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Unrest boils at annual shareholder meeting, but things remain civil

Apple, Inc. (AAPL) CEO Tim Cook won reelection to Apple's Board of Directors by a 99.1 percent vote.  Apple is enjoying record profitability and is rumored to be working on a new project -- a smart watch.

I. Cook Acknowledges Disappointing Share Prices Amid Lawsuit

And yet share prices have been on a downward slide, dipping as "low" as $435 USD per share in recent weeks.  Some investors are worried that future Apple products won't be as big hits as the iPhone and iPad; others are angry that Apple is sitting on $137B USD in cash and securities, yet is failing to grow share buyback and dividends at an equivalent pace.

At the annual shareholder meeting, Tim Cook tried to placate his critics, arguing he was as mad as the next guy about low share prices.  He comments, "I don't like it either. The board doesn't like it. The management team doesn't like it.  What we are focused on is the long term. This has always been a secret of Apple."

Tim Cook
Tim Cook claims he shares shareholders pain about dropping stock prices.
[Image Source: Bloomberg]

Such a frank acknowledgement still sounds strange coming from Apple.  Mr. Cook's predecessor, the late Steve Jobs typically would refuse to apologize for anything.  By contrast, since taking the reins, Mr. Cook has been "all apologies" as the Nirvana song goes.

In a way that makes sense.  Mr. Cook himself was awarded one million restricted stock units last year (worth around $450M USD at current share prices); that fortune is hurt by low share prices, but could be boosted if share prices go back on the uphill climb.

However, top shareholder David Einhorn, who manages Greenlight Capital Re., Ltd. (GLRE), made a powerful statement by refusing to show up at the meeting.  Last Friday his firm scored an injunction invalidating a shareholder vote to scrap a proposal for Apple to issue preferred stock at its discretion.

Mr. Einhorn is pressuring Apple to "share the love", so to speak, by issuing preferred stock shares that would yield a fixed 4 percent annual dividend.  He claims his so-called "iPref" proposal would reward Apple's investors with more profit sharing, while not diluting the primary pool of shares.

II. Shareholders Stay Civil, But Send a Message to Apple

Shareholders flexed their muscle on other issues as well.  The shareholders ratified a proposal that would force Apple executives to hold more stock, which could push them to share more profit.  They also passed a measure that will force the company to commit a board committee on human rights, which will investigate allegations of abuse at the factories that make Apple products in China.  Apple opposed both proposals.

On the same note, Apple many shareholders voted against a pay raise for top executives, including Tim Cook.

California Public Employees Retirement System (CPERS), a large institutional Apple investor, voiced support for Mr. Einhorn's iPrefs proposal -- also known among shareholders as "Proposal 2".  Senior Portfolio Manager Anne Simpson said it was unfortunate that the issue was not put to a vote at the meeting.  She is quoted as saying, "We know there is hot debate going on with cash.  We are willing and happy to wait."

David Einhorn
Top Apple shareholder David Einhorn (manager of Greenlight Capital) is leading a push to force Apple to open up its treasure chest. [Image Source: Value Walk]

Tim Cook acknowledged the measure was being considered, while arguing that Mr. Einhorn's lawsuit to force the issue was a "silly sideshow".

While the mood was tense during the meeting, it remained mostly civil and there were moments of levity.  One shareholder pointed out that the Santa Clara, California Apple store lacked a bathroom.  Tim Cook agreed that was a problem and promised to look into it.

Sources: Reuters, Forbes



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RE: Seriously
By B3an on 2/28/2013 11:17:52 PM , Rating: 2
I completely agree with you. But i was already sick of all the Apple coverage years ago. Couldn't be any less interested. To avoid this i've started going to a few news sites where each report mostly on a specific company.

It's a shame there isn't a site that reports on everything tech related but does not cover Apple. I'm know i'm not alone here at all, i'm sure a site like that would get a ton of hits.


RE: Seriously
By exanimas on 3/1/2013 10:27:48 AM , Rating: 5
If you go on Engadget, you can actually add /exclude/apple to the end of the URL and not see anything tagged with Apple. Favorite that page and baby, you got yourself a stew going. :)


RE: Seriously
By Mitch101 on 3/3/2013 9:50:04 AM , Rating: 4
Agree if you had one person mention Apple your conversation was dominated with all Apple talk now its but a whisper and they are either in denial or you can hear the retreat in their voice as they know there are products on the market that rival them or are flat out better. The confidence that Apple was way ahead of everyone is gone to but a few fans. I just read an article that Apple tablet sales are starting to slide in market share which now you have iphone 5 sales warnings, tablet sales warnings, and now you have comparable products at nearly half the price of Apple in an economic recession. Im a huge fan of Microsoft but I use an Android tablet and like it. I especially love that I get all the functionality I want without the hefty price. This is why I think Microsoft failed with Surface RT because the price should have been $300 or less at $500 for RT its not smart. Im also not sure I need another tablet either I don't want to play crisis on my phone or tablet. I want to play words with friends or something along those lines if I was to play graphic intensive games and get serious I want to do it on my PC.

BTW Windows Phone is now 3.1% in the US. Doesn't sound like much but market share is increasing now even in the USA.

I personally believe Android has the best Tablet OS just have to get a good hardware manufacturer. I still believe Microsoft has the best Phone OS and to me personally again the Nokia 920 is a slightly better device than the Samsung Galaxy S3. But were about to go another round so hit the reset button. To me if your considering an iPhone your old and looking for an entry level smartphone if your more serious your looking for the next Samsung with android or the nokia pureview camera for windows phone.


RE: Seriously
By Tony Swash on 3/3/13, Rating: -1
RE: Seriously
By bug77 on 3/3/2013 5:09:01 PM , Rating: 3
Right, so declining share price is not a sign of floundering. I guess I've just learnt something new today.


RE: Seriously
By Tony Swash on 3/4/13, Rating: -1
RE: Seriously
By 91TTZ on 3/4/13, Rating: 0
"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation














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