Fundamentally, you can't fool Mother Nature in computers, either - Andy Grove - Only the Paranoid Survive
GADGET DESIGNER Apple has replied to Greenlight Capital's lawsuit by claiming that the hedge fund just wants to avoid the risk that Apple's stockholders won't approve issuing preferred stock.
Apple has been under pressure to return some of its $137bn cash pile to investors and is planning to send its plan for issuing preferred stock to a shareholder vote in the coming weeks. However Greenlight Capital, which has a $600m stake in Apple, sued the firm over its plans, a move that Apple claimed was made to avoid the possibility that shareholders might not vote in favour of issuing preferred stock.
Greenlight Capital essentially wants Apple to forgo the shareholder vote and issue preferred stock. Apple CFO Peter Oppenheimer said Greenlight's so-called "Proposal 2" would bypass the firm's procedure for issuing preferred stock. Oppenheimer said that Greenlight's David Einhorn "viewed requiring shareholder approval for his [...] proposal as a 'roadblock that was not needed' [...] He said that he wanted to 'take the risk away' of a shareholder vote and asked, 'why make it harder?'"
Oppenheimer's statements come after a meeting between Apple CEO Tim Cook, Einhorn and himself and are presented in Apple's court filing. According to that filing, "We [Cook and Oppenheimer] told Mr. Einhorn that Apple was considering his proposal, but that the Board would not issue his proposed perpetual preferred shares without shareholder approval."
Apple had already commented on the Greenlight lawsuit last week with Cook even calling it a sideshow but saying that Apple would consider the firm's proposals. Apple said it is in the midst of distributing $45bn in cash to shareholders, but that it sees issuing preferred stock as locking in a long term steady return for investors that do not want their earnings per share to vary wildly based on quarterly earnings. µ
Sign up for INQbot – a weekly roundup of the best from the INQ