Judge Blocks Vote on Proposal 2 at Next Week's Apple Shareholder Meeting

[MacRumors]

A judge has decided to block a vote on Question 2 at Apple's annual shareholder's meeting next week, according to a report from Reuters.

Hedge fund Greenlight Capital, a major shareholder of Apple stock, filed a lawsuit earlier this month asking that Apple be prevented from bundling a number of proposals into one ballot question at the shareholders meeting. The firm argued that the bundling of three separate corporate governance proposals into one question was in violation of SEC rules.

A judge handed hedge fund star David Einhorn a victory in his court battle with Apple Inc on Friday, blocking the iPhone maker from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

Proposal 2 contains language relating to the term of office of the board of directors, language about the board's ability to issue preferred shares of AAPL stock without shareholder approval, and the establishment of a par value for the company's common stock.

Apple CEO Tim Cook called the lawsuit a "silly sideshow" and "a waste of money for all involved", but the judge presiding over the case disagreed. Apple issued a statement in early January saying it was in "active discussions" about ways to return cash to shareholders as Greenlight head David Einhorn has requested.

Update: AllThingsD has the text of the judge's ruling.

Update 2: Apple has withdrawn Proposal No. 2 from its proxy statement, issuing this statement:

We are disappointed with the court's ruling. Proposal #2 is part of our efforts to further enhance corporate governance and serve our shareholders' best interests. Unfortunately, due to today's decision, shareholders will not be able to vote on Proposal #2 at our annual meeting next week.

Article Link: Judge Blocks Vote on Proposal 2 at Next Week's Apple Shareholder Meeting

[komodrone]

can someone explain to me like a 9 year old on what the hell is going on?

how about explain it to me like a 5 year old?

[Squilly]

It's clear Apple doesn't like to lose...

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Originally Posted by komodrone

can someone explain to me like a 9 year old on what the hell is going on?

how about explain it to me like a 5 year old?

Apple was sued and lost.

[MTL18]

Originally Posted by komodrone

can someone explain to me like a 9 year old on what the hell is going on?

how about explain it to me like a 5 year old?

In as simple of wording as possible - Apple tried to use some trickery on a shareholders vote. A judge deemed it a no go, as it violated rules of the securities and exchanges commission (SEC).

[Benjamins]

Originally Posted by komodrone

can someone explain to me like a 9 year old on what the hell is going on?

how about explain it to me like a 5 year old?

http://dealbreaker.com/2013/02/david...-in-the-world/

Einhorn wants Apple to issue two hundred thirty-six billion dollars of iPrefs, or five $50-par, 4%-coupon iPref shares per common share. That’s more than half of Apple’s market cap, but Apple’s market cap is the wrong denominator. If Apple took Einhorn’s advice and issued $236 billion of listed preferred, it would be issuing more than the entire market cap of all the publicly traded preferred stock in America, combined

basically Einhorn thinks Apple should worth much more than it is right now. In order to reflect that he wants Apple to issue a ton of prefer stocks. Apple thinks that is crazy.

[ouimetnick]

This is what I got from reading the article.

[WhoDaKat]

Time for a serious share buyback.

[spoonie1972]

Originally Posted by WhoDaKat

Time for a serious share buyback.

as someone who understands nothing about this kind of system, what would it take for apple to become private? could it do it legally within the next 5 years? 10?

[iMikeT]

Einhorn sticking it where it doesn't belong again....

[Peace]

Originally Posted by spoonie1972

as someone who understands nothing about this kind of system, what would it take for apple to become private? could it do it legally within the next 5 years? 10?

It would take a lot more cash and securities than Apple has.

[knemonic]

What the... That's it! Einhorn is Finkle! Finkle is Einhorn! Einhorn is a man! Oh, my GOD! Einhorn is a man!

[msdarkroom]

Originally Posted by spoonie1972

as someone who understands nothing about this kind of system, what would it take for apple to become private? could it do it legally within the next 5 years? 10?

It would generally take a large private equity group who was able to raise roughly 20-40% MORE than the current market value of the company they wanted to take private. In this case, the group would have to come up with 500 to 600 billion dollars based on today's closing price.

[MTL18]

Originally Posted by spoonie1972

as someone who understands nothing about this kind of system, what would it take for apple to become private? could it do it legally within the next 5 years? 10?

Apple would have to come up with enough money to buy it out of the stock market. This typically comes at a premium as well.

AAPL currently has a market valuation of 425 billion dollars. Therefore, one could postulate that Apple would need to come up with over 500 billion in raw cash in order to take it private (assuming AAPL's market cap falls tremendously as well).

Over the next 5 or 10 years, it is tough to tell. If Apple can continually bank 50 billion per year while having it's stock grown 0% YOY (close to where we are at today), than certainly.

Remember though, Apple is at a low cycle in it's P/E valuation. It has dipped into the 10/11 range before, but has always rebounded back into the low 14s. At this point in time, it seems unlikely, but anything is possible.

[buysp]

Apple innovates in the courtroom

[SeattleMoose]

The best judicial decision money can buy. The sharks see the pile of cash and will do anything to get it. Einhorn represents everything that is wrong with our financial system. Pretending to be doing this on "behalf of the shareholders". As a shareholder I would much rather have Apple control what they do with THEIR money than some sleazy shark....

[MTL18]

Originally Posted by Benjamins

http://dealbreaker.com/2013/02/david...-in-the-world/



basically Einhorn thinks Apple should worth much more than it is right now. In order to reflect that he wants Apple to issue a ton of prefer stocks. Apple thinks that is crazy.

I found this report interesting. The investors and banksters that sent us into 2008 now want to tell the most valuable company in the world (that built it's value during their recession) what to do? And a judge says .... sure...

What a piece of junk system! My 0.02

[iGrip]

Originally Posted by MacRumors

Apple CEO Tim Cook called the lawsuit a "silly sideshow" and "a waste of money for all involved", but the judge presiding over the case disagreed.

Apple management is out of control. The BOD needs to check them. Hard.

If they don't, the BOD will be RIP. The shareholders own the place. Lock, stock and barrel. The BOD serves at the pleasure of the shareholders, and the management serves at the pleasure of the BOD.

Who the hell do these guys think they are? They act like they own the place instead of being merely employees.

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Originally Posted by spoonie1972

as someone who understands nothing about this kind of system, what would it take for apple to become private? could it do it legally within the next 5 years? 10?

It would take a private person or entity (or a team of such persons and entities) to offer a high price to buy all outstanding shares from the Hedge Funds who currently own them. Such a deal would be approved by the BOD. Then the shares would be purchased by the takeover person/people/entity/entities, who would then own Apple just like you own your car.

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Originally Posted by Peace

It would take a lot more cash and securities than Apple has.

Ummmm.......Apple's cash ownership is irrelevant. The entity would not be buying its own stock in order to "go private".

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Originally Posted by SeattleMoose

The best judicial decision money can buy. The sharks see the pile of cash and will do anything to get it. Einhorn represents everything that is wrong with our financial system. Pretending to be doing this on "behalf of the shareholders". As a shareholder I would much rather have Apple control what they do with THEIR money than some sleazy shark....

It is not Apple's money. The money belongs to you (a tiny bit) and to the sleazy shark (much of it).

What you want is for Apple to control YOUR money, instead of you controlling it. Fair enough, that is why you invested.

But don't worry about some sleazy shark controlling your money, or about them controlling Apple's money.

[Rocketman]

This isn't a conspiracy on either side. The issue hinged on "shareholder confusion" (silly given the percentage of institutional ownership), that putting three different issues into a single proposal might cause.

Confusion or not, the fact such different proposals were combined into one, is what the judge took note of, makes voting for what you want or don't want more difficult and unlikely, not "easier".

1. Set a par value
2. Eliminate Preferred stock (unless another vote reinstates it)
3. Management rule

Notice has been given on Proposal 2, so at the meeting they should bifurcate it to the three issues, take votes and show the results of those votes to the judge for affirmation.

Is that easy enough for a 5th grader?

Rocketman

As for Apple going private, it is entirely practical. With the $500B market cap and the $137B in cash they could easily do a LBO. Every bank on the planet wishes they were lending Apple money. At free cash flow of about $20B a quarter and rising, they could pay off all debt in about 5 years or less. Apple SHOULD go private IMHO.

[stuffradio]

Originally Posted by MTL18

Apple would have to come up with enough money to buy it out of the stock market. This typically comes at a premium as well.

AAPL currently has a market valuation of 425 billion dollars. Therefore, one could postulate that Apple would need to come up with over 500 billion in raw cash in order to take it private (assuming AAPL's market cap falls tremendously as well).

Over the next 5 or 10 years, it is tough to tell. If Apple can continually bank 50 billion per year while having it's stock grown 0% YOY (close to where we are at today), than certainly.

Remember though, Apple is at a low cycle in it's P/E valuation. It has dipped into the 10/11 range before, but has always rebounded back into the low 14s. At this point in time, it seems unlikely, but anything is possible.

Why would Apple want to do though?

[nagromme]

I don't know whether Greenlight is right about the preferred stock (and I don't much care) but it certainly sounds like they're right about the inappropriate bundling.

Follow the rules!

I say, keep the cash and use it in future when the strategic moment comes. Rather than giving it to Greenlight OR lawyers!

Anyone worried about the stock price should be worried about stock manipulation (and media ad-baiting) affecting the perception of the company's very real success. They shouldn't be worried about counter-manipulating the stock. Get the facts out there--be a voice of reason. That shouldn't be as rare as it is.

Originally Posted by komodrone

can someone explain to me like a 9 year old on what the hell is going on?

how about explain it to me like a 5 year old?

Here on an Internet forum, is there really any other way?

[Kaibelf]

Originally Posted by stuffradio

Why would Apple want to do though?

So that fools like Einhorn don't try to decide what Apple does based on his armchair quarterbacking, and Apple is free to actually plan its own destiny. If going into the phone business or creating tablets was up to a vote, do you think people like him would have seriously said yes? They would have balked at the risk.

[DaveTheRave]

Originally Posted by SeattleMoose

The best judicial decision money can buy. The sharks see the pile of cash and will do anything to get it. Einhorn represents everything that is wrong with our financial system. Pretending to be doing this on "behalf of the shareholders". As a shareholder I would much rather have Apple control what they do with THEIR money than some sleazy shark....

Asking a judge to force Apple to allow individual votes instead of bundling them together to reduce likelihood of having them pass is wrong? If anything this is a win for shareholder rights. You should be happy since large companies routinely steamroll small shareholders' interests.

[Rocketman]

Originally Posted by nagromme

I don't know whether Greenlight is right about the preferred stock (and I don't much care)

Their reasoning for issuing preferred stock with a perpetual dividend, provided to each shareholder, is to provide one more pipeline of capital and income to shareholders.

The Apple BoD has determined a common stock dividend is sufficient, stock buy backs are sufficient, and the capital they have in the form of cash is serving a valuable purpose to protect from catastrophie, to invest in supply chain which shockingly few companies do at all, and buying firms on a regular basis. Apple currently only has common stock.

In this "recession", companies and investors generally have a high cash position, so why not Apple too? It is to scale.

Apple's recent high water mark was about $700B in market cap so the $137B in cash is only 20%. What percentage of your overall assets are in something you can sell in 30 days or less? Assume you can sell a house or building at "some price" within that time frame.

Rocketman

[Bubba Satori]

Originally Posted by iMikeT

Einhorn sticking it where it doesn't belong again....

Hi Tim.

[Rogifan]

Can someone remind me again what's good about hedge funds?