|Court Blocks Apple Shareholder Vote|
|Bill McGuire||Feb 22, 2013, 3:59 PM|
A federal court judge in New York today granted a request by hedge fund Greenlight Capital to block Apple Inc. from including a measure on its shareholder ballot that would limit the iPhone maker's ability to issue preferred stock.
Greenlight Capital's David Einhorn, whose firm owns more than 1.3 million Apple shares, sought the injunction after complaining that Apple was hurting shareholder value by holding too much of its $137 billion cash hoard, the most of any firm.
U.S. District Judge Richard Sullivan granted the preliminary injunction stopping the vote on that proposal, set for Feb. 27 at the company's annual stockholders' meeting. He ordered the two sides to submit briefs outlining the next steps in the case.
Apple CEO Tim Cook has defended the company's use of its cash: "We do have some cash, but it's a privilege to be in this position …where we can seriously consider returning additional cash to our shareholders," he told the Goldman Sachs Technology and Internet Conference.
"Apple doesn't have a depression-era mentality" about cash, he said. The company, he added, makes "bold bets," investing $10 billion in research and development last year.
Cook said Apple will "thoroughly consider" a proposal by Einhorn, who wants the company to issue preferred shares that pay a high dividend.
"Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders," Einhorn said.
He's urging Apple shareholders to vote down a proposal to eliminate preferred stock and sought a federal court order to bar the firm from certifying votes cast in favor the proposal. Preferred shares often pay a higher dividend than common shares.
Cook had called the Einhorn suit a "silly sideshow" that detracts from Apple's real mission of creating top products. "Our north star is great products. When everyone comes to work every day they think about that. We wouldn't do anything we don't think is a great product," he said.
A Greenlight Capital spokesman had said in an email in response to Cook's comments, "If Apple thinks the lawsuit is a waste of resources, it could simply end the matter by complying with existing law and filing a new proxy that unbundles the proposed changes to the charter so that shareholders can express their views on each matter separately."