Apple Recap: Court Date, Shareholder Pain, Changing Priorities

Most of the buzz around Apple (NASDAQ:AAPL) on Tuesday was generated from comments made by chief executive Tim Cook at the Goldman Sachs technology conference in San Francisco. And while analysts and watchers were busy reviewing the question-and-answer session from Cook, investors reacted quickly, and disapprovingly. Apple dropped more than 2.5 percent to close at $467.84, reversing the gains it picked up on Monday. Here is a cheat sheet to the stories around the company:

Resolution Deadline

With two weeks to go for its annual shareholders meeting, Apple is planning to respond quickly to the lawsuit filed against it last week by David Einhorn’s Greenlight Capital and find an early resolution to the conflict. The company is reportedly set to make a filing on Wednesday. Greenlight will follow with its own response on Friday before a hearing is set for early next week.

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Greenlight, the hedge fund led by David Einhorn, filed the suit in an attempt to stop Apple from putting limitations on high-yield preferred stock options for shareholders. If Apple’s proposal passes, the company would have to put preferred security to a shareholder vote each time it wants to issue it. The proposal is set to be voted on during the annual meeting.

It’s clear that Apple is hoping to solve the issue as early as it can so that it doesn’t take center stage at the meeting. Late Monday evening, Judge Richard Sullivan of the U.S. Court for the Southern District of New York granted the company’s request to fast track the case… (Read more)

Lawsuit A ‘Silly Sideshow’

Apple chief executive Tim Cook called the ongoing lawsuit proceedings versus Greenlight Capital a silly sideshow to larger capital allocation discussions, adding that the proposal being opposed by the hedge fund had been designed for the benefit of shareholders. “I find it bizarre we find ourselves being sued for doing something that’s good for shareholders,” Cook said while answering a question during the Goldman Sachs technology conference on Tuesday.

“It’s a silly sideshow, honestly … This is a waste of shareholder money, it’s a distraction, and it’s not a seminal issue for Apple.” Cook also defended the allegation from Greenlight’s David Einhorn, who said Apple possessed a “depression-era mentality” and was not moving with the times… (Read more)

Apple’s Ecosystem Wins

Cook had more to say at the conference. He also spoke about the company’s ecosystem stickiness, adding that Apple was not worried about the possibility of falling margins because it does not consider itself solely a hardware company and had other ways of making money.

“Because we’re not a hardware company, there are other things we’re doing and could do to have revenues and profits flow,” Cook said. “We don’t look at the sale of a product as our last part of the relationship with the customer, it’s the first. We are very focused on that. There’s also financial benefit in doing that.”

Specifically addressing the question of falling margins, Cook said that lower margins have to be often accepted for a product for strategic reasons, such as making an entry into a new sector… (Read more)

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