Each common share gets a preferred share at 6 percent. Hence each year u get a 6 percent divvy on the preferred and another on the common. I think it's a good deal.....but einkorn is fked BIGTIME if it doesn't!! His hedge fund is done if this doesn't work.
If Einhorn's plan goes thru, (and lets hope Apple SHareholders get to vote on it at some point), then Apple would have to issue 1 Prerred Share for each share of Common stock you own. THis would force Apple to stop hoarding the $140 Billion in cash and the $40 billion of profits, and pay 4% dividend on each share of Preferred Stock it would issue. That with the 2.6% div. you already get on your Common Stock, would together give each shareholder well over 6% per year on capital. A nice return on investment just from dividends.
Please, help me understand:
1. Only Einhorn gets to vote, and the rest of us cannot?
2, Apple now has roughly 939 M shares. Issuing 1 preferred share for each share of common stock would not dilute the shares?
3. Who determined the 4% dividend for the preferred shares?
4. Is this good for the shareholders in the long run, or Einhorn just wants a short term pop so he can bail out, and the rest of us get stuck holding our you know what?
Well, there is a limit as to how much cash they will want to hand out. Management has already adopted a strategy of maintaining a very large contingency fund. It would be a lot simpler, and less costly to just keep buying back stock at the dips and increase the dividend faster than earnings for a couple of years or so. Classic battle between long-term horizon and the many ultra short-term investors. But, for this (common only) to satisfy investors, they need to believe in the talent and vision of management. At this time, this belief has become weak.