3 ms·

Some 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

by RyanZAG 14y ago

Some 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 ago
If 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 ago
  The 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 ago
  the 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.

by RyanZAG 14y ago

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 ago

If 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 ago
The 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 ago
the 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.