Einhorn sues Apple
Apple Inc on Thursday confronted its first major challenge from an activist shareholder in years as hedge fund manager David Einhorn’s Greenlight Capital filed suit against the company and demanded it dole out a bigger piece of its $137 billion cash pile to investors.
The unusual move comes as the world’s largest technology company grapples with a tumbling share price, mounting competition in the smartphone and tablet markets and concerns about its ability to produce new breakthrough products.
Einhorn, a well-known short-seller and Apple gadget fan, said in an interview with CNBC that the company harboured a “Depression-era” mentality that led it to hoard cash and invest only in the safest, lowest-yielding securities.
Apple nearly went broke in the 1990s before Steve Jobs returned and engineered a sensational turnaround, with products such as the iPhone and iPad that became must-haves. The company's near-death experience has led Apple to be conservative with its cash.
Last March, just months after Jobs’ death, Apple responded to a barrage of investor criticism over its large cash hoard by initiating a quarterly cash dividend and a share buyback that would pay out $45 billion over three years. At the time, Apple was sitting on $98 billion in cash.
Einhorn’s lawsuit filed in US district court in Manhattan targets a proposal by Apple to eliminate from its charter “blank check” preferred stock. The board now has discretion to issue preferred stock but is asking shareholders at its annual meeting on February
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