In March 2013, Apple Inc. has a really sizeable cash balance and is under pressure to return cash to investors. Hedge fund manager David Einhorn believes Apple can "unlock value" by issuing perpetual preferred stock, dubbed iPrefs. Henry Blodget, CEO of The Business Insider, differs, saying "you cannot just wave your magic wand and make something of nothing." This short case was made to bolster a conference of “perfect” markets and Modigliani- Miller capital structure inappropriate prepositions.
The case emphasizes on two pertinent Questions: 1) from the perspective of a shareholder, how is Apple’s cash differentiated from the cash in the money market or bank account? (2) Can Apple create significant value for investors by splitting each common share into aniPref plus a common share?
PUBLICATION DATE: December 03, 2014 PRODUCT #: 215037-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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