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Apple considers returning cash to investors after Einhorn lawsuit

BusinessNews
by Rawiya Kameir
, 08 Feb 2013News
Apple considers returning cash to investors after Einhorn lawsuit

US hedge fund manager David Einhorn is suing Apple for failing to distribute more of its $137 billion (£87 billion) cash holdings to investors.

In the complaint, filed with a New York court by his Greenlight Capital hedge fund, Einhorn said Apple’s strategic decision to hold on to its cash stores did not prevent the company from sharing out dividends. Einhorn urged the company to distribute preferred stock to existing shareholders, which would divvy out a fixed dividend over time.

“[Apple] has sort of a mentality of a depression. In other words, people who have gone through traumas... and Apple has gone through a couple of traumas in its history, they sometimes feel like they can never have enough cash,” the hedge fund manager told CNBC.

Though Einhorn claims Apple originally turned down his proposition, the company has now said it will ‘evaluate’ his request.

In a statement released on 7 February, Apple admitted it had managed to accumulate more cash than needed to operate its business and said it was exploring other options.

"Apple's management team and Board of Directors have been in active discussions about returning additional cash to shareholders," the company said. "As part of our review, we will thoroughly evaluate Greenlight Capital's current proposal to issue some form of preferred stock. We welcome Greenlight's views and the views of all of our shareholders."

After saying it was in discussions to return cash to investors, Apple sent its stock climbing by three per cent, up to $468.25 (£298). The company's shares have been dropping steadily over the past few months, down by some 35 per cent from a record high in September 2012 when it was preparing to launch the iPhone 5.

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