“Greenlight Capital Inc. founder David Einhorn on Thursday began to detail his plan for Apple Inc. to return more cash to shareholders, in an attempt to rally other shareholders to support his plan for the company to issue a new type of preferred stock,” Jessica E. Lessin reports for The Wall Street Journal.
“The remarks, made in an unusual public conference call, attempted to paint a plan he has been pushing for weeks as reasonable,” Lessin reports. “‘It is not complicated. It is merely unfamiliar,’ Mr. Einhorn said in introductory remarks.”
Lessin reports, “He says that companies that fail to distribute cash to shareholders are punished by shareholders, mentioning Dell Inc. as a cautionary tale.”
Read more in the full article here.
Related articles:
Einhorn’s Greenlight Capital: Every Apple shareholder should get preferred shares ‘for free’ – February 21, 2013
Hedge fund manager Einhorn takes Apple campaign to shareholders via conference call – February 21, 2013
Einhorn’s lawsuit against Apple hangs on ‘irreparable harm’ – February 20, 2013
Greenlight makes case to stop Apple preferred-stock vote – February 19, 2013
Apple accused by Greenlight of breaking law by bundling – February 16, 2013
Judge approves Apple request to expedite Einhorn’s Greenlight Capital case – February 11, 2013
Apple’s cash return options: Pay U.S. tax man or incur massive debt – February 11, 2013
Bernstein’s Sacconaghi: Most important for Apple is a capital allocation plan – February 11, 2013
Evaluating David Einhorn’s proposal to Apple – February 9, 2013
The colossal gall of bad Apple investors – February 8, 2013
Cramer: By suing Apple, wrong-headed Einhorn has gone too far – February 8, 2013
Analysts: Apple may crack open its massive, bulging wallet for shareholders – February 8, 2013
Apple with $137 billion in cash considers preferred stock – February 8, 2013
Einhorn’s Apple lawsuit marks biggest investor challenge in years – February 8, 2013
Gamco’s Haverty: Apple’s cash is ‘shareholders’ cash’ (with video) – February 8, 2013
Apple shares surge following company response to Einhorn – February 7, 2013
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
Legg Mason’s Miller: Apple stock would rise 50% on ‘sensible capital allocation’ alone – February 6, 2013
Gamco’s Haverty: Apple board can be sued over excessive accumulation of cash (with video) – January 28, 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
Boycot Mr. Einhorn
Not sure yet. It sounds like he is suggesting Apple dollars similar to the American dollar that was once backed by gold but not now. (It is promissory notes from our kids.) It would be interesting to create a new kind of currency based on a corporate’s real assets and get away from government paperwork. We will see what the future holds as they collapse what we all have known in the past. Maybe gold coins would be a better way to go. It worked before.
Isn’t it eerie how close Einhorn is coming to Dell’s famous proclamation? He is missing only the “SIDA” portion of SIDAGTMBTTS.
Having listened to his presentation, I think the plan makes sense, although I’m not sure about the final scale. The small trial he recommends would at the very least change the whole tone of the anti-Apple rhetoric daily spewing forth from the MSM and give some welcome buzz to the possibilities of investing in Apple. If it were combined with a large split, so much the better.
iHorn better stop these nonsense of iPref, Apple executive team needs a lot of billions for future takeover or needs. Let the shareholders vote for issuance or non issuance of preferred shares.
Wall Street people are the LAST PEOPLE to listen to.
uSuck iHorn’s iPref .
I agree with you, let the shareholders vote. But that’s what Einhorn wants. He simply doesn’t want it bundled with other issues. Makes sense to me. Separate things and let the shareholders vote. That’s impossible for anyone to argue against. I see so many on here complain about Einhorn but I haven’t seen anything that makes sense yet. Preferred shares? There’s something wrong with preferred shares? Really? How so? It’s just complaining to be complaining. One fanboy after another. And then there’s all the angst from the people who are way underwater in AAPL and they simply want to lash out at everyone and everything. I’m not saying that Einhorn isn’t motivated to make money but isn’t everyone? When you invest in AAPL don’t you expect to make a profit? Otherwise why do you invest? “It’s not in the best interest of the company”? Says who? What facts do you have to back that up? I just say let them vote. You’re never wrong when you let the people vote. No matter what the situation.
You raise good points GM, and frankly I agree with you about Cook needed the testicular fortitude to stand up to this sort of behavior. He is running the show, not the stockholders, (of which I am one).
Your point about making a profit from an investment needs a little perspective. Some people invest in a stock, hoping that the stock goes up, others hoping to receive a dividend, others just for fun (yes I know a few investors that will invest in a lot of companies, hoping that one makes it, they don’t sweat the rest).
The thing about making a profit is of course best done by the golden goose analogy. Killing the goose or keeping it alive will both make you a profit. It’s the quality of the profit that counts.
I of course was very sad when Steve Jobs died and I knew that the stock would take a hit, regardless of who was running the show. I am not overly thrilled that Apple has given a dividend. I knew back then that the stock would take a hit for that was well. I also know that Apple does not follow Wall Street rules, thank goodness.
I also know that Tim Cook is the captain of the ship, and by dang it, I’m willing to let him sail it for a while before I even consider getting off at some other port. Mutiny at this stage, is way way way to premature.
Anyway, just thought I’d add my perspective to what you said. Good questions.
I guess Tim Cook is doing a good job I’m just not sure. I’m willing to give him the benefit of the doubt until I’m certain that he’s falling down. But Apple needs to do more to defend themselves. They can’t just build great products and let them sell themselves. I don’t care what anyone says, I think Apple needs to be more proactive in their own defense and they need to advertise more. This smug bullshit that so many here want to throw out there about Apple is just stupid. You can be smug, haughty and arrogant when you introduce the iPod, the iMac, iPhone and iPad. You can be smug, haughty and arrogant when you have Steve jobs out there like a carnival barker pushing these products. Most of all, they were brand-new. They’re not new anymore. They are not new categories and they are improved versions of previous models. You need someone holding them in front of the crowd. I’m not saying that they don’t know how I’m just saying that they aren’t marketing as aggressively as they should. And their PR department is nowhere to be seen. Except for the planned leaks that they manage to get to the media occasionally (lately).
Actually I think I have a pretty good perspective on investing. I’ve been doing it for a long, long time. All investors invest in a stock hoping that it goes up. If they didn’t they would be insane. You invest to make a profit. That certainly includes dividends if one is issued. And no one wants to kill the golden goose. No one wants anything that they invest in to go away.
I don’t have anything against what you’ve said, but I have found myself wondering more often if we might be wrong letting people who are uninformed on the issues have a vote. And before anyone blows a gasket putting words into my mouth, I’m not suggesting any alternative. I think democracy works very well if the people are educated on the issues. But our sound-bite culture makes that almost not a possibility anymore. What do you think?
And I will go on the record as hating the bundling of disparate issues into legislative bills.
I doubt the uninformed own enough shares to make a difference.
This will be interesting to watch, if nothing else, just to see if Cook has the balls to fight it off in order to ensure Apple’s cash is theirs alone to decide what they want to do. Any caving to shareholders will signal the beginning of trend that will see shareholders slowly burying their straws deeper and deeper until they suck Apple’s lifeblood away. Jobs knew this and was purposefully defiant, making sure they didn’t get any foothold. Cook has already caved to the pressure to issue dividends, and now that they sense an opportunity (someone who can be manipulated) the gravy sucking shareholders want more. Odds are in Einhorn’s favor now that he has carrots to wave around … and he makes it all sound so very justifiable … but comes down to shareholders telling Apple how they should act and that’s something Cook needs to stamp out fast.
Want to know how Apple’s doing post Jobs? Stock is down over 20% and there’s disarray with shareholders.
Apple needs a strong leader focused 100% on technology and zero percent on Wallstreet. Someone who will shut these clowns up for good.
You know how Jobs did this? Negotiating. If he didn’t like something he’d walk. Apple needs its people to stand up say that if Einhorn continues, they’ll just quit. It’s all about leverage and a common voice from the leader.
I’m no math wiz, but when Steve Jobs passed away on Oct 05, 2011, AAPL closed at $378.25 a share. Today AAPL closed at 446.06. I’d say Tim has increased the value of my AAPL shares.
What makes you think anything positive Apple did for the year after Jobs passed away had nothing to do with him?
Why does this buffoon keep getting airtime?
This guy must be associated with Obama’s redistribution plan. Careful …
I don’t like Einhorn. I don’t trust him. He is what many Americans have suffered from (bad investments, financial mismanagement, corporate greed). Apple is very successful company and has accumulated a great deal of wealth for which a company like Apple, invests in the future to keep the growth and the technology services at the leading edge.
What Einhorn wants, is a piece of the money pie for himself and he is trying to persuade others to get theirs too. Sure, they can probably get it but then you are limiting what Apple has in store for the future.
Don’t trust Wall Street.
I Agree with MEES.
Einhorn seems like a greedy hedge fund manager. He’s never done anything for Apple… so what gives him the right to any of Apple’s cash hoard?
If Einhorn wants Apple to issue preferred AAPL stock to everyone with a virtually guaranteed high dividend, then why issue preferred at all? Just get the stockholders to force a stockholder vote that Apple will distribute as a dividend 20% of the accumulated Apple cash every year. There is no need for “preferred” status.
The reason for his push? It’s because he knows that very large individual investors (there are a few) and some of the non hedge fund organizations that have large holdings won’t support his plan. Thus he makes a big show in hopes of embarrassing Apple into doing something like this specific version of preferred stock issued to a subset — like his fund. This would make him look like a hero to his investors. It would advance his fund and make him richer. It would do ABSOLUTELY NOTHING to benefit Apple, Inc.
Apple, Inc. does not *NEED* a higher stock valuation (capitalization) to do business better than it does now. Increasing capitalization allows you to *borrow* money at more favorable terms and get better deals on various financial instruments around the world. It does nothing else other than give you bragging rights. As the public company with the highest capitalization — bar none — Apple, Inc. does not need this. As a company with virtually zero debt (every company has short term debt no matter how cash flush the company is), Apple does not need this.
Apple, Inc. needs to *USE* the cash to make Apple, Inc. better. Apple, Inc. has absolutely no need to make Einhorn’s fund better or Einhorn richer.
And…
Attempting to compare Apple to Dell is 100% asinine. Dell had a completely different business model (called, “the race to the bottom”) that any sane investor knew was not sustainable. No one wins — long term — by having their primary selling point being that they can do something cheaper than the next guy. That’s not innovation (like the iMac). That’s not growing into, or creating, new markets (like the iPod, iPhone and iPad). That’s not creating jobs (like the new plant in the U.S. and data centers in the U.S.). Dell didn’t even have a “new business model” for doing things better (which is what they claimed for years). They just had a drive to get barely tolerable quality WinTel machines out as cheaply as possible. Doing things as cheaply as possible and selling the product as cheaply as possible is NOT a new business model.
Dell was doomed to long term failure. That’s why I told each of my money managers (across multiple firms) over a decade ago that if they put a penny of my money into Dell, I’d drop them in a heartbeat.
Apple does do things differently — not always right, but definitely differently. I hope it continues to do so.
Listen to the presentation, so you can argue from facts rather than speculation. LIke it or not Einhorn’s plan take account of the large pool of cash sitting overseas (no need to repatriate it a high tax rates), the cash at home (keep it available for company use at will), and U.S. tax law (dividend are taxed at the low rate). He went over the other possibilities, including yours of a raising the ordinary dividend and found them wanting.
Einhorn is ONLY INTERESTED in putting money IN HIS POCKET. HE DOES NOT CARE ONE IOTA about the rest of us as stockholders. He is a HEDGE FUND MANAGER – NOT A STOCKHOLDER – A MANIPULATOR.
As STOCKHOLDERS, WE WANT EINHORN as a leech to GO AWAY. WE SHOULD BE GETTING EXTRA DIVIDENDS FROM EINHORN !!!