Apple 'Seriously Considering' Returning Cash to Shareholders

Javier E. David | Special to CNBC.com
Wednesday, 27 Feb 2013 | 4:15 PM ET
Apple Inc. headquarters in Cupertino, California.
Source: Joe Ravi | Wikipedia
Apple Inc. headquarters in Cupertino, California.

With Apple's stock being hammered daily and shareholders increasingly pointing at the company's huge war chest, CEO Tim Cook hinted on Wednesday he was "seriously considering" ways to return some of the company's cash hoard.

At a shareholder meeting in its Cupertino headquarters, Apple put forth a raft of relatively minor governance proposals. However, the iPhone maker sidestepped hints of a new strategy to parcel out more of its sizable money pile.

Cook renewed his criticism of shareholder activist's David Einhorn's lawsuit against the company as a "silly sideshow". The controversy has put added pressure on a stock that has fallen sharply in the last several months, shaving billions off Apple's market share, and making investors more nervous about its ability to keep up with fierce competition from competitors Google and Samsung.

Cook acknowledged as much on Wednesday, as he fielded questions from shareholders.

"I don't like it either," Cook said about the stock's tumble from an all-time high hit last fall. He added the company was focused on the long term, and that 2012 had been "an incredible year of innovation" at Apple.

Apple is currently sitting on more than $137 billion in net cash, with $23 billion of operating money collected in the last quarter alone. Einhorn — who a few weeks ago likened Apple's cash management to his frugal grandmother's — is vigorously pressing the iPhone maker to deploy some of that cash in the form of a special dividend or preferred stock.

Apple: In Active Discussions on Returning Cash
Apple says it is active discussions about returning additional cash to shareholders, reports CNBC's Scott Wapner.

Still, Cook's words did little to boost Apple's battered stock. In a measure of investors' disappointment that the company failed to offer any new incentives, Apple's shares drifted lower in afternoon trading, falling by about one percent to $444.

"The cash hoard is purely the spoils of past victory. The positive cash flow is a measure of how competitive their products are and how much you're willing to pay for the design," said Kevin Landis, co-founder and CIO of Firsthand Funds, also an Apple shareholder. "Everybody agrees it's a high-quality problem they have."

(Read more: Apple's Cook Calls Einhorn Lawsuit 'Silly Sideshow', Says Company's Not Tight-Fisted)

Einhorn: Apple's Cash Mentality 'Depression'
David Einhorn, Greenlight Capital founder and president explains why he is opposed to Apple's proposal to eliminate preferred stock.

After Apple tried to advance a new shareholder proxy filing, Einhorn, founder of Greenlight Capital, filed suit against the iPhone maker, saying the proposal could eliminate the option of preferred stock. Last week, a federal judge ruled in Einhorn's favor.

As a result, shareholders were not able to vote on Apple's proposal No. 2, which the company was originally planned to bring up for a vote at Wednesday's shareholder meeting.

When asked about whether he still believed Einhorn's lawsuit was silly, Cook responded: "I absolutely do."

(Read more: Court Rules in Favor of Einhorn in Apple Dispute)

The tech giant also voted to approve new governance proposals on Wednesday, including approving its slate of directors, its accounting firm, and a plan giving shareholders more say on executive pay. Two proposals over executive stock and human rights failed to pass.

Apple shares have fallen more than 30 percent since their peak above $700 last September. What's Apple stock doing now? Click here for the latest quote.

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