Einhorn drops lawsuit versus Apple, ends challenge

SAN FRANCISCO Fri Mar 1, 2013 3:15pm EST

David Einhorn, president of Greenlight Capital, speaks during the Sohn Investment Conference in New York, May 16, 2012. REUTERS/Eduardo Munoz

David Einhorn, president of Greenlight Capital, speaks during the Sohn Investment Conference in New York, May 16, 2012.

Credit: Reuters/Eduardo Munoz

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SAN FRANCISCO (Reuters) - Hedge fund manager David Einhorn's Greenlight Capital withdrew its lawsuit against Apple Inc, after winning an injunction last week that blocked the iPhone maker from moving forward with a shareholder vote on a controversial proposal.

Apple had sought to limit its ability to issue preferred shares without a shareholder vote, but Einhorn challenged that in court as part of an effort to unlock more of the company's $137 billion cash hoard.

U.S. District Judge Richard Sullivan ruled in Einhorn's favor last week and on Friday granted the motion to withdraw his lawsuit.

Einhorn wanted Apple to issue what he called "iPrefs," or preferred shares with a perpetual 4 percent dividend. He argued that, if the proposal had passed, it would have complicated future attempts to issue such securities.

"Apple removed the bundled proposal from the shareholder meeting, therefore resolving the issue," Greenlight said in a statement after the court, acting on its request, ruled to close the case.

Apple did not respond to a request for comment.

Chief Executive Tim Cook pledged to take seriously Einhorn's and other investors' suggestions on how to unlock more of Apple's cash pile, one of the largest in technology and equivalent to Hungary's Gross Domestic Product.

Investors have grown increasingly strident as the cash hoard swells and Apple's share price -- which is down 35 percent from its September peak -- continues to wallow at levels not seen since early 2012.

At its annual shareholders' meeting on Wednesday, Cook conceded that there had been widespread disappointment among investors used to consistent capital gains, and said the board was actively looking for ways to reward shareholders -- but he gave no details on what they were considering.

Major institutional investors have long urged Apple to expand a dividend and share-buyback program that Cook instituted shortly after taking the helm from the late Steve Jobs. But Einhorn's lawsuit in February -- and his simultaneous lobbying in the media -- brought the issue to the fore.

Some analysts say the cash debate has overshadowed what may be a more important long-term issue, whether Apple's product pipeline contains a device that can offset slowing revenue and market share growth.

The case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900.

(Editing by Jeffrey Benkoe)

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Comments (2)
americanguy wrote:
Check this Einhorn guy out.
He makes most of his money shorting stock and the stock price apparently falls after he makes public negative statements about the company that he shorted.
One example of many:
“In January 2012, the U.K. Financial Services Authority (FSA) fined Einhorn and Greenlight Capital $11.2 million for allegedly trading on inside information.”
Glad he pays little or no income tax on the 1.1 billion he made, he is a great guy!
It is an honor for me to pay higher income taxes so he can get tax welfare.

Mar 01, 2013 4:03pm EST  --  Report as abuse
JapanViewer wrote:
Say what you want about these hedge fund guys (heartless capitalists, the cause of starvation in far corners of the world, etc.), but Einhorn’s win is a real win for democracy and the little guy (the shareholder), despite the fact that most of these “little guys” are mega rich corporations and individuals, but they shouldn’t either be short-changed in their investments.
Kudos to Einhorn, Kudos to the courts, Kudos to democracy.

Mar 01, 2013 4:14pm EST  --  Report as abuse
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