reported that Apple (NASDAQ:
) will initiate a share buyback program or increase its dividend
in order to silence the legion of critics-including David
Einhorn-who believe Apple should return some of its $137 billion
in cash to its shareholders.
Apple is reportedly exploring options but a stock buyback or
increased dividend is at the top of its list. David Einhorn's
plan has received consideration too. Dubbed the "iPref" plan,
Einhorn's idea includes issuing perpetual preferred stock.
Einhorn took Apple to court to block the company from bundling
four separate issues into one proposal. Einhorn won the case.
Apple CEO Tim Cook called the suit a "silly sideshow" but
sources said that Apple found the preferred stock idea
With the stock down more than 35 percent and long term
investors wondering what happened, Apple is under increasing
pressure to do something to return value to its shareholders.
Whether that is through a stock buyback in order to put a
floor under the stock, a
$30 cash dividend
-a rumor that made its way around Wall Street last week, or the
issuance of preferred shares, it's becoming increasingly clear
that Apple knows it has to do something.
In an earlier story,
reported that Apple would announce its plans for its cash by
April. According to the story, Howard Ward, chief investment
officer at Gamco Investors Inc. said, "We're going to get an
announcement from the company as to how they intend to reallocate
some of their cash. They will put a floor under their stock at a
higher price than it is today."
But two investing titans don't necessarily believe that Apple
has an obligation to bow to shareholder pressure.
interview, former GE (NYSE:
) CEO Jack Welch said, "They'd come after us, 'What are you going
to do with all that cash?' Well, we're going to do a smart thing!
Trust us!" Welch later said, "Apple deserves, after all they've
done, a chance to deliver on all their promises."
, who is known for keeping a sizable cash position for Berkshire
Hathaway (NYSE: BRK-B) had this advice for Tim Cook regarding
David Einhorn: "I would ignore him. I would run the business in
such a manner as to create the most value over the next five or
ten years. You can't run a business to try and run the stock up
Apple is down fractionally in premarket trading Wednesday
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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