TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Investor wants Apple to distribute cash

About The Tribune-Review
The Tribune-Review can be reached via e-mail or at 412-321-6460.
Contact Us | Video | Photo Reprints

By The Associated Press

Published: Thursday, Feb. 7, 2013, 5:54 p.m.

NEW YORK — With its annual meeting looming and its stock on the decline, Apple is facing a rebellion from an influential investor who wants the company to stop stockpiling cash and give it to shareholders instead.

Greenlight Capital said Thursday that it is suing Apple in a New York federal court over the company's proposal to make it more difficult for it to issue preferred stock. David Einhorn, who heads the investment fund, said the proposal would close down one avenue for Apple to reward shareholders with more cash.

Apple is still the world's most valuable company, but its stock has lost 35 percent of its value since September, as it's become obvious that its once-rapid growth has slowed down. The company is fabulously profitable, and Wall Street wants the company to share more of that money with its shareholders rather than tucking it away in low-yielding bank accounts.

“Apple has $145 per share of cash on its balance sheet. As a shareholder, this is your money,” Einhorn said in a letter to the company. He has a history of criticizing companies publicly.

In a statement Thursday, Apple said its management and board continue “active discussions” about what to do with the money, and it will take Einhorn's proposal into consideration.

Its $137 billion in cash makes up nearly a third of Apple's stock market value. Shares of the Cupertino, Calif., company closed on Thursday at $468.22, up $13.52.

Corporations normally don't hoard cash the way Apple does. They keep enough on hand for immediate needs, and either invest the rest in their operations or hand it out to shareholders in the form of dividends or stock buybacks. If they need more cash for, say, an acquisition, they borrow it.

Einhorn told CNBC on Thursday that Apple was acting like his grandmother “Roz,” who grew up during the Great Depression. People who've experienced financial trauma, he said “sometimes feel like they can never have enough cash.”

 

 
 


Show commenting policy

Most-Read Business Headlines

  1. Chocolate prices expected to soar as ingredients grow more expensive
  2. Squeezed by competition, Chobani to expand offerings
  3. Investment in Western Pa. startups reaches 5-year high
  4. Shale pioneer hires Chesapeake for drilling job
  5. Pa. unemployment rate falls to lowest since 2008; 12,000 more enter workforce
  6. 2014 Beetle is celebration of 65th American anniversary
  7. Under the Hood: A chance to take top cars for a spin
  8. Chrysler’s Easter eggs fun for vehicle owners
  9. Long-term unemployed struggle to find — and keep — new jobs
  10. Wages have soared in Pittsburgh, but economy appears to have stalled
  11. Pandora sued by record companies
Subscribe today! Click here for our subscription offers.