Greenlight Company Presentation
iPrefs Impact the Common Stock
o iPref dividends reduce Apple net
income and EPS available to the
common stock
o Constant P/E multiple x Adjusted EPS =
Estimated price of Apple common
stock after Apple distributes iPrefs
Greenlight Capital, Inc.
Apple net income
Less: ¡Pref dividends
Pro forma net income
$ billions $ per share
Constant P/E multiple
New Apple price per share
Current price per share
Change in price per share
42.5 $45
(1.9)
40.6
($2)
$43
10.0x
$430
$450
($20)
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Once the iPrefs are distributed for free to existing shareholders, they have an on-going dividend
which Apple must pay out. In the example of a $47 billion iPref distribution, the annual dividend
payment by Apple is about $1.9 billion.
Of course iPref dividends reduce the income available to the common shareholders. As a result,
consensus estimates that Apple will earn about $45 per share would be reduced by $2 per share to
take into account the iPref's dividends.
This means Apple would now earn about $43 per share.
If you apply a constant P/E multiple on the new Apple earnings, Apple common stock would have a
new price of $430 per share versus the current $450 per share. That's a reduction of $20 dollars in
the price of the existing Apple common equity.
37View entire presentation