Cook sheds little light on Apple's plans for cash

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Posted: Thursday, February 28, 2013 12:00 am

Apple Inc. Chief Executive Officer Tim Cook, saying he's in “very, very active” talks about what to do with the company's growing cash pile, did little to assuage investors seeking more clarity on his plans.

Apple shares slipped as Cook ended the company's annual shareholder meeting without giving any additional insight on what he'll do with $137.1 billion in cash and investments.

Cook is under growing pressure to use higher dividends, stock buybacks or a new class of preferred shares to compensate investors after Apple shares tumbled by more than a third from a September peak. The calls grew louder amid signs of slowing sales and profit growth and increasingly acute competition from Samsung Electronics Co. and Google Inc.

“The stock isn't going to do much until the investment community gets more granularity or clarity about how they are thinking about returning capital to shareholders,” Ted Bridges, a shareholder from Omaha who attended the meeting, said in an interview. He runs Bridges Investment Counsel Inc.

Cook said he and other executives are “focused on the long term” and aren't happy with the falling stock price.

Apple's shares fell 1.2 percent to $443.70 at 2:20 p.m. in New York. Through Tuesday, the stock had dropped 36 percent from a record in September.

After taking over as CEO in 2011 from co-founder Steve Jobs, Cook has proved more sensitive to shareholders' concerns than his predecessor. While Jobs long dismissed investors' cash demands, Cook reinstated the company's quarterly dividend and unveiled a $10 billion stock buyback program last year.

Shareholders re-elected the board, approved Ernst & Young LLP as accountant and passed a nonbinding measure on executive pay.

Investors defeated another measure, offered by a shareholder, that would have required executives to hold more company stock, to ensure that their interests are better aligned with those of investors. Apple had said its existing structure, which includes salary, bonus and shares that vest over time, is enough to keep management focused on performance over the long haul.

“Winning for us isn't about making the most,” Cook said. “We want to make the best. That's why we're here.”

A proposal that would have required Apple to get shareholder approval before issuing preferred shares was scrapped before the meeting. Greenlight Capital Inc. founder David Einhorn, who advocates a bigger payout, sued Apple as part of a push to get the company to create a new class of dividend-paying preferred stock. A judge sided with Einhorn in a ruling last week.

Cook has defended Apple's policies, saying that it's handling cash responsibly to invest in operations, while acknowledging the company has money to spare. The board is exploring different options, including boosting dividends and buybacks and issuing preferred shares.

Cook said Apple is working on “new categories” for products.

“We don't have our head stuck in the sand,” Cook said. “We're in this for the long term.”

Cook updated shareholders on the progress of Apple's future headquarters, a project that Jobs worked on before his death in 2011. The spaceship-like headquarters with a circular design, set on 176 acres in Cupertino, is taking longer to build than expected, with plans to move in by 2016, Cook said.

Jobs “put a lot of love and attention” into designing the building, Cook said.

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