Einhorn Makes Case For Apple Preferred Shares

Feb 22 2013 | 1:51pm ET

Greenlight Capital's David Einhorn did his best impression of the late Steve Jobs yesterday as he sought to convince his fellow Apple Inc. shareholders to push the company to issue preferred shares.

In an hour-long conference call, Einhorn laid out his plans for Apple to issue perpetual preferred stock as a way to return some of its huge $137 billion cash horde to investors. He called it, appropriately, the iPref. And he even paraphrased one of Jobs' more Orwellian mantras, about consumers not knowing what they want until you show it to them.

"Here's the product that Apple doesn't yet know it needs," Einhorn said.

Under Einhorn's plan, Apple would spend $47 billion to issue preferred shares with a face value of $50 that would pay a 50-cent quarterly dividend in perpetuity.

"Apple can redeem them for face value, but shareholders should not anticipate getting the face value," he explained. "They should expected to receive 50 cents per quarter, every quarter, forever."

"Over time, the iPrefs should be highly liquid. We expect the market to accept the iPrefs as premium quality instrument."

Einhorn said the move would also boost Apple's stock price.

Greenlight has sued Apple over the company's plan to bundle a proposal that would restrict its ability to issue preferred shares with two other, more widely-supported, proxy proposals.

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