Apple's Board Is All Grown Up
by Josh Arnold
Shares of Apple (AAPL) rallied over 2% in the final 30 minutes of trading Thursday because the company finally showed some signs that it does, in fact, care what shareholders think. The subject of the statement was Greenlight Capital's David Einhorn's suit filed against the company urging shareholders to reject the upcoming "Proposal 2." The proposal effectively removes the ability of Apple to issue preferred stock (although Apple said preferreds could still be issued with shareholder approval). Einhorn believes that issuing preferred stock would be one way for Apple to unlock the value that is held on its balance sheet. Einhorn is right that something needs to be done, as Apple is making close to nothing on its ~$130 billion cash hoard. Einhorn asserts that for every $50 billion in perpetual preferred shares Apple issues, $32 per share of value will be unlocked. I won't get into his math and whether he's right or not, but his idea of Apple issuing preferred shares to Apple common stock holders is an intriguing one. Apple is viewed, correctly or incorrectly, as a maturing tech giant. As such, growth investors are probably looking elsewhere to invest their capital, as we've seen in the past few months with the drop from $705 to the $450 region. read more »
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