A decision by Apple Inc. to refrain from returning more cash to shareholders would leave its board vulnerable to investor lawsuits, according to Lawrence Haverty, a portfolio manager at Gamco Investors Inc.
“Someone is going to sue them for excessive accumulation of cash,” Haverty said in an interview today on Bloomberg Radio’s “Surveillance” with Tom Keene. Gamco holds Apple shares, according to data compiled by Bloomberg, and Haverty said in the interview that he considers the shares a buy. Haverty didn’t discuss or present knowledge of any particular plans of a lawsuit against Apple.
Apple executives said on an earnings conference call last week that they’re considering increasing the quarterly dividend and stock buybacks. Apple reinstated dividends last year and said it would repurchase $10 billion in stock over three years. Even after paying out about $4.5 billion in the recent quarter, the Cupertino, California-base company had $137.1 billion in cash and investments in the period that ended Dec. 29.
Steve Dowling, a spokesman for Apple, didn’t immediately return a call seeking comment.
Apple’s indicated dividend yield has climbed to 2.4 percent amid a decline in the stock price, according to data compiled by Bloomberg. It’s still low compared with other technology bellwethers. Intel Corp. pays out an indicated 4.3 percent, while Hewlett-Packard Co. pays 3.1 percent and Microsoft Corp.’s indicated yield is 3.3 percent.
Apple dropped 37 percent since reaching a record close of $702.10 in September through Jan. 25, compared with a 2.9 percent gain in the Standard & Poor’s 500 Index.
Apple needs to build a phone in the $100-to-$200 range to meet demand for low-cost mobile devices in China’s large and growing consumer market, Haverty said.
“It’s a mind-boggling market,” he said.
Apple gained 2.5 percent to $450.80 at 3:31 p.m. in New York.