The fight over Apple’s cash pile is starting to take its toll.
Apple CEO Tim Cook yesterday characterized a lawsuit brought by hedge-fund honcho David Einhorn as a “silly sideshow” and a “waste of shareholder money.”
While Cook said Apple is in “active discussions” about spending some of its $137 billion cash hoard, investors were disappointed that he didn’t elaborate. Shares fell 2.5 percent yesterday to close at $467.84.
Einhorn, the founder of $8 billion Greenlight Capital, wants Apple to return more cash to shareholders.
As part of that effort, he sued last week to thwart Apple’s plan to eliminate its ability to issue preferred stock without shareholder approval, so-called blank check preferred stock.
Einhorn argues the proposal violates securities law and is an impediment to doling out cash.
“If Apple thinks the lawsuit is a waste of resources, it could simply end the matter by complying with existing law,” he said.
Pension funds such as the California Public Employees Retirement Fund are backing Apple. Yesterday, proxy advisory firm Glass Lewis also came out in support of Apple.
Einhorn wants Apple to issue preferred stock that pays a 4 percent dividend.
At a Goldman Sachs conference yesterday, Cook called the proposal “creative” and reiterated that the company is considering it.
Although shareholders are generally opposed to blank check preferred stock, they also want Apple to come up with a plan to use its stash of cash.
“We support measures to get more cash back to Apple’s shareholders,” said Bob Grady, chairman of the $70 billion New Jersey Division of Investment, which owns 1.7 million shares in Apple.