Apple has just issued a statement on its massive cash pile.
The statement is in response to the letter sent to Apple shareholders this morning by high-profile hedge fund manager David Einhorn of Greenlight Capital urging them to vote ‘NO’ on a proposal from Apple to eliminate the company’s ability to issue preferred stock.
Greenlight Capital, a major shareholder with over 1.3 million shares has also sued the company to try and block Apple from adopting a measure at its Feb. 27 shareholder meeting that would amend the company’s charter to eliminate preferred stock.
Here’s the complete statement from Apple posted on its website:
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.
Wall Street seems to be very happy with the developments, Apple’s stock is up sharply after issuing the statement.
You can read the letter that Greenlight Capital sent to Apple shareholders by clicking on this link (PDF) and also watch the video of David Einhorn’s interview with Bloomberg where he explains his position: