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Apple's Cook Calls Einhorn's Proxy Fight A 'Silly Sideshow'

 February 12, 2013 01:25 PM

(By Balaseshan) Apple Inc.'s (NASDAQ: AAPL) Chief Executive Tim Cook said David Einhorn's preferred stock proposal is "creative," but called the hedge fund activist's shareholder lawsuit as a "silly sideshow".

During a Goldman conference, Cook said that the board is in "very active" discussions about returning additional cash to its shareholders.

Shareholder uproar over unlocking value has intensified after Einhorn's Greenlight Capital last week criticized a proposal that would prevent Apple from issuing preferred shares and urged shareholders to vote against the proposal. He also sued Apple saying that the iPhone maker has volated SEC norms by bundling more than one matter in to a single proposal.

[Related -Can Eric Schmidt Resolve Google Inc's (GOOG) Biggest Challenge After $100 Mln Bonus?]

Subsequently, Apple issued a statement saying that shareholders would still have the right to approve preferred stock even if the proposal is adopted.

Apple has invested around $10 billion in capital expenditure last year and that the company will spend a similar amount this year, Cook said at the conference on Tuesday.

"We're investing in retail around the world, in product innovation, in new product, in supply chain," the Wall Street Journal reported quoting Cook as saying. "We're acquiring some companies."

[Related -Sobering Quarter and Guidance for Long-Time Apple Bull]

Apple plans to return $45 billion to shareholders in the form of share repurchases and dividends over three years, the company said in a statement of February 7. Apple announced a dividend of $2.65 a share and buyback in March 2012 .

RBC Capital analyst Amit Daryanani expects that Apple could double its dividend to a 4%-plus yield – or more - and start returning additional excess capital to shareholders.

"In our view, an increase to a 4%+ dividend could get the stock moving upwards in the near-term as the company has ample cash to fund the dividend ($43 billion domestic cash)," Daryanani wrote in a note last week. 

Wall Street, which was expecting some signs of revision in capital allocation, were disappointed with Cook's comments, resulting in 1.5 percent drop in Apple shares in mid-day trading on Tuesday.

The stock has been trading between $435.00 and $705.07 for the past 52 weeks.



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