Apple shareholder drops lawsuit on preferred stock

Lawyers for hedge fund manager David Einhorn of Greenlight Capital notified U.S. District Judge Richard Sullivan in a letter sent Thursday that they no longer plan to pursue the lawsuit . Sullivan closed the case, which began three weeks ago in New York.

Einhorn had already achieved his goal last week when Sullivan issued a preliminary ruling blocking an Apple Inc. proposal that would have required shareholder approval before preferred stock could be issued. Apple withdrew the proposal from the agenda at its annual meeting held Wednesday.

Two shareholders who attended the annual meeting said they were disappointed that they weren't able to vote in favor of a proposal, which they described as an example of sound corporate governance.

Shareholders had reason to be even more discouraged Friday as Apple's stock touched a new 52-week low, deepening a roughly six-month slide that has wiped out nearly $260 billion of the company's market value.

In another setback Friday, a federal judge in San Jose erased nearly half of the $1 billion in damages that a jury had awarded Apple last year in a patent infringement case against rival smartphone and tablet computer maker Samsung Electronics Co. The ruling lowered Samsung's bill to $599 million.

Apple might be able to ease the pain of the recent 39 percent drop in its stock price by doling out some of its $137 billion cash hoard to shareholders instead of letting the money idle at a time when interest rates at near record lows.

Einhorn, whose fund owns 1.3 million Apple shares, filed his lawsuit to preserve Apple's ability to issue dividend-paying preferred stock without having to take the extra step of gaining shareholder approval. He is pushing Apple to issue preferred stock that would guarantee a 4 percent dividend.