Original URL: http://www.theregister.co.uk/2013/02/08/apple_respond_to_activist_shareholder/

'Depression-era grandma' Apple responds to bolshy investor

Board to 'evaluate' the proposal

By Anna Leach

Posted in Financial News, 8th February 2013 13:59 GMT

Apple has taken the unusual step of publicly responding to a complaint from a shareholder who compared the company to his cash-hoarding grandmother.

David Einhorn, president of Greenlight Capital, said that Apple Inc had a "depression era" attitude to cash that reminded him of his grandmother who refused to leave voicemail messages because she didn't like being charged for them. He told CNBC:

[Apple] has the mentality of a depression era… people who have gone through traumas - and Apple has gone through a couple of traumas in its history - feel like they can never have enough cash

Imagine 137 billion of those dollar bills

With Apple shares down in value, Einhorn urged Apple to let shareholders get at some of the $137bn that the company has left sitting around in cash holdings.

The recent, severe under-performance of Apple’s shares, which are down approximately 35% from their peak valuation, underscores the need for the Company to apply the same level of creativity used to develop revolutionary technology for its consumers to unlock the value of its strong balance sheet for its shareholders.

Apple currently has $137bn in cash, up from $97.6bn 11 months ago.

In May 2012, Einhorn petitioned Apple to issued preferred stock with a guaranteed yearly return of 4 per cent to all current shareholders. Apple HQ refused in September, and with its latest set of proposals to shareholders, Cupertino plans to make it much harder for preferred stock to be agreed upon. Shareholders have to vote on Proposal 2 on 27 February.

Einhorn has filed a lawsuit against Apple and issued a public letter to shareholders urging them to vote against a proposal from Apple management that would eliminate the power of the Board to decide to offer preferred stock. Under Apple's Proposal 2, the Board and shareholders would have to vote in a decision to issue preferred stock, so while it would still be possible, it would be less likely.

In Apple's response last night, the company says it already has shaken down some of the cash value to shareholders, and is considering Einhorn's points.

The company said:

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.

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