking. But Einhorn decided to file suit anyway because of the approaching annual meeting.

"The lawsuit is just to get the proxy sorted out," he said.

LONG ON APPLE

Einhorn began investing in Apple in 2010 and holds 1.3 million shares worth about $600 million at current values.

He emerged as a prominent advocate for the stock after it began to fall last year following some disappointing quarterly results, stiffer competition in the smartphone market, and product snafus that fueled fears Apple had lost its innovative edge following the death of co-founder Steve Jobs.

Einhorn said in a letter to investors last month that Greenlight had taken advantage of the drop in Apple's shares to buy more stock in the fourth quarter. That was one reason the fund posted a negative return of 4.9 percent in the quarter.

Since May last year, Einhorn has been urging the company to unlock several hundred billion dollars of shareholder value by distributing preferred stock, which he favored over a share buyback because it did not deplete cash immediately.

In private conversations with Oppenheimer, Einhorn said Apple could initially distribute $50 billion of perpetual preferred stock with a 4 percent annual cash dividend paid quarterly at preferential tax rates.

But, according to Einhorn, Oppenheimer and his advisers calculated the dividend to be 8 percent, which they deemed too high.

"We said, that's crazy. That's crazy. We think 4 percent. If we're wrong, maybe it's 4.5 percent or 4-1/4 percent - it is not 8 percent. So, we kind of agreed to disagree. We kind of sat on it for a few months," Einhorn said.

When he eventually took the matter to Cook, Einhorn said he felt that the CEO did not know all the details of Einhorn's discussions with Oppenheimer.

"When I discussed this with Tim Cook, and actually, the conversation has been going on for the last couple of weeks, he said that he wasn't familiar with my previous conversations with Peter Oppenheimer and whoever Peter Oppenheimer's advisers were. I was surprised by that.

"I think we got the brush-off the first time," Einhorn said about Oppenheimer and his advisers. "I don't know what the communication was" between Oppenheimer and Cook.

Apple declined to comment on the specifics of the discussions with Einhorn.

A source familiar with the matter characterized the interaction with the hedge fund manager as "cordial," saying that there had been "friendly disagreement" only on whether common shareholders should be allowed to vote on something as significant as an issuance of preferred stock.

NEAR-DEATH EXPERIENCE

Einhorn said in a television interview that despite their differences, he felt Cook was doing an excellent job as CEO, but he described Apple's management as having a "Depression-era" mentality that led it to hoard cash and invest only in the safest, lowest-yielding securities.

"In other words, people who have gone through traumas...and Apple has gone through a couple of traumas in its history, they sometimes feel like they can never have enough cash," Einhorn said on CNBC.

Cook and Oppenheimer both joined Apple during the turbulent late 1990s when the tech company was struggling to stay afloat and before Steve Jobs engineered a sensational turnaround with products like the iPhone and iPad that became must-haves for consumers around the world.

Oppenheimer later earned a reputation on Wall Street for extreme conservatism in cash management. The company likes to remain liquid by investing in safe but low-yielding U.S. Treasury and agency debt, shies away from big acquisitions, and repeatedly preaches a "capital preservation" mantra to investors.

Under Cook in 2011, Apple gradually loosened the reins, announcing its first multi-year dividend and share repurchase programs.

Einhorn and Apple will have another bout when they air their arguments on February 22 in court. Before then, the outspoken fund manager will be lobbying other shareholders.

Analysts say one benefit of preferred stock is that up to 80 percent of the dividends can be tax-free for corporate investors, although preferred shares tend to be less liquid than ordinary shares or bonds.

"The idea is powerful and when I have a chance to explain it to the shareholders, most will see it as an enormous win-win," Einhorn said.

(Reporting by Jennifer Ablan; Additional reporting by Edwin Chan and Poornima Gupta; Editing by Tiffany Wu and Matt Driskill)

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Illini buzzer-beater upsets No. 1 Hoosiers, 74-72

CHAMPAIGN, Ill. (AP) — Tyler Griffey made an uncontested layup at the buzzer off a baseline inbounds pass and Illinois beat No. 1 Indiana 74-72 on Thursday night, the fifth straight week the nation's top-ranked team has lost.

The Illini (16-8, 3-7 Big Ten) trailed 41-29 at halftime and by double digits for most of the second half before closing the game on a 13-2 run over the final 3:36.

With the score tied, Indiana's Victor Oladipo turned the ball over and recovered to block a breakaway layup by D.J. Richardson out of bounds with less than a second to play.

Griffey, who was open after setting a screen, took the inbounds pass from Brandon Paul with .9 seconds left and gently laid the ball into the basket.

Hundreds of Illinois students rushed the court, but held their collective breath while the officials checked replays to make sure Griffey had beaten the clock. They erupted once more when the officials signaled the shot was good, and Paul and Richardson hugged and cried.

The upset ended a three-game losing streak for Illinois.

The Hoosiers (20-3, 8-2) took over the top spot in The Associated Press' Top 25 on Monday.

Richardson had 23 points for Illinois, Paul had 21 and Griffey finished with 14 points and eight rebounds.

This was Illinois' third win over a No. 1 team and first since beating Wake Forest in 2004.

Cody Zeller led Indiana with 14 points, while Will Sheehey had 13, Christian Watford 12 and Jordan Hulls 11.

Indiana shot 50 percent from the field (25 of 50), 52.9 percent from 3-point range (9 of 17) and 93 percent from the free throw line (13 of 14). The Hoosiers led by an 8- to 10-point margin for most of the second half.

When 6-foot-11 Nnanna Egwu fouled out with just under 5 minutes to play, the Hoosiers looked in control. Egwu is the only Illini player with the size to realistically match up with the 7-0 Zeller.

Watford made two free throws after Egwu's fifth foul and, at 69-59, the Illini looked done.

But with the clock under 3 minutes, Richardson went on a run of his own, first burying consecutive 3-pointers and then hitting a midrange jumper on the run to tie the game at 70 with 1:17 to play.

Oladipo's layup put the Hoosiers back on top with 50 seconds left, but Paul answered with two free throws, the first banked in, to tie the score again at 72.

With the clock under 30 seconds, Indiana had the ball for what would have been a last shot but Oladipo committed the turnover.

Griffey was benched several weeks ago as Illinois' slump dragged on. On a team that had lost its shooting touch, the senior forward had grown especially cold. And, though one of Illinois' bigger players at 6-9, he wasn't adding much to the inside presence the Illini desperately needed.

Sheehey slammed a two-handed dunk home over Griffey, screaming as he stood just a few inches from the face of the Illinois forward.

The taunt drew a technical — and an eye roll from Hoosiers coach Tom Crean — but with just over a minute left in the half it made the score 39-25, effectively muzzled a near-capacity crowd and drove home the point that the game had tilted Indiana's way as they led 41-29 at halftime.

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Southern diet, fried foods, may raise stroke risk

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Ex-LA cop, murder suspect sent CNN anchor parcel

LOS ANGELES (AP) — Law enforcement officials are inspecting a package CNN's Anderson Cooper received from a former Los Angeles police officer who allegedly killed three in a shooting spree.

CNN spokeswoman Shimrit Sheetrit said Thursday that a parcel containing a note, a DVD and a bullet hole-riddled memento were sent by Christopher Dorner and addressed to Cooper's office.

LAPD Cmdr. Andrew Smith says LAPD robbery-homicide detectives will inspect the package for clues.

The package arrived Feb. 1, days before the first two killings Dorner is accused of.

It contained a note on it that read, in part, "I never lied."

Dorner was fired from the LAPD in 2008 for making false statements.

A coin typically given out as a souvenir by the police chief was also in the package, and riddled with bullet holes.

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Justice weighs action against Moody's

(Reuters) - The Justice Department and multiple states are discussing also suing Moody's Corp for defrauding investors, according to people familiar with the matter, but any such move will likely wait until a similar lawsuit against rival Standard and Poor's is tested in the courts.

Inquiries into Moody's are in the early stages, largely because state and federal authorities have dedicated more resources to the S&P lawsuit, said the sources, who were not authorized to speak publicly about enforcement discussions.

Moody's spokesman Michael Adler and Justice Department spokeswoman Adora Andy declined to comment for this story.

Moody's in the past has defended itself against similar allegations, including a 2011 congressional report that concluded the major ratings agencies manipulated ratings to drive business.

The firm previously said Moody's takes the quality of its ratings and the integrity of the ratings process very seriously. It also said the firm has protections in place to separate the commercial and analytical aspects of its business.

The U.S. Justice Department filed a $5 billion lawsuit against S&P late on Monday and accused it of an egregious scheme to defraud investors in the run-up to the financial crisis, fueled by a desire to gain more business.

Shares of McGraw Hill Cos Inc , which owns S&P, have fallen more than 25 percent since news of the lawsuits. Moody's shares have fallen about 15 percent, even though it was not named in any of this week's actions.

"Don't think Moody's is off the hook," said one law enforcement official.

Another rival, Fimalac SA's Fitch Ratings, is unlikely to face similar action, the sources said, since it is a much smaller player in the U.S. ratings industry. The firm also escaped the brunt of scrutiny from congressional investigators.

In a sign of just how high-stakes the battle is, S&P hired prominent defense attorney John Keker, who has represented everyone from cyclist Lance Armstrong to Enron's Andrew Fastow.

S&P said in a statement on Tuesday that the lawsuit is meritless and said it will vigorously defend itself.

A similar coordinated federal-state action against Moody's would follow lawsuits two states have already filed against the ratings firm. Connecticut, which led the states in this week's actions, sued Moody's and S&P in March 2010.

In January a state court in Hartford denied the last of the preliminary motions Moody's had filed to have the case thrown out. That case and the one against S&P are proceeding to trial in the second half of 2014.

Democratic Senator Richard Blumenthal of Connecticut, who as then-attorney general brought the cases against S&P and Moody's in 2010, said he found rampant abuse across the credit rating industry.

"The difference is one of degree and scale rather than essential modus operandi," Blumenthal said in an interview. "S&P is the largest and they did the most sizeable amount of ratings with the largest profits."

CASE THEORY

Those earlier cases and the more recent ones against S&P are based on a theory that the firms misled investors by stating that their ratings on mortgage products were objective and not influenced by conflicts of interest.

Instead, the lawsuits contend, the firms inflated ratings and understated risks as the housing bubble started to burst, driven by a desire to gain more business from the investment banks that issued mortgage securities.

Framing the cases in that manner steers clear of attacking individual ratings, which have largely been shielded under free speech protections. Instead, the focus is on proving false just one statement S&P made - that its ratings were objective.

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Postal unions angry, customers unfazed about Saturday cut

Chicago Tribune reporter Rob Manker gathers some reactions to the recent news that the U.S. Postal Service plans to drop Saturday delivery of first-class mail by August. (Posted on: Feb. 6, 2013.)

The U.S. Postal Service's plan to end Saturday first-class delivery in August angered unions that stand to lose jobs and faces an uncertain fate in Congress.

But the decision, which the Postal Service says will save $2 billion a year, barely fazed a number of people interviewed at Chicago-area post offices.

"No one really sends letters anymore," said David Braunschweig, 63, who was at the Arlington Heights post office to mail a gift. "Putting away mail (both Saturday and Sunday), it won't kill anyone."

Hammered by competition that includes the Internet, the Postal Service lost nearly $16 billion last year and said doing away with first-class mail on Saturdays is essential to its recovery plan.

"It's an important part of our return to profitability and financial stability," Postmaster General and CEO Patrick Donahoe said at a news conference Wednesday in Washington. "Our financial condition is urgent."

The agency will continue delivering packages and filling post office boxes six days a week, and all offices that already were operating on Saturdays will continue to do so. Package volume is one bright spot for the Postal Service. It's up 14 percent since 2010, which officials attribute to the growth of online commerce.

The end of Saturday delivery would be the biggest change to mail service since the end of twice-daily delivery in the 1950s. Overall mail volume dropped by more than 25 percent from 2006 to 2011, which could explain the shrugs from several Chicago-area postal customers.

"I was accustomed to getting mail on Saturdays, but we will get accustomed to not getting it as well," Rich Klimczak, 74, said outside the Tinley Park post office. "The only thing I would not like to see is (postal workers) losing their jobs."

The move, which would take effect Aug. 5, aims to reduce the postal workforce by at least 20,000 more employees through reassignment and attrition. It would also significantly reduce overtime payments.

Local union officials estimated that 10,000 postal workers will have their workweek reduced because of the move. On Wednesday afternoon, the Chicago branch of the National Association of Letter Carriers called for Donahoe's resignation.

"USPS executives cannot save the Postal Service by tearing it apart," Cliff Guffey, president of the American Postal Workers Union, said in a statement. "These across-the-board cutbacks will weaken the nation's mail system and put it on a path to privatization."

The National Rural Letter Carriers' Association, which has about 1,500 members in the Chicago suburbs, said the elimination of Saturday service puts the Postal Service in a "death spiral."

Although the Postal Service no longer receives taxpayer money, it remains subject to oversight by Congress, which since 1983 has repeatedly passed measures requiring six-day delivery. Donahoe's announcement appeared to be an effort to force action in Congress after comprehensive postal reform legislation stalled last year.

While many members of Congress insist they would have to approve the cutback, Donahoe told reporters that the agency believes it can move forward unilaterally. The current mandate for six-day delivery is part of a government funding measure that expires in late March.

"There's plenty of time in there so if there is some disagreement" with lawmakers, "we can get that resolved," he said.

The divide among lawmakers on the issue does not break cleanly along party lines. Lawmakers who represent rural areas, who tend to be Republicans, generally have opposed service cutbacks. So have those with strong backing from postal labor unions, mostly Democrats.

Last year, the Senate approved a bill that would have allowed the Postal Service to end Saturday delivery after a two-year period to evaluate the potential effects. Similar legislation in the House never came up for a vote.

The Obama administration had included a proposal for five-day mail delivery in its 2013 budget plan. White House officials, however, had said they supported that change only in concert with other reforms. White House spokesman Jay Carney said Wednesday that officials had not yet studied the latest plan.

Sen. Tom Carper, D-Del., the new chairman of the Senate Homeland Security and Governmental Affairs Committee, expressed concern that the Postal Service's unilateral announcement could complicate his plans for overall reform.

However, he added, "It's hard to condemn the postmaster general for moving aggressively to do what he believes he can and must do to keep the lights on."

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Exclusive: Microsoft and Symantec disrupt cyber crime ring

BOSTON (Reuters) - Software makers Microsoft Corp and Symantec Corp said they disrupted a global cyber crime operation by shutting down servers that controlled hundreds of thousands of PCs without the knowledge of their users.

The move made it temporarily impossible for infected PCs around the world to search the web, though the companies offered free tools to clean machines through messages that were automatically pushed out to infected computers.

Technicians working on behalf of both companies raided data centers in Weehawken, New Jersey, and Manassas, Virginia, on Wednesday, accompanied by U.S. federal marshals, under an order issued by the U.S. District Court in Alexandria, Virginia.

They seized control of one server at the New Jersey facility and persuaded the operators of the Virginia data center to take down a server at their parent company in the Netherlands, according to Richard Boscovich, assistant general counsel with Microsoft's Digital Crimes Unit.

Boscovich told Reuters that he had "a high degree of confidence" that the operation had succeeded in bringing down the cyber crime operation, known as the Bamital botnet.

"We think we got everything, but time will tell," he said.

The servers that were pulled off line on Wednesday had been used to communicate with what Microsoft and Symantec estimate are between 300,000 and 1 million PCs currently infected with malicious software that enslaved them into the botnet.

HIJACKING SEARCHES

The companies said that the Bamital operation hijacked search results and engaged in other schemes that the companies said fraudulently charge businesses for online advertisement clicks.

Bamital's organizers also had the ability to take control of infected PCs, installing other types of computer viruses that could engage in identity theft, recruit PCs into networks that attack websites and conduct other types of computer crimes.

Now that the servers have been shut down, users of infected PCs will be directed to a site informing them that their machines are infected with malicious software when they attempt to search the web.

Microsoft and Symantec are offering them free tools to fix their PCs and restore access to web searches via messages automatically pushed out to victims.

The messages warn: "You have reached this website because your computer is very likely to be infected by malware that redirects the results of your search queries. You will receive this notification until you remove the malware from your computer."

It was the sixth time that Microsoft has obtained a court order to disrupt a botnet since 2010. Previous operations have targeted bigger botnets, but this is the first where infected users have received warnings and free tools to clean up their machines.

Microsoft runs a Digital Crimes Unit out of its Redmond, Washington, headquarters that is staffed by 11 attorneys, investigators and other staff who work to help law enforcement fight financial crimes and exploitation of children over the web.

Symantec approached Microsoft about a year ago, asking the maker of Windows software to collaborate in trying to take down the Bamital operation. Last week they sought a court order to seize the Bamital servers.

The two companies said they conservatively estimate that the Bamital botnet generated at least $1 million a year in profits for the organizers of the operation. They said they will learn more about the size of the operation after they analyze information from infected machines that check in to the domains once controlled by Bamital's servers.

Their complaint identified 18 "John Doe" ringleaders, scattered from Russia and Romania to Britain, the United States and Australia, who registered websites and rented servers used in the operation under fictitious names. The complaint was filed last week with a federal court in Alexandria and unsealed on Wednesday.

The complaint alleges that the ringleaders made money through a scheme known as "click fraud" in which criminals get cash from advertisers who pay websites commissions when their users click on ads.

Bamital redirected search results from Google, Yahoo and Microsoft's Bing search engines to sites with which the authors of the botnet have financial relationships, according to the complaint.

The complaint also charges that Bamital's operators profited by forcing infected computers to generate large quantities of automated ad clicks without the knowledge of PC users.

Symantec researcher Vikram Thakur said Bamital is just one of several major botnets in a complex underground "click fraud ecosystem" that he believes generates at least tens of millions of dollars in revenue.

He said that researchers at will comb the data on the servers in order to better understand how the click fraud ecosystem works and potentially identify providers of fraudulent ads and traffic brokers.

"This is just the tip of the iceberg in the world of click fraud," said Thakur.

Boscovich said he believes the botnet originated in Russia or Ukraine because affiliated sites install a small text file known as a cookie that is written in Russian on infected computers.

The cookie file contains the Russian phrase "yatutuzebil," according to the court filing. That can loosely be translated as "I was here," he said.

Microsoft provided details on the takedown operation on its blog: http://blogs.technet.com/b/microsoft_blog/archive/2013/02/06/microsoft-and-symantec-take-down-bamital-botnet-that-hijacks-online-searches.aspx

(Reporting By Jim Finkle; Editing by Claudia Parsons and Leslie Gevirtz)

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Signing Day: Ole Miss muscles in on power programs

Alabama. Ohio State. Michigan. Florida. Notre Dame. Mississippi?

Ole Miss muscled in on the powerhouses that usually dominate national signing day, landing some of the most sought-after prospects in the country on college football's annual first-Wednesday-in-February frenzy.

The Rebels, coming off a promising 7-6 season in their first season under coach Hugh Freeze, had the experts swooning by signing three of the bluest chips still on the board and building a well-rounded class otherwise.

"I do think (this class) has the possibility of being a program changer," Freeze said. "But it's all on paper right now.

The day started with defensive end Robert Nkemdiche from Loganville, Ga., rated the No. 1 recruit in the country by just about everyone who ranks them, deciding to join his brother, Denzel, in Oxford, Miss.

"I feel like it's the right place for me," Nkemdiche said after slipping on a red Ole Miss cap. "I feel like they can do special things and they're on the rise. I feel like going to play with my brother, we can do something special."

Nkemdiche originally committed to Clemson last year, then backed off that and narrowed his picks down to LSU, Florida and Mississippi — and the Rebels beat the big boys.

They weren't done. Coaches in the Ole Miss war room were exchanging hugs and high-fives again a couple hours later when Laremy Tunsil, a top-rated offensive tackle from Lake City, Fla., picked the Rebels over Florida State and Georgia.

"Tunsil to Ole Miss I think was the biggest surprise of the whole (recruiting season)," said JC Shurburtt, national recruiting director for 247Sports.com.

And, as if the Ole Miss needed more good news, highly touted defensive back Antonio Conner from nearby Batesville, Miss., chose the Rebels over national champion Alabama.

Ole Miss also landed Laquon Treadwell from Crete, Ill., one of the best receiver prospects in the country. He made a verbal commitment to the Rebels back in December, and sealed the deal Wednesday, the first day high school players can sign binding letters of intent.

The end result was a class good enough to even catch the attention of LeBron James.

"Ole Miss ain't messing around today! Big time recruits coming in. SEC is crazy," the NBA MVP posted on his Twitter account.

Crazy good. While the Rebels racked up, it's important to remember they still have plenty of ground to gain on the rest of their conference.

Nick Saban reloaded the Crimson Tide with a class that Rivals.com ranked No. 1 in the country.

SEC powers Florida, LSU and Georgia pulled in typically impressive classes. SEC newcomer Texas A&M cracked the top 10 of several rankings. Even Vanderbilt, coming off a nine-win season, broke into the top 25.

It's the cycle of life in the SEC, which has won seven straight BCS championships. Stock up on signing day and scoop up those crystal footballs at season's end.

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SLIPPING AWAY FROM USC

Signing day didn't do much to soothe the scars left from a difficult season for Southern California.

NCAA sanctions limited the number of scholarships coach Lane Kiffin and the Trojans could hand out this year, and then as signing day approached USC had several players who had given verbal commitments change their minds.

The most notable defection on signing day was five-star defensive back Jalen Ramsey of Brentwood, Tenn., who flipped to Florida State. Defensive end Jason Hatcher from Louisville, Ky., bailed on USC and signed with Kentucky, and defensive end Torrodney Prevot from Houston not only reneged on his USC commitment, but he landed at Pac-12-rival Oregon.

"People expected (Prevot) to flip from USC, but they thought it would be to Texas A&M," Shurburtt said.

USC's class won't be lacking blue chippers. Quarterback Max Browne from Washington is considered the next in a long line of topflight Trojans quarterbacks, and Kenny Bigelow from Maryland is rated among the best defensive linemen in the nation.

Kiffin will be banking on quality to make up for the lack of quantity, but that's a precarious way to play a game as uncertain as recruiting.

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IF MOMMA'S NOT HAPPY ...

Alex Collins, a top running back prospect out of Plantation, Fla., announced on Monday night that he was going to Arkansas instead of Miami.

It was considered a huge victory for new Razorbacks coach Bret Bielema.

But on Wednesday morning, when it was time to make it official, Collins' letter of intent didn't come spinning through the fax machine in Fayetteville, Ark.

There were some odd reports about Collins' mother not being happy with her son's decision to go so far from home.

College coaches aren't allowed to talk about specific players before they sign, but Bielema did acknowledge during his signing day news conference that Arkansas' class of 22 players could "grow by one."

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THE BIG TWO

Ohio State and Michigan received two thumbs up from experts on their signing day classes. They all had the Buckeyes and Wolverines around top five in the country.

After that, there was a drop off. Nebraska received solid grades and Penn State, despite NCAA sanctions that limited its class to 17 signees, held up pretty well.

"That's a tribute to the job (Penn State coach) Bill O'Brien and the staff did," Shurburtt said.

But signing day 2013 signaled that Urban Meyer's Buckeyes and Brady Hoke's Wolverines are primed to pull away from most of the Big Ten, and maybe — just maybe — give the league a team or two that can challenge those SEC teams for a national title.

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BUILT TO LAST

Notre Dame followed up its best season in more than two decades with a recruiting class that coach Brian Kelly hopes can keep the Fighting Irish contending for more national titles.

The class includes a famous name in Torii Hunter Jr., the son of the All-Star outfielder. Hunter Jr. is a top-notch receiver prospect, though he broke his leg during an All-Star game and it could be a while before he's back on the football field.

Linebacker Jaylon Smith from Fort Wayne, Ind., is generally regarded as the jewel of a class that experts have ranked among the best in the country.

"I love agreeing with experts," Kelly said.

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BASEBALL OR FOOTBALL?

Oklahoma hopes it has found the next Sam Bradford in Cody Thomas, a pocket passer from Colleyville, Texas.

One small problem. Thomas is also a big-time baseball player who could draw interest in the major league draft this summer.

"We wouldn't have pursued him if we didn't feel there was a great chance he'd be playing football," Oklahoma coach Bob Stoops said.

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QUOTABLE

South Carolina coach Steve Spurrier said recruiting classes "don't always pan out. Of course, they always seem to pan out at Alabama."

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AP Sports Writer David Brandt in Oxford, Miss., and Associated Press Writer Tom Coyne in South Bend, Ind., contributed.

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Follow Ralph D. Russo at www.Twitter.com/ralphdrussoap

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New whooping cough strain in US raises questions

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

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

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

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

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

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

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

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

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

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

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

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

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JournaL: http://www.nejm.org

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Selena Gomez works the front row at Neo show

NEW YORK (AP) — Selena Gomez sat front and center at the fashion show to preview the first collection in her collaboration with Adidas' streetwear Neo label.

But the runway at Wednesday evening's show was a next-gen catwalk: Teenager bloggers were charged with styling the outfits instead of industry professionals.

Gomez thanked them as she stood on stage at the end of the show. She was flanked by models in denim shorts, Bermudas, slouchy sweats and T-shirts that read "Pirate Love." There were a few graffiti prints sprinkled in, and some varsity jackets.

The clothes, mostly in sunny yellow, bright pink and navy, were more surf than sport, which is Adidas' normal niche.

The show was very briefly interrupted by a protester trying to hand out leaflets about sweatshops.

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