Questioning Apple's Cash Policy

 | Feb 07, 2013 | 11:30 AM EST  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:


 (This piece was originally sent to subscribers of Action Alerts PLUS this morning at 10:36. Sign up for a free trial of AAP here.)

This morning, David Einhorn of Greenlight Capital announced that he would oppose a proposal made by Apple (AAPL) to eliminate the ability to offer a preferred stock from its charter. Einhorn said that such a move would take away the flexibility and the option of providing cash to shareholders.

The big question is why Apple wants to eliminate the preferred in the first place, but we side with Einhorn -- it doesn't make sense to take away the ability to at some point be able to offer a preferred security.

We've been critical of Apple's handling of its cash (as have many). It has $275 billion on its balance sheet, or $145 a share, and shareholders are rightfully frustrated that Apple has not addressed its cash strategy. CEO Tim Cook is speaking at Goldman's conference next week, and there's been speculation that he will announce the company's cash plans -- a dividend increase is the rumor. Should it announce something, it certainly would make value investors more interested in the stock. The stock is cheap, but a higher yield would make it more appealing. It currently has a 2.3% yield.

Our preference still is for the company to make an acquisition (or several) in order to increase its growth rate, but we would view a buyback or an increased dividend as positive.

Columnist Conversations

I am beginning to replace my sold Twitter in after hours at under $33/share on a scale. As extreme the rise wa...
Good day in market but some of the rises in oil related and industrial names today seem like dead cat bounces....
A big shout out to "Monkey Girl" who I gave Twitter stock to on the occasion of her Bat Mitzvah this year - an...
We're all familiar with the morningstar candle pattern. It is a three day bullish reversal pattern formed by a...



News Breaks

Powered by

Columnist Tweets


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.