David Einhorn Drops Apple Lawsuit

NEW YORK (TheStreet) -- In light of a victorious court ruling earlier this week, activist investor David Einhorn has dropped his lawsuit against Apple (AAPL).

Einhorn had asked shareholders to fight against the company. He put out a letter asking investors to vote against Apple's proposal to do away with preferred stock, which he says restricts "the Board's ability to unlock the value on Apple's balance sheet."

Last week, U.S. District Judge Richard Sullivan in Manhattan granted Einhorn's Greenlight Capital fund a preliminary injunction to stop the vote on that proposal, which was scheduled for Apple's shareholder meeting earlier this week. Apple CEO Tim Cook called the lawsuit a "silly sideshow."

Einhorn has been seeking a way for Apple to return more of its $137.1 billion cash hoard to investors, as he believes the market is not properly valuing it. Last week, he held a conference call to discuss his preferred stock idea, dubbed "iPrefs," arguing that the idea would raise Apple's common stock, without actually using its cash.

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In the fourth quarter, Einhorn's 13-F filing showed he raised his holdings in Apple. He owned 1.3 million shares, up from 1.09 million in the third quarter. In addition to that, Einhorn owns the right to purchase another 275,000 shares via call options.

Apple shares have come under pressure in recent months, as Wall Street worries about innovation, increased competition and new products. Earlier today, research firm Credit Suisse cut its earnings estimates on Apple, citing near-term concerns on the iPhone.

At the shareholder meeting, Cook didn't touch on the iPref suggestion, but said that Apple is in "very, very active" discussions on what to do with its cash hoard.

Apple could not be immediately reached for comment on this matter.

Shares of Apple were lower in Friday trading, off 1.78% to $433.53.

--Written by Chris Ciaccia in New York

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