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AAPL action as investor threatens to sue and Apple issues statement

Karen Haslam | Feb. 13, 2013
There was some AAPL action after billionaire hedge fund manager David Einhorn of Greenlight Capital issued a press release stating that his company had filed a lawsuit against Apple, targeting a proposal by Apple to eliminate preferred stock from its charter. Apple then issued a statement saying it is willing to consider Greenlight's ideas, but the proposal isn't as bad as it claims.

Business Insider thinks this is a better idea because it "doesn't actually require them to use any of the cash right away. They would be able to maintain their cash chest and all of the strategic ideas and at the same time shareholders would be rewarded with something that gives them credit for Apple's phenomenal balance sheet and franchise value."

Apple's statement in full

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.

 

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