Photo: By Justin Sullivan/Getty Images
Apple has issued a statement on its massive pile of cash.
The press release is a response to David Einhorn, who earlier today outlined a proposal for Apple to issue preferred stock as a way of leveraging its cash. In Einhorn’s proposal, he urged Apple investors to vote NO on an Apple proposal to prevent the issuance of preferred stock.
Apple’s cash is a source of consternation to many investors, who feel that Apple is hoarding its pile, and that the market isn’t properly valuing all that cash.
In Apple’s release the company says: We’ll evaluate Greenlight Capital’s proposal (Editors note: ha!) and nothing in the Apple proxy would foreclose the possibility of doing what Greenlight wanted. The release notes that management and the board of directors are in discussions about ways to return more cash to shareholders. The Greenlight proposal will be considered as part of that overall discussion.
Below the dotted line is the full release.
By early last year, Apple’s cash balance had built to a point beyond what we needed to run our business and maintain flexibility to take advantage of strategic opportunities, so we announced a plan to return $45 billion to shareholders over three years. As of next week we will have executed $10 billion of that plan.
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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