How Einhorn's Apple Proposal Shows His Concern Over Growth

NEW YORK ( TheStreet) -- Apple ( AAPL) shares didn't take long to run out of juice on Thursday despite a proposal by Greenlight Capital's David Einhorn aimed at getting the tech giant to give up some of its enormous cash hoard.

That may be because Einhorn has, ever so slightly, changed his thesis on the company.

Einhorn used to love Apple because he saw it as a drug. Users get hooked on Apple products and they never let go. Einhorn talked about the enormous untapped potential for Apple to sell to businesses, as employees addicted to Apple products demanded their bosses buy them for use in the office.

Now the emphasis is decidedly different. Einhorn wants the company to give up its cash. Specifically, he wants shareholders to vote against a proposal that would eliminate the company's ability to issue preferred stock. In other words, he wants Apple to give back some of its cash in the form of a dividend.

A company growing at the speed of light doesn't give its cash back to shareholders -- it uses it to create and market new products.

Einhorn would likely argue Apple has more than enough cash and can still pursue growth even if it gives up some cash via preferred stock. Still, following Apple's most recent earnings report in which the company missed analyst expectations on revenue, there is clearly concern about whether Apple has already done most of its growing. That may be why, after opening sharply higher on Thursday following Einhorn's proposal, Apple shares took just 24 minutes to dip into negative territory.

As my colleague Chris Ciaccia points out, Einhorn first floated the idea of a perpetual preferred issue by Apple in May. Investors may simply be skeptical that Apple will give in to Einhorn's demands. Still, when the debate over Apple is about whether it will give up its cash, the stock has become a very different kind of investment.

A call and email to Einhorn's public-relations representatives and an email to an Apple spokesman weren't immediately returned.

-- Written by Dan Freed in New York

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