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Apple (AAPL) can unlock $320/share in value assuming no PE expansion, says David Einhorn,...

  • Thursday, February 7, 8:58 AM ET
    Apple (AAPL) can unlock $320/share in value assuming no PE expansion, says David Einhorn, speaking on CNBC after the release of his letter to shareholders. Apple has a "cash problem" and a "depression-era mentality ... We own more Apple today than we ever have before." Shares +1.7% premarket.
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This news story has 25 comments:

  •  
    Exactly how much AAPL does he own?
    7 Feb, 09:38 AM Reply Like
  •  
    I thought he said 1.1-1.2 million shares.
    7 Feb, 09:53 AM Reply Like
  •  
    Share with the current Share Holders unlike the recent Multiple Million Dollar gift to Al Gore with his recent share conversion...

    I vote for sharing the Apple wealth with the current shareholders.....
    7 Feb, 10:04 AM Reply Like
  •  
    SA needs to correct. It is $32 and not $320.
    7 Feb, 10:06 AM Reply Like
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    It is correct. Einhorn said that could unlock $32.00 a share for every 50 billion in preferred issues and that they could issue up to 500 billion in preferred.
    7 Feb, 10:23 AM Reply Like
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    I think Apple is cheap at $1200. Here is the Apple can do it. Buy 200 millions shares back. Then Issue these shares at $1000 again. Apple will make $100B more just on this transaction. Also they will save in billion in stock dividend.
    7 Feb, 10:09 AM Reply Like
  •  
    We need to support David's comments. As an AAPL investor, he understands the "fiscal idiocy" of holding that cash for a "rainy" day. Wake up Timmy, it's raining on your stock.
    7 Feb, 10:12 AM Reply Like
  •  
    I agree that apple should use their capital much more efficiently. At current share prices a large share buy-back would be much more beneficial to shareholders than Apple sitting on their cash. It would increase EPS bigtime and save on dividends. I think they could do a large buy back plus issue preffered shares.
    7 Feb, 12:40 PM Reply Like
  •  
    They have to release this under utilized capital sitting in Money Market accounts!!!
    7 Feb, 02:17 PM Reply Like
  •  
    AAPL has to utilize the under utilized capital sitting in Money Market accounts
    7 Feb, 02:18 PM Reply Like
  •  
    All these are just speculation to get apple prices up
    Thats what the stock market is all about..
    7 Feb, 02:20 PM Reply Like
  •  
    Support him by voting NO on to proposal #2 on the shareholder proxy!
    7 Feb, 02:30 PM Reply Like
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    Thank you David Einhorn in speaking for the masses who have stuck it out with Apple's nonsense. That cash is no longer "rainy day." It could outlast a storm of Biblical proportions!
    7 Feb, 02:31 PM Reply Like
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    If AAPL is a broken stock, not a broken company (as we must assume AAPL mgmt believes) - then why would they do anything to unlock value? They will just wait out the market to fix the stock price.
    7 Feb, 02:40 PM Reply Like
  •  
    Einhorn is a corporate raider. What he proposes is fine for pirates such as himself, but will destroy Apple, their long term investors and Apple consumer's who depend on the continuous improvement and growth of the Apple Ecosystem.

    Getting rid of any possibility of future preferred shares of Apple is exactly what Steve Jobs would have done. Senior securities, such as bonds and preferred stock, are parasites on the common stock shareholders of Apple. Vote no to preferred stock for Apple.
    7 Feb, 02:40 PM Reply Like
  •  
    Putting the pressure on AAPL, they will have to do something.
    7 Feb, 02:41 PM Reply Like
  •  
    An interesting idea from a financial perspective.

    However, I still favor dividend increases and buybacks - with a longer term (5 year) commitment to increase both. By pledging about 75 billion in capital (that could just be FCF over the coming years - AAPL could keep its cash hoard largely intact), AAPL could commit to an increase of $1/share / year in the divi, and buy back maybe 25 million shares / year (reducing float by 3% in year 1, compounded). They buyback would cost about 12 billion per year. The divi would be an extra billion in year 1, 2 billion in year 2, etc.
    7 Feb, 03:39 PM Reply Like
  •  
    I usually appreciate Einhorn's thoughts on Apple, but this is awful, a transaction that would put AAPL's regular shares in permanent purgatory. A massive buyback does the same thing, (raises the price with the same p/e). The thing is, if Apple does buy back, the daily nonsense will go away. The HFT's will struggle to fight against Apple's purchases and will move on. The best thing about a buy back is that it's benefits are long lasting. Apple hoarding the cash is just bad business. People should be careful about asking for a special dividend, once it is paid the stock is dead.

    Example: MSFT, If Microsoft would have repurchased shares, the stock would not have gone stagnant.
    7 Feb, 08:00 PM Reply Like
  •  
    Why does it seem like everyone is opposed to Einhorn's proposal? If Apple issued 125B of 6% prefs that leaves $38.5/share EPS to the common which at the current ex-cash PE of 6.6 brings total value to $504B or $535/share. This allows pension funds and insurance companies to buy the prefs and would be supportive of PE expansion for the common for addtional upside.

    Have you guys even bothered to look at the model on Greenlight's webiste?
    8 Feb, 12:32 AM Reply Like
  •  
    The mission of Apple management is to produce great products. It is not to spend time, energy and resources in response to short term movements of the company's stock price. I am a recent buyer of a relatively small amount of Apple stock, and not particularly happy with my current loss position. But I'm in it for the LONG term and would be very distressed to see Apple management operating the company in reaction to the stock price or to the opinions of pundits.
    8 Feb, 02:47 AM Reply Like
  •  
    Well said, oldidiot.
    10 Feb, 09:14 AM Reply Like
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    So oldidiot and jasaggie, are you suggesting that Apple should just let their cash hoard accumulate for ever? At current accumulation rates they appear to be generating about $40BN per annum. So by the end of next year they should have over $200bn!
    At what point do you think they should unlock some of this?
    There is nothing that says you cant have an efficient use of your cash and STILL produce great products.
    11 Feb, 04:41 AM Reply Like
  •  
    Some 30% of that is subject to tax and held as 'permanently invested overseas'. It won't be easy for them to unlock value out of the 'hoard' once the realities of Apple's global tax evasion catches up to it.
    11 Feb, 08:18 AM Reply Like
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    KMI I think its more than 30% held abroad! However it seems to me that a simple solution to that problem is to use the money to buy back stock using off shore brokers. I dont think that triggers a tax charge.
    And anyway so what if they have to pay a bit of tax? The cash is doing nothing for the shareholders right now.
    18 Feb, 04:54 AM Reply Like
  •  
    Einhorn's goal is to move the stock price up as any savy investor wants for his holdings. His goal is to get AAPL's senior management to do something for its investor base. Since the stock has fallen over 30%, it seems like AAPL's senior management has done or said nothing about the horrible slide and that AAPL is becoming a laughing "stock" (pun intended) while the competition is taking market share away at an alarming pace. Einhorn has a little over a million shares and has said he loves the company. If AAPL management doesn't do something soon, many of us will cash out and go elsewhere.
    12 Feb, 12:13 PM Reply Like
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