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  • December 2014 (Revised April 2015)
  • Case
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Apple, Einhorn, and iPrefs

By: Carliss Y. Baldwin, Hanoch Feit, Edward A. Minasian and Brandon Van Buren
  • Format:Print
  • | Language:English
  • | Pages:8
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Abstract

In March 2013, Apple Computer has a very large cash balance, and is under pressure to return cash to shareholders. Hedge fund manager David Einhorn thinks Apple can "unlock value" by issuing perpetual preferred stock, dubbed iPrefs. Henry Blodget, CEO of Business Insider, disagrees, saying "you can't just wave your magic wand and make something of nothing." This short case is designed to support a discussion of "perfect" markets and the Modigliani-Miller capital structure irrelevance propositions. The case focuses on two questions: (1) From a shareholder's perspective, how is Apple's cash different from cash in a bank or money market account? (2) Can Apple create significant value for shareholders by splitting each common share into an iPref plus a common share?

Citation

Baldwin, Carliss Y., Hanoch Feit, Edward A. Minasian, and Brandon Van Buren. "Apple, Einhorn, and iPrefs." Harvard Business School Case 215-037, December 2014. (Revised April 2015.)
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About The Author

Carliss Y. Baldwin

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Related Work

    • December 2014 (Revised April 2015)
    • Faculty Research

    Apple, Einhorn, and iPrefs

    By: Carliss Y. Baldwin, Hanoch Feit, Edward A. Minasian and Brandon Van Buren
    • November 2019
    • Faculty Research

    Apple, Einhorn, and iPrefs (Abridged)

    By: Carliss Y. Baldwin and W. Carl Kester
Related Work
  • Apple, Einhorn, and iPrefs By: Carliss Y. Baldwin, Hanoch Feit, Edward A. Minasian and Brandon Van Buren
  • Apple, Einhorn, and iPrefs (Abridged) By: Carliss Y. Baldwin and W. Carl Kester
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