By early last year, Apple’s cash balance had built to a point beyond what we needed to run our business and maintain flexibility to take advantage of strategic opportunities, so we announced a plan to return $45 billion to shareholders over three years. As of next week we will have executed $10 billion of that plan.
We find ourselves in the fortunate position of continuing to generate large amounts of cash, including $23 billion in cash flow from operations in the last quarter alone.
Apple’s management team and Board of Directors have been in active discussions about returning additional cash to shareholders. As part of our review, we will thoroughly evaluate Greenlight Capital’s current proposal to issue some form of preferred stock. We welcome Greenlight’s views and the views of all of our shareholders.
As a part of our efforts to further enhance corporate governance and serve our shareholders’ best interests, Proposal #2 in our proxy includes some recommended changes to our articles of incorporation. These changes were recommended independently of Greenlight’s proposal and would not preclude Apple from adopting their concept. Contrary to Greenlight’s statements, adoption of Proposal #2 would not prevent the issuance of preferred stock. Currently, Apple’s articles of incorporation provide for the issuance of “blank check” preferred stock by the Board of Directors without shareholder approval. If Proposal #2 is adopted, our shareholders would have the right to approve the issuance of preferred stock. As such, Proposal #2 has the support of many of our shareholders.
We remain committed to having an ongoing dialogue with our shareholders to get perspectives around return of capital and driving shareholder value.
Source: Apple Inc.
“Apple Inc. shares spiked after the company issued a response to David Einhorn‘s plea for the company to lose the Depression-era mindset and unload that $137 billion cash hoard, preferably through the issuance of high-yielding preferred stock,” Paul Vigna reports for The Wall Street Journal.
“Apple shares finished up 3% at $468.22,” Vigna reports. “At least one analyst doesn’t think Einhorn’s idea would serve the best interests of shareholders. ‘If you are looking to boost the stock for long-term shareholders, it’s not a good idea,’ said Trip Chowdhry of Global Equities Research this afternoon on Digits… Chowdhry would prefer the company look to buybacks, which offer essentially the same benefits, but without the specter of double-taxation.”
Vigna reports, “Apple ‘is outsourcing all of its manufacturing to a country which is not really friendly, called China,’ Chowdhry said. If Apple were for some reason forced to build factories here in the U.S., that ‘mountain of money’ would suddenly be dearly needed.”
Full article here.
Greenlight’s Einhorn sues Apple over plan to eliminate preferred stock, wants more cash distributed – February 7, 2013
Greenlight Capital urges Apple shareholders to vote ‘No’ on proposal 2 that would impede Apple’s ability to unlock shareholder value – February 7, 2013
Greenlight’s Einhorn sues Apple, ‘dissatisfied with capital allocation strategy’ – February 7, 2013
Greenlight’s Einhorn: Apple ‘the best big growth company’; Fed stimulus ‘counterproductive’ – July 10, 2012
David Einhorn says Apple isn’t a below-average company, it’s just priced like one – May 30, 2012