Apple, the world’s most valuable technology company, is being urged by David Einhorn’s Greenlight Capital to return more of its $137.1bn (€101.5bn) in cash to shareholders.
Greenlight, an Apple investor, asked fellow holders to vote against a proposal — outlined in the company’s annual proxy statement — that would eliminate preferred stock.
Einhorn said that Apple’s $137.1bn in cash equates to about $145 per share, and that other investors agree with him that the company is hanging onto too much of it. Apple executives said on an earnings’ conference call last month that they’re considering increasing share buybacks and the quarterly dividend. The company reinstated dividends last year and said it would repurchase $10bn in stock over three years.
“Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders,” Greenlight president David Einhorn said in a statement.
Mr Einhorn said he’s been in discussions with Apple’s management, encouraging the company to distribute a high-yielding preferred stock that wouldn’t cost shareholders.
He said that preferred shares would be a way to reward investors without putting the company at risk or forcing it to incur taxes on cash brought to the US from overseas.
“Greenlight suggested an initial preferred share distribution, whereby dividends could be funded on an ongoing basis by a relatively small percentage of the company’s operating cash flow,” Mr Einhorn said. “Apple rejected the idea outright in Sept 2012.”
Steve Dowling, a spokesman for Cupertino, California-based Apple, didn’t immediately return a call seeking comment.
A decision by Apple to refrain from returning more cash to shareholders would leave its board vulnerable to investor lawsuits, according to Lawrence Haverty, a portfolio manager at Gamco Investors Inc.
“Someone is going to sue them for excessive accumulation of cash,” Mr Haverty said in a late January interview on Bloomberg Radio’s Surveillance with Tom Keene.
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