Preferred stock seen as Apple's chance to 'seize the opportunity' and reverse losses - Page 2

Apple doesn't need to "reverse losses", because it hasn't had any losses. Apple's stock has lost value, but the company has not lost money. In fact, Apple remains extremely profitable. What's happened is there is a disconnect between Apple's financial performance, which by any object measurement has remained stellar, and Wall Street's inflated expectations.

What Apple needs to do more than anything else is innovate. All of their major product segments are rapidly approaching saturation, meaning that going forward a higher percentage of people will only be buying an Apple product when they feel it's time to upgrade. Unfortunately, that's not going to keep Apple's profits flying high. They need to invent new insanely great products that will define new product categories, like the iPad did with the tablet segment. Apple didn't invent the tablet, but the iPad transformed it into something huge.

Apple needs to do that again and surprise us with something we didn't know we needed until they gave it to us. Steve Jobs understood that. Now that he's gone, Apple's current management needs to understand it, too.

 

Bingo. That's what the issue really is. Destroying the preferred class of shareholders, of which Einhorn's a member. Apple wants shareholders that are in this to support Apple, not to make easy money. And yet they aren't destroying the whole preferred shares outright, just saying they want that call to go to the full class of shareholders. Let them decide if a few of their own get special treatment or not. Rather than the Board,who might also benefit by way of having invested in some of these funds, decide without override to benefit such groups as special 

 

If  Einhorn was really in this to benefit shareholders and not just himself he would have been screaming for a split when the stock was $700+, higher dividends for all shares etc.

 

and I'm not shocked that White would jump on this or in this way. My only questions are if he's invested in this same fund, or giving guidance on it or was he asked to comment on this issue to his investors by Einhorn.

 

You've got it wrong. They shouldn't spend, they need to keep saving it up. So they can buy the government. Apple is Sautech. 

Declarations that Apple's >$400 share price is "low", referring to their position as needing to recover from "losses", all of these negative "Apple is in trouble" kind of perspectives, all completely redirecting from the fact that Apple is in an extraordinarily healthy state, and in rarefied and unseen territory as a company, and shows few signs of abating...

Yes, relative to the price some months ago, relative to standard earnings multipliers, etc%u2026 the SHARE price is down, and probably below where it should be.

The price was CLEARLY manipulated into this position by carefully placed and timed negative "analyses" tied to large-scale buy/sell cycles. A group of funds sold off large amounts of stock almost in lockstep, while at the same time specious articles quoting 'analysts' predicting 'problems for Apple' (that don't actually exist - like the declared 'sudden free-fall of demand for iPhone based on%u2026' shifting supply orders?), were injecting FUD into the marketplace%u2026

These guys made a killing in the process. I would look into Einhorn's longer term movement with regard to Apple. Analyze his buy/sell cycles in coordination with these analyst releases%u2026 is he manipulating the stock for his own gain? I would mark him as suspect.

They're lucky I'm not with the SEC. I'd be all over him like a bad shirt.

Meanwhile, as we saw in recent slightly pre-Jobs-return history, NOT having a strong cash reserve puts a company at risk of failure.

There are better ways to 'redistribute' profits to ALL shareholders, fairly and incrementally.

Einhorn really needs to stand down.

Just fine until your last two sentences. How can you possibly believe they are not working on the next big thing that you don't know you want? Sheesh.

 

 

I think he did say "it was the biggest mistake JOBS ever made…"  Noticed.

 

And the only reason Sculley appeared 'successful" is because for several years he rode the momentum that Apple already had when he took the helm. He butied it, slowly and incrementally. I remember… I was there as an active observer during those years.

 

I watched Sculley's leadership take Apple from a 25% market share in Japan, to a 2% market share as it approached bankruptcy...

 

Success and Sculley are two words that DO NOT belong in the same sentence synonymously. To do so means you are trying rewrite a very valuable history lesson.

 

I have to agree that I don't think it was the dividend but rather then date that did it.

 

October was the anniversary of Steve's death. Many folks that don't understand tech development and how it is a multiyear process believed that at this one year mark anything Steve was a part of was come and gone (when in truth that time could be another decade on some items)

 

So Fall 2012 was, in the eyes of the less educated, the start of Tim Cook's Apple. They expected something wiz bang crazy amazing to show them that Tim was just as magical as Steve, like that real TV, and didn't get it. Add this to the analysts and their way overinflated predications and the drop was easy to see coming. 

 

However I disagree that the users are leaving. They aren't. If anything they are growing. It's only the investors looking for quick money that are leaving. And that could be a good thing. Especially if the analysts go with them. And the hit whoring blogs that will drop Apple into everything they can to score eyes and love to connect Apple to everything in a negative way. Like the mentioned Foxconn freeze. Evened was quick to bash Apple but no one bothered to find out the truth before printing. Which was more along the lines that condition improvements are working so well that almost every employee working the Apple lines asked to continue working here, leaving no room to hire more people. 

Every major piece of software in existence has its share of bugs.

 

I don't know who you are, but you are unerringly debating in favor of Einhorn's position, and brushing aside all the good sense of those opposed as if they have no validity. How does "Apple stock reversing" have anything to do with 'preferred or not preferred, and WHO gets to decide that"?

 

You are also painting opposition to Einhorn's position as foolish, short-sighted, etc. This post here works to divide us all into an image of your own making. Two camps. those with the 'luxury to wait around happily cheering on Apple" ('on paper' implies that they aren't as strong as they appear…? seriously?) and "those who need Apple to reverse its LOSSES"….

 

The STOCK took a hit. Apple hasn't seen any LOSSES in a long while. Apple itself is in fine shape, immensely profitable and with a growing cash pile. Some of us are looking beyond the immediate arguments. I ask, WHY has the stock been hammered, if the company is in such great shape? It reeks of manipulation. And lo and behold, a financial shark (Einhorn) appears in the midst of THAT, going after Apple aggressively regarding changing the earnings game…? And you argue entirely on the behalf of that position? M-hm...

 

It isn't wise to invest money into the stock market that you had earmarked for buying a house… the stock market is NOT a moderate-to-low risk environment. Vacation money, retirement money… stock market is the LAST place those are invested, or you're putting those at undue risk.

 

Apple's stock price WILL go up, a lot, and quickly. As soon as people like Einhorn get out of the way and let it accrue naturally. While they're CREATING the downward pressure through carefully timed 'analyst' releases and buying manipulations (based on a background agenda like the one apparent here now), the stock will not mature as it should.

 

Einhorn will lose the push to allow preferred shares. He will cease his campaign, and the stock will rebound quickly toward where it should be. Why would you have a problem with that?

It most certainly can be!

More generally, what's your point about corporations? The fact that they have limited liability? Why should that matter?

 

Actually, no, the house can't be a corporation, although it can be owned by one. The point to that question was that you didn't have a valid analogy. The point about corporations is that they own themselves, the stockholders simply own stock issued by the corporation, not the corporation itself.

You've got your facts twisted. Einhorn is suing Apple over 3 propositions shareholders are to vote on which are bundled together. The law suit is about whether the bundling is legal according to SEC rules. One of the 3 propositions, the one he's against, was thrust on Apple by a group pushing for more transparency for shareholders. Do you see the irony here?

Secondly Einhorn presented this idea about preferred shares with special dividend rights attached and Apple responded by saying that the idea was creative and warranted study. Further, apple has made statements over the past many weeks since the quarterly results announcement that they were "actively looking at ways to return shareholder money".

In fact it's not a straightforward thing. 80% of that money is overseas and repatriating that money would mean a huge second tax bite (apple already paid tax on it in the country where it was earned). So only about 20% of AAPLs billions are even eligible to be used. What Einhorn wants is for apple to borrow money in the USA to pay for a special dividend and have to pay back that borrowed money out of USA revenues. Is that in the best interest of shareholders? If you say yes I bet you work on Wall Street.

I wonder.... how low does APPL need to go before $130 billion can be used to take the company private?

Apple doesn't control Wall Street. The decline of AAPL is unsupportable given Apple's balance sheet, plain and simple. But as any savvy investor can tell you, market psychology is what counts the most in terms of explaining the rise or fall of a particular stock. There's nothing that AAPL can do in the short term to change this. The only reason that Apple has been as successful as they are and has as much cash on-hand as they do is because of innovation.

Being an investor carries with it a responsibility to stay on top of market trends. This is true with any equity, not just AAPL. Taking a big loss on AAPL is inexcusable considering that the decline is not something that happened overnight. AAPL has been falling for months. If anyone was caught sleeping at the wheel all this time, it's their own fault.
Edited by popnfresh - 2/21/13 at 1:04pm

 

Well, they're on track to have $200 billion in cash by the end of this year. And their market cap is on track to plummet to roughly that in almost the same amount of time.

Simple - Apple should decide how they handle their cash, not an idiot who bought stock when the price was high and now wants to save his reputation. If Einhorn's such a genius, how come he waited to buy Apple stock until the price was high, as other hedge fund managers were already lowering their positions?

Very funny interpretation. Apple was 6 months from bankruptcy when they brought Jobs back. They were losing money at a very fast rate.

It's obvious you're not an investor. You're just a troll. That is not my "solution", nor did my post infer it would be. I'm not going to dignify with an explanation the ad hominem rants of some adolescent who is only here to engage in a flamewar, but in the future I would advise you to keep your insults to yourself.
Edited by popnfresh - 2/21/13 at 3:27pm

Absolutely not (I am restricting myself to the US, here). Shareholders are the owners, but they delegate the day-to-day running of the business to their agents, namely managers.

 

Stay with me here.

 

In the US system, the officers of the corporation are accountable to the Board, and the Board, in turn, has the fiduciary obligation to oversee the affairs of the corporation using shareholder value maximization as the sole criterion (unless, of course, you are a 'B' corporation -- of which there are not many). This is all well-understood ever since the classic work of Berle and Means (The Modern Corporation and Private Property, 1932) and numerous subsequent court decisions.

 

This distinction between owners and managers, in turn, creates a massive problem commonly referred to as an 'agency problem'. What this separation of ownership and control creates is the incentive for agents (managers) to screw over the 'principals' (owners). A great deal of corporate law, regulation, and disclosure is all about attempts to mitigate this agency problem (not always successfully, however).

 

Consider non-pubic corporations (e.g., the S-Corp). Surely, you would agree that equityholders are quite obviously the owners of such 'corporations'? There is conceptually no difference between an S-Corp and a public corporation in terms of who the owners are, except that, with the latter, ownership is dispersed, ownership rights trade on stock exchanges, and public corporations have more detailed reporting/disclosure requirements.

Corporations, including AAPL are less concerned with their trading value than their corporate valuation, and it is not the company that sets their trading value, it is the market. Knowing that then we must understand that the only influence the company can do is to create the very best in product and service that is possible. The rest is all fluff, so this lawsuit is nonsense because in providing preferred shares to owners of their shares means that the company actually loses valuation since it is eroded because giving it away does not benefit the value of the company, only the shareholder. Is that a bad thing? Not for the shareholder, like this greedy bastard. And to be perfectly honest I'd love it but then i'd be fighting the long-term value of AAPL shares, which would not benefit me unless I was only concerned with the short term. I am a long-term holder, so I am totally opposed to the idea of giving corporate money to those whose only interest is to dry up AAPL share valuation for a momentary gain. 

 

Apple is clearly a remarkable company, let them do their best and if you own shares, hang on for the ride as it will provide all of us stock holders with gain as the public continues to believe in and purchase their products and services. As for the lawsuit, its a bunch of nonsense.

Only one problem with all of that. The Supreme Court has ruled otherwise.

First, the shareholders do not own the company in a traditional sense. They own specific rights granted to them proportionate to the share of stock they own, but that's not quite the same things. Someone else posted the Supreme Court decision a while ago.

In addition, the Board does not have a fiduciary responsibility to increase share value, nor do they have a legal responsibility to the shareholder. The same decision says that their responsibility is to the company. In one simple example, if they have to choose between the long term survival and health of the company vs increasing shareholder value in the short term, they are supposed to choose the former. As another example, there are plenty of examples where the board rejected a takeover offer - even one that was significantly higher than the current share price. If the board determines that it's in the company's interest to stay independent, they are free to vote that way - even if the shareholders feel otherwise.

I used to believe that the Board has a responsibility to the shareholders, as well, but the Supreme Court case that was cited here convinced me otherwise.

Granted, in 99% of cases, what is good for the company is good for the shareholders, but not 100%.

Man, you are off the freakn planet.

Why why in the world would Apple ever want to borrow that amount of money when it doesnt have to and put itself at risk. Crazy.

With the reserves that they have today never mind the future - phhht that's asylum talk.

 

You must be in the markets - not in the real world..

Oh, I can read and thanks for your concern about NZs education system.

I think we can safely dismiss your notion that Apple could borrow to go private and say, Apple will never borrow to go private. That would be completely irresponsible of the BoD to put the company at risk.

 

Champion Einhorn all you want - I think it's a smokescreen and the reality would turn out to be that control of the iPrefs would end up in the hands of a few. Does that benefit Apple ? At the end of the day it would be just another market to trade in. Another market indicator that Wall St can point to and manipulate. Sure a few would benefit short term. Long term for Apple, meh who knows ?

Does Apple need to do this ?

I say, No, it's not needed.

I think we can agree to disagree.

Edited by RobM - 2/22/13 at 11:54am

Shareholders meeting 27 Feb.

No doubt this will be kicked around there, where it should be.

I'd expect the BoD to mull over what comes out of that meeting then make a statement.

Or they may even have a special vote to decide some of the issues rather than issue a judgement call.

 

As an investor I trust the board. I am not expecting them to do anything else other than what is prudent and responsible.