4 ms·
Can someone explain what this means and why it's happening?
by cllns 14y ago
Can someone explain what this means and why it's happening?
- RyanZAG 14y agoSome shareholders want to sue Apple to force them to pay out more of Apple's cash to shareholders. This is a fairly legitimate claim, as companies are meant to pay out excess profits back to shareholders in the form of dividends/preference shares, and Apple is earning more money every quarter than they can use or are paying back. They are also sueing over a special term that allows Apple to create preference shares... not a big deal. This press release states that Apple is making plans to pay out more cash to shareholders, and that the special term does not exclude the board of directors from doing other things with preference shares in addition. Apple shares are likely to rise on this news in the short term, but may be a signal that Apple has no new healthy investments, and may lower share price in the long term. Nobody knows, share markets are volatile.
- jholman 14y ago"Some shareholders want to sue Apple to force them to pay out more of Apple's cash to shareholders.." From my reading of the news, I think this is wrong. Einhorn (of Greenlight) is not suing to force them to pay out. He's pressuring via normal shareholder activism. "They are also sueing over a special term that allows Apple to create preference shares.." Well, this is closer, but still not quite right. Apple has a proposal forward for shareholder vote. Einhorn/Greenlight claim that this proposal is really three proposals in one, and that SEC rules require these three proposals to be unbundled, and voted on seperately. They're therefore suing to force this unbundling. Even if his suit is 100% successful, Apple shareholders will still be able to vote in favour of the modification, which would, according to the summary by Apple and that by CalPERS, 'Eliminate “blank check” preferred stock'. Einhorn's choice of language implies that he is in favour of at least one of the other aspects of Proposal 2, which is part of why he's suing to unbundle. Here are some things I read to help me understand this: http://www.sec.gov/Archives/edgar/data/320193/000117152013000075/eps5041.htm http://www.sec.gov/Archives/edgar/data/320193/00011715201300... http://blogs.barrons.com/techtraderdaily/2013/02/07/aapl-is-fantastic-says-einhorn-its-utterly-mis-valued-but-give-us-our-preferred-shares/ http://blogs.barrons.com/techtraderdaily/2013/02/07/aapl-is-... and then after that, re-read TFA (the apple.com statement)
- cpeterso 14y agoIf a public company does not pay dividends, what is the motivation for an investor to buy their stock? As far as I can see, an investor can only make money by selling to a "greater fool" or waiting in anticipation that the company will pay a dividend.
- kbutler 14y agoThe motivation is the expectation that it will increase in value relative to other investment options (e.g., the company increases in market share, etc.). This doesn't mean a later buyer is a "greater fool", but rather that the fraction of the company is now worth more. "Buy low, sell high".
- gfodor 14y agothe company can also buy back shares. the point is that essentially that as long as the company is profitable and continuing to generate cash flow, some shareholder down the road will get his or her due, so the stock is worth some value of these projected cash flows.
- ipmb 14y agohttp://www.npr.org/templates/story/story.php?storyId=171370345 http://www.npr.org/templates/story/story.php?storyId=1713703...
- ctdonath 14y agoApple is sitting on somewhere close to $200,000,000,000 in _cash_ (or whatever equivalent billions of dollars are stored in). Seems Apple is getting sued by [a] stockholder(s) for hoarding cash to the tune of >$140/stock.
- swalsh 14y agoCan anyone here comment on what qualifies as cash?
- rednukleus 14y agoDefinitions vary (depending on context), but generally it refers to short term (usually 90 day or less), highly liquid investments such as Treasury bills, money market holdings and commercial paper.
- protomyth 14y agoShort term investments that can be liquidated quickly. Most of it is not in the US.
- twoodfin 14y agoI believe it's just about anything they own that's actually cash or that they could turn into cash on short notice. Cash, T-Bills, marketable securities.
- mynegation 14y agoHighly-liquid short term instruments with very high credit rating, such as actively traded stocks, US Treasury bills, banker acceptances, commercial paper.
- wiredfool 14y agoIt's more on the order of 120-140 billion, not 200. According to their 10k (which I received in paper yesterday): As of 9/29/2012, they had 121.3B in cash, cash equivalents and marketable securities. Of that, 10.7B in cash, 18.3B in short term marketable securities, and and 92B in Long term marketable securities. Cash + equivalents are highly liquid investments with maturities of 3 months or less at the date of purchase. Short term securities have a maturity of < 12 months, and long term are > 12 months. It's also broken down by holding (in $B): Money Market : 1.4 (cash) Mutual Funds : 2.4 (st) US Treasury : 20.1 (mixed, mostly lt) US Agency : 19.5 (mostly lt) Non US Gov : 5.6 (mostly lt) CDs : 2.2 (cash + lt) Commercial Paper: 2.1 (cash + st) Corporate : 46.8 (st + mostly lt) Munis : 5.6 (mostly lt) MortgageBacked : 12 (lt) (edit for formatting)
- antr 14y agoGreenlight (an investment fund) wants to push Apple to issue preferred stock. Why? Because, among other things, preferred stock, compared to ordinary issued shares, will receive a perpetual dividend (very much like a bond), but with no maturity. Pros for the investor: if you are corporation/qualified investor, rather than paying 35% capital gains tax in the U.S. they will pay 15%. Preferred also tends to be senior to ordinary equity. Cons for the investor: they will probably have little or no voting rights as preferred equity holders. Little decision making at the shareholders' meeting. Additionally, given that preferred equity does not participate in the growth of the company, the preferred shares and dividends will most certainly remain/trade like a bond, with little volatility compared to traditional equities (if Apple's revenues/cash continue to grow like crazy, preferred equity investor will not have that much an upside). Cons for Apple: preferred dividends are not tax-deductible (unlike debt). In theory, Apple's cost of capital will increase. They will also issue an instrument with no redemption date. Pros for Apple: they might be able to avoid paying any repatriation on cash held internationally. Preferred equity is great for defending a company from hostile takeovers (but this is rare in Apple's case given its size).
- crazygringo 14y ago> if you are corporation/qualified investor, rather than paying 35% capital gains tax in the U.S. they will pay 15%. Serious question: all else being equal, if you had to pay less taxes on gains from preferred stock, then wouldn't the market be expected to price it higher, since people are presumably investing, buying/selling based on their expected return post-taxes? Thus, in the end, making it a wash? Or are there other factors, like international investors etc., that prevent this?
- iyulaev 14y agoIn some ways this is a negative. Issuing dividends means a company thinks that an investor can get a higher return on the cash elsewhere. I.e. there is a lack of profitable opportunities for the company to invest their cash pile.