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Apple (AAPL) has withdrawn proposal #2, preferred stock shareholder voting requirement and all,...

Apple (AAPL) has withdrawn proposal #2, preferred stock shareholder voting requirement and all, in response to the injunction placed earlier today at Greenlight Capital/David Einhorn's request. Apple: "We are disappointed with the court’s ruling. Proposal #2 is part of our efforts to further enhance corporate governance and serve our shareholders’ best interests." Greenlight on the injunction: "This is a significant win for all Apple shareholders and for good corporate governance." (court ruling)
Comments (54)
  • What's important is innovation in products not innovation in getting cash to shareholders. This is a side show.
    22 Feb 2013, 08:27 PM Reply Like
  • What is the purpose of a CFO and his staff if it is not investor relations? If the CFO needs to be involved in R&E then let him fill that role and hire a real CFO who can focus on investor relations.

     

    Oppenheimer is in way over his head...the board should wish him well and hire someone with a finance background who could take 150 billion and put it to work instead of leaving it in a simple interest bearing account like my Aunt Marge in Dayton does with her money.
    22 Feb 2013, 09:57 PM Reply Like
  • Digger5 - You could not be more wrong.

     

    If AAPL keeps making 30-40 billion cash flow per year, to add to the 143 billion they have now (given additions since they last announced earnings) what is the end game?

     

    What's the point for us owners of AAPL stock if they produce and collect more money than any other company in history, but they keep it sitting in savings bonds?

     

    We own the stock because they make money. As the company becomes more mature, the mark of its success (and the drivers of its future success) will shift; they now need to be great stewards of capital and capital allocators in addition to producing and selling great products.

     

    Look at Coke, Berkshire, even Comcast! These are companies that have leveraged their cash flow and cash-on-hand for growth and shareholder return.

     

    It's time that AAPL - sitting on more cash than any company in the history of America - learned to do the same. One of the reasons AAPL stock is in this tailspin is because much of the management has not yet grasped this shift.
    22 Feb 2013, 11:01 PM Reply Like
  • @Digger5,
    Agree with you on innovation, I wrote about it a couple of days ago:
    http://seekingalpha.co...
    23 Feb 2013, 06:29 AM Reply Like
  • @digger5: Right on. Perhaps Mr. Einhorn would like to retrain as an highly productive and talented engineer - oops, then he wouldn't make as much money...gambling.
    23 Feb 2013, 05:30 PM Reply Like
  • I love how you and others like you talk about innovation like something akin to making coffee in the morning. Innovation is not a choice. You can direct your efforts at innovation, and get nothing in return. Did you even check out Einhorn's presentation? At this stage of the game "iprefs" can be a kind of innovation with respect to capital structure.

     

    I keep having to remind people on seeking alpha about non-linearities. Innovation goes in discrete leaps and bounds. I believe in Apple's value. I've been a recent buyer. But don't expect for them to start rolling out new products on the level of iphones and ipads any time soon.
    23 Feb 2013, 07:27 PM Reply Like
  • @SL: And youth is no guarantee of innovation.

     

    Correct me if I am wrong, but Einhorn didn't care about iPrefs or such "financial innovations" until the stock precipitously declined from being an overbought hedge fund hotel. If he is so passionate, then why doesn't he start or buy his own compan(ies) and implement such ideas? Because he could care less - he only wants to game and make money, which is why he's among the top four of the world series of poker. (Note however he had to wear sunglasses during the event - maybe he does indeed have some tells.)
    23 Feb 2013, 08:54 PM Reply Like
  • you are wrong whitehawk
    proposal 2 is not for the shareholders
    it is for the management to prevent cash going back to the stock holder
    24 Feb 2013, 01:23 AM Reply Like
  • @haha
    YOU are wrong. Wake up.

     

    It said management must get shareholder approval before issuing 'blank check' preferred stock. As it stands now management has the right to issue it without shareholder approval. Apple was looking out for the rights of holders of the common stock. Einhorn didn't like it because he wanted to dilute the common by adding preferred shares and wanted to be sure the common shareholders would not be able to prevent that from from happening.
    26 Feb 2013, 02:28 AM Reply Like
  • If you consider that Apple's success was a lot of being at the right place at the right time, ie the point in history where mass acceptance of mobile computing occurred, and that further innovations in that space are unlikely to yield the same growth trajectories then, the focus now SHOULD be on getting that huge windfall to shareholders.
    22 Feb 2013, 08:40 PM Reply Like
  • So they can get out?
    22 Feb 2013, 09:11 PM Reply Like
  • Simply was not being in the right place at right time. Apple created products that were and still are "wanted" by the majority of the populace. They have revolutionized the phone, music, computer and other segment industries. Very premature to think a shift has occurred. If you are a shareholder you need only patience. That being said, I do expect a larger dividend that most likely would have happened regardless of Greenlight.
    23 Feb 2013, 08:16 AM Reply Like
  • Wrong, this money should be invested in corporate innovation and new enhancing endeavors ( A&M ) giving cash away is a very foolish undertaking that will fail to enhance the bottom line . Investment has been working and it will keep on working. I agree that the people handling the money should not be making these mistakes , or maybe they do need to be replaced , after all they let this miss come out when it never should have happened.Very poor supervision when the company had the cash and means to fix it before hand.
    23 Feb 2013, 10:16 AM Reply Like
  • Amen
    good for stock holders
    24 Feb 2013, 01:24 AM Reply Like
  • they do not need so much money that is more than all other companies except 17 in the sp500
    they should worry about being the worst performer out of all sp500 now.
    24 Feb 2013, 01:25 AM Reply Like
  • Digger,

     

    Companies historically that accumulate large cash balances that are not given back to investors in the form of dividends and buy backs (my personal preference) have been known to do silly acquisitions or grossly reward themselves.

     

    Apples cash management has been grossly pathetic. While I think einhorns preferred idea won't fly, the press on returning cash to shareholders is noteworthy and necessary to regain shareholder confidence. The current ivory tower stance isn't cutting it given the paltry returns on the cash horde to date.

     

    Start doing buy backs or give it back!
    22 Feb 2013, 08:59 PM Reply Like
  • Why do you think buy backs are so advantageous?
    22 Feb 2013, 09:34 PM Reply Like
  • Buy-backs have always been accretive when done at low valuations. Anyone who thinks that AAPL is cheap at these prices should support a buy-back.

     

    If they do announce a buy-back, I would prefer it be done Warren Buffet style - with a cap price (i.e. we will buy back our stock at any price below 10x trailing PE; Buffet set it at 110% of book).
    22 Feb 2013, 11:03 PM Reply Like
  • Apple needs to use this cash to grow the company , there are many ways to cut costs and make major ( A&M ) that will enhance the bottom line and EPS of the company and the shareholders. Giving the cash away is the most foolish of these actions. There are many investments out there that can rival Apples earnings with proper management.
    23 Feb 2013, 10:23 AM Reply Like
  • They are not . Smoke and mirrors to make you think a company is doing something for shareholders , they aren't . Do you think these companies just buy these shares and throw them in the garbage can, they do not.
    23 Feb 2013, 10:26 AM Reply Like
  • Re: "There are many investments out there that can rival Apples earnings with proper management."

     

    Please, do tell. Which ones?
    26 Feb 2013, 02:48 AM Reply Like
  • as a shareholder increasing the dividend is fine with me ...preferred stock eh...one time dividend won't do much for stock price.....I do wish they would acquire or organically build a streaming video movie /shows , similar to Netflix.......
    22 Feb 2013, 09:40 PM Reply Like
  • the prefer stock you get extra will give you dividend every quarter just like increase dividend
    it also give you the options to just sell the prefer or the stock or both
    the option belong to the stock holder
    24 Feb 2013, 01:27 AM Reply Like
  • Has Apple ever won any court cases? Seems like everytime I hear about Apple and litigation its an explanation of how they got spanked in court.
    22 Feb 2013, 09:47 PM Reply Like
  • AAPL litigates and wins a ton of cases - but, those are not widely discussed in the media. People like reading about "little guy" stories. Not, "Apples Team of High Paid Lawyers Wins another Mundane Patent Case"
    22 Feb 2013, 11:04 PM Reply Like
  • This Einhorn thing is no "spanking".

     

    The judge ruled that you can't "bundle".

     

    So what ?
    22 Feb 2013, 09:59 PM Reply Like
  • that means apple has just done something that is illegal in the law of the USA
    24 Feb 2013, 01:28 AM Reply Like
  • And the punishment is nothing more than being told "take that back – you made a mistake, can't do it."
    26 Feb 2013, 02:54 AM Reply Like
  • interesting days ahead for sure...next week should be anything but boring...
    22 Feb 2013, 11:18 PM Reply Like
  • Buybacks would be ok at current prices - The Buffet method is actually very clever. Increasing the dividend substantially would also be interesting. At the end of the day management should work for the shareholders best interest. It seem like many of them are working only to make things easy for themselves like cash hording.
    23 Feb 2013, 01:00 AM Reply Like
  • Morgan Stanley expects to see a 6% Apple dividend to go with a cheaper I phone, both good for Apple stock. Apple can do what everyone else is doing, borrow it a very low rates and use that cash to increase the dividend. That policy has also helped the debt to cash ratio for US corporates to reach an all time high .
    23 Feb 2013, 04:34 AM Reply Like
  • Don't fret about Apple too much . Another article on this site points out according to research firm Wireless Intelligence, 4 billion 3G-4G global connections will be established by the end of 2016, a significant increase in amount above today's 1.9 billion connections. There aren't too many industries or business models out there who can look out to that kind of growth horizon.Apple will gets it share of that.
    23 Feb 2013, 05:08 AM Reply Like
  • Thank you David Einhorn. This issue is bigger than apple.
    23 Feb 2013, 05:39 AM Reply Like
  • Right. It's as big as Einhorn's head.
    26 Feb 2013, 02:56 AM Reply Like
  • They actually need to do both--increase the dividend and buy back more of the stock than they currently already are. And yes, they should buy P and NFLX too.
    23 Feb 2013, 07:09 AM Reply Like
  • The judge said that according to current law you cannot bundle. The surprise is that they did not know this concept. That bundling can force you to vote against your best interest and intention which is not fair.
    23 Feb 2013, 07:12 AM Reply Like
  • I'm a part time trader and Apple shareholder, and as such, I would like to see some cash from the hord wouln't we all?
    23 Feb 2013, 07:33 AM Reply Like
  • You do.
    26 Feb 2013, 02:57 AM Reply Like
  • How would Greenlight Capital benefit from the preferred shares? I see a possible conflict of interest here, seeking to boost the price of the shares and value of fund units when you're the manager of the fund. An "activist shareholder" on the other hand would only be seeking to increase the share value. Once the price of common and preferred stock both get pushed down to what the market considers an appropriate value are shareholders going to be any better off? A 4% dividend without a share split looks like a much better option.
    23 Feb 2013, 09:58 AM Reply Like
  • the prefer stock advantage has to do with capital gain vs dividend for tax purpose.
    24 Feb 2013, 01:32 AM Reply Like
  • Sounds as if this could be the end for Oppenheimer??

     

    Apple management knows enough to take care of their know-nothing BOD (Al Gore, etc) but surprisingly don't know anything about the issue of bundling, etc. while keeping their shareholders happy.....
    23 Feb 2013, 10:39 AM Reply Like
  • As a stockholder for a number of years, I would like to say -- I would prefer that Apple pay a 4 to 4.5% dividend (easily done with their cash position) but I don't care if they keep the money to buy new initiative companies or other productive investments. Anyone can do better that gov't bond returns.
    23 Feb 2013, 12:11 PM Reply Like
  • Apple's investment in r&d and acquisitions should be based on intrinsic benefit, and not on the amount of cash on hand. Growth at all costs will lead to ruin. IMO
    23 Feb 2013, 12:31 PM Reply Like
  • I am so fed up at the way the media has handled Einhorn and Apple. It is ridiculous. I'm going to go write an article about it.
    23 Feb 2013, 03:09 PM Reply Like
  • good for you
    please answer me why apple is doing thngs that is illegal?
    are they saying they do not know?
    of they are saying it is good for you even if it is illegal?
    24 Feb 2013, 01:34 AM Reply Like
  • So...AAPL gives up its cash hoarde (after paying huge taxes on it to bring it back from overseas), Einhorn pats himself on the back for introducing a concept that went out the window years ago, AAPL drives itself off a cliff on the product side, the stock craters....

     

    And Einhorn will be where????

     

    YUP, long gone...having 'done the right thing for the shareholders' (himself).
    23 Feb 2013, 04:30 PM Reply Like
  • you are wrong
    Apple do not need to do anything with cash oversea
    they have enough cash in the us to do want they need
    even if they do not have enough cash they can borrow them at 2 to 3 % interest
    24 Feb 2013, 01:35 AM Reply Like
  • Can anyone here just imagine what Steve Jobs' reaction to Einhorn's "horning in on Apple business" lawsuit would be? Einhorn would be lucky to live to the next day. At the very least, he would be ripped a new one.
    23 Feb 2013, 06:29 PM Reply Like
  • Not true
    Steve Job probably will not bundle to begin with
    Else he would fire the one that suggested this illegal move
    Now all companies can present to the court in any law sut that Apple is a company that do not respect any law
    24 Feb 2013, 01:37 AM Reply Like
  • Getting the idea that Cook is a wimp and seeks to avoid all conflict and controversy, the very things Jobs thrived upon.

     

    How could an Apple CEO be so different from Jobs and still have the faith of Jobs to run the place the right way after he passed? Still trying to figure that one out.
    23 Feb 2013, 06:34 PM Reply Like
  • When you get to be the CEO of the largest and arguably most transformational company in a generation, then maybe your dumbass insults will have merit. Until then, you may want to STFU.
    23 Feb 2013, 07:17 PM Reply Like
  • why don't we wait for one year and see where iCook will be before you jump the gun to defend him
    24 Feb 2013, 01:39 AM Reply Like
  • It's not a question of defending Tim Cook. It's a question of challenging idiot bashers whose sum achievement in life is finally moving out of their parents' basement. If you're going to hurl insults at the CEO of ANY successful company, you bring your pedigree into question. Criticisms of the company and its actions are fine, but when the criticisms become idiotic personal insults, then it speaks volumes about the critic.
    24 Feb 2013, 08:00 AM Reply Like
  • @ nguyen,
    Nice one!
    26 Feb 2013, 03:02 AM Reply Like
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