SAN FRANCISCO – Apple’s board and management are actively discussing the return of more cash to shareholders and considering a proposal that it issue preferred stock.
Apple shares jumped 3 percent after Thursday’s statement, which followed a call by Greenlight Capital Inc.’s David Einhorn for the maker of iPhones to return more of its $137.1 billion in cash. He had also urged shareholders to vote against a proposal by the company to eliminate preferred stock without investors’ approval.
Thursday’s statement suggests Apple is softening its stance on the preferred shares after saying previously in its annual proxy that it has no plans to issue them. Apple also said that its already committed to returning $45 billion to shareholders over three years.
Apple needs to distribute some of that cash, said Erick Maronak, chief investment officer at Victory Capital Management Inc., which owns 370,000 shares of Apple stock.
Apple rose 3 percent to $468.22 at the close in New York, leaving them down 33 percent since reaching a record on Sept. 19.
Greenlight sued to block the proposal to eliminate preferred shares, asking a federal court in Manhattan to bar Apple from certifying votes cast in its favor. Einhorn said he’s been in discussions with Apple’s management, encouraging the company to distribute a high-yielding preferred stock that wouldn’t cost shareholders.
Before, Apple had proposed doing away with blank check preferred stock, which can be issued without shareholder approval.
The company has not issued shares of preferred stock since 1997, Apple said in the regulatory filing. The board does not intend to issue preferred stock in the future.
Apple said last month that it’s considering an increase in share buybacks and the quarterly dividend. The company reinstated dividends last year.
Einhorn said Apple’s cash hoard equates to about $145 a share, and he joins other investors in saying that the company is hanging on to too much of it.
Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders, Greenlight President Einhorn said.