The Zacks Analyst Blog Highlights: Apple, Google, Microsoft, Nokia and Research In Motion

Zacks


For Immediate Release

Chicago, IL – February 15, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Apple Inc. (AAPL), Google, Inc. (GOOG), Microsoft Corporation (MSFT), Nokia Corporation (NOK) and Research In Motion Limited (BBRY).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Thursday’s Analyst Blog:

Is Apple Ditching Shareholders?

David Einhorn is not alone. Brian Gerick from Pensylvania has also filed a lawsuit against Apple Inc. (AAPL) seeking to prevent the iPhone maker from pushing for a shareholder vote on February 27 regarding two proxy proposals. The first of these seeks to eliminate a provision called “blank check preferred.” This allows a company to issue an unlimited number of preferred shares of any type.

The second proposal refers to an advisory “say-on-pay” vote on executive compensation. The lawsuit alleges that Apple has failed to reveal details of how it decides on the pay of top executives. In a broader sense, Gerick is blaming Apple for clubbing together unrelated issues into a single shareholder vote.

Einhorn’s accusations are far more focused and center on Apple’s cash pile, which amounts to nearly $140 billion. The activist investor grabbed the limelight by going short on Lehman Brothers before the firm folded up shortly afterwards.

Though Einhorn is betting long term on the iPhone maker, he believes Apple is accumulating cash which is more or less sitting idle. The weighted average rate of interest that the company receives from its cash, cash equivalents and marketable securities amounted to just 1.02% in fiscal 2012 and 1.07% in the first quarter of 2013.

Additionally, Apple’s share price has fallen to around $470 from more than $700 in September. Einhorn claims that around $145 of the current share price of $470 can be attributed to Apple’s huge cash reserves. This implies that the market thinks the rest of Apple’s business is worth only seven times the company’s earnings.

This is quite low when compared to Google, Inc. (GOOG) which is nearly three times more. In fact, Apple’s multiple is much lower than Microsoft Corporation’s (MSFT). This is despite the fact that the company derives the largest chunk of its revenues from PC operating software, which many worry is a segment that may be sinking.

Yet, Apple is a company whose profit profile is shining. The company has continued to deliver a bevy of successful products and has posted robust results quarter after quarter. It has now put in place a dividend and stock buyback program which is projected to cost $45 billion over the next three years.

Android-powered smartphones from Samsung and other smaller players have emerged as the company’s only serious competitors. Meanwhile, Nokia Corporation (NOK) has launched its new Lumia series whereas Research In Motion Limited (BBRY) has launched two phones based on its new OS BlackBerry 10 in an effort to recapture lost ground.

Einhorn believes that by sitting on this cash pile Apple is hurting shareholder value. He has hit on a radical solution to this situation. He proposes that Apple should issue $610 million of preferred stock in perpetuity to shareholders, which would pay a dividend yield of 4%.

The company would then have to pay small amounts compared to a one-time dividend payment or stock buyback. It would also add to the company’s net worth, he argues.

Apple has responded by seeking to put to vote the provision to issue an unlimited number of shares. Apple CEO Tim Cook has described Einhorn’s lawsuit as a “silly sideshow.” He said the company welcomes all suggestions from shareholders, including Einhorn, and the management team and board were actively discussing them.

He added that regardless of the outcome of the lawsuit, Apple would not issue preferred stock without assent from shareholders. He also said the company would continue to acquire a company every two months. Gross margins could be increased by selling more software and services. Ultimately, Cook believes that Apple holds a long-term view on its business despite the fact that people “worry about quarters.”

 Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Media Contact
Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

http://www.zacks.com

 

 

Read the analyst report on AAPL

Read the analyst report on GOOG

Read the analyst report on MSFT

Read the analyst report on NOK

Read the analyst report on BBRY

Zacks Investment Research



More From Zacks.com
View Comments (2)