Apple Inc. will outline what it plans to do with a growing pile of cash by next month, according to Howard Ward, chief investment officer at Gamco Investors Inc.
Apple, which has been grappling with investor criticism over the handling of its $137.1 billion in cash and investments, will add $42 billion in earnings to that sum in 2013, Ward said.
Greenlight Capital Inc.’s David Einhorn has been urging Cupertino, California-based Apple to issue high-yielding preferred shares to spread the funds among investors. Investors are also urging Apple to consider a higher dividend payout.
“We’re going to get an announcement from the company as to how they intend to reallocate some of their cash,” Ward said in an interview today on Bloomberg Radio’s “Surveillance” with Tom Keene. “They will put a floor under their stock at a higher price than it is today.”
Apple climbed 1.4 percent to $437.87 at the close in New York, leaving the shares down 18 percent this year, compared with an 9.1 percent increase in the S&P 500 Index.
Keith Goddard, president of Capital Advisors Inc., said Apple will probably announce a dividend or buyback by the end of the year, possibly as early as April, when the company is scheduled to release second-quarter earnings.
“It really is mind-boggling to me that they’re being so stubborn about sitting on so much cash,” said Goddard, who said his firm owns 23,100 Apple shares.
Apple has said it’s in active discussions over how to manage the cash, and that it’s considering buybacks, a bigger dividend among other options.
Ward compared Apple’s shares to JPMorgan Chase & Co. stock a year ago, after the bank announced a multibillion-dollar loss at the hands of one trader.
“The stock was beaten up and it was at 30 dollars a share, and now it’s 50,” he said.
Apple is the largest holding in Gamco’s fund, Ward said.