Seeking Alpha

Icahn, Cook still talking about bigger buybacks

  • Carl Icahn is at it again on Twitter. "Spoke to Tim [Cook]. Planning dinner in September. Tim believes in buyback and is doing one. What will be discussed is magnitude."
  • Tim definitely believes in buybacks: Between them, Apple (AAPL +0.1%) and banks authorized to repurchase shares on its behalf bought back 13M shares (nearly 1.5% of outstanding shares) in the June quarter.
  • Analysts have been split (I, II) on whether adding more debt to Apple's balance sheet to further ramp buyback activity is a bright idea.
  • Icahn's original Apple tweets
Comments (37)
  • bmwr1200c
    , contributor
    Comments (138) | Send Message
     
    this things got to be illegal. How much more info we need to say that one can tweet and manipulate the market. I am happy my apple shares are going up.
    What worries me is that negative tweet can do the opposite.
    if this is not market manipulation then what else is?
    22 Aug 2013, 03:56 PM Reply Like
  • financeminister
    , contributor
    Comments (610) | Send Message
     
    First amendment? This falls under the "with great power comes great responsibility" amendment.
    22 Aug 2013, 04:07 PM Reply Like
  • RobbyRob
    , contributor
    Comments (358) | Send Message
     
    It must not be illegal if a billionaire does it. If a small boiler room did it, there would be outrage. Frankly, I wish he would just shut up. This isn't a corporate raiding scenario of a failing company...this is blatant attempted manipulation.
    22 Aug 2013, 04:00 PM Reply Like
  • rocback
    , contributor
    Comments (972) | Send Message
     
    Nah, it only moved a couple of points along with the market when it resumed trading. Frankly, with the potential of a new 5S along with an inexpensive version (5C) that will sell well in China and a deal with China Mobile potentially being announced on Sept 10th, there will be upward pressure through at least that date. Depending then on what exactly is announced it could contiue up through to $625 with the buy back alone and no increase in the multiple or in the earnings.
    22 Aug 2013, 05:55 PM Reply Like
  • kimboslice
    , contributor
    Comments (1464) | Send Message
     
    When will the SEC pay Icahn a visit to tell him to shut up?
    22 Aug 2013, 04:05 PM Reply Like
  • rrosey2
    , contributor
    Comments (685) | Send Message
     
    It's not a manipulation if what he says is true, unless he has a set percentage of the stock, which he does not have.
    22 Aug 2013, 04:08 PM Reply Like
  • Ajayyy
    , contributor
    Comments (311) | Send Message
     
    As an investor Icahn gets benefits from his position to engage the management; when he connects with the company heads and discloses the information in a timely manner through twitter--whats the harm? I don't think he did anything wrong.
    22 Aug 2013, 04:10 PM Reply Like
  • financeminister
    , contributor
    Comments (610) | Send Message
     
    true... I don't understand what's the hue and cry about public statements. I do the same thing on twitter too... just that no one cares :-)
    22 Aug 2013, 04:12 PM Reply Like
  • Ajayyy
    , contributor
    Comments (311) | Send Message
     
    Exactly, no one batted an eye when Leob opened communications with the management through public "snail-mail". Icahn just found an easier way. It's what technology is all about.
    22 Aug 2013, 04:29 PM Reply Like
  • jayurbain
    , contributor
    Comments (38) | Send Message
     
    Apple already has a good buyback program. Success is based on innovation. I would like to see increased spending in R&D relative to GOOG.
    22 Aug 2013, 04:11 PM Reply Like
  • Randal James
    , contributor
    Comments (2326) | Send Message
     
    "Spoke to Tim. Told him I could get him an interview with Lumber Liquidators..."

     

    What's next with these tweets?

     

    @BillB "Spoke to Tom. Will try long pass to rght @ the 45"
    22 Aug 2013, 04:17 PM Reply Like
  • u01bsb0
    , contributor
    Comments (616) | Send Message
     
    I don't think this is wrong, it is the public who choose to act on them. He isn't giving false information to manipulate a stock he's just keeping the public up to date with his actions.

     

    On the other hand, the practices of Bill Ackman making up groundless claims which have affected the shares of Herbalife should be punishable. If he could show evidence fair enough, but it was simply to help his short position by constantly appearing in the news and sites such as CNBC.
    22 Aug 2013, 04:21 PM Reply Like
  • Ajayyy
    , contributor
    Comments (311) | Send Message
     
    Both the scenarios are different sides of the same coin. These guys bet a lot of money, take huge risks and if they want to make any significant impact they can do whatever that aids their convictions.

     

    I like it when big money bets big because it shows their passion.
    22 Aug 2013, 04:27 PM Reply Like
  • szeducate
    , contributor
    Comments (78) | Send Message
     
    Apple has enough added capital in its bank to buy more shares back and not effect its current cash hoard. It is estimated by the end of next year that the company will be approaching 200 billion. That might be a bit unseemly. The more shares they take out of circulation, the higher the P/E ratio rises. This is a win/win for shareholders. There is nothing wrong with doing this and it is not at the exclusion of doing other things with the money. Apple has never used its money to make a huge 5 or 10 billion dollar purchase. Even if it decided to do so now, it appears that it can do so without much trouble. I applaud Icahn since we needed something to get this stock moving again in the right direction. You might recall that just a few days before this whole Icahn scenario, Apple's board of directors warned Cook about the slow pace of getting things to market.
    22 Aug 2013, 04:22 PM Reply Like
  • The Long Tail of Finance
    , contributor
    Comments (695) | Send Message
     
    Ichan during 'the dinner' at some fancy-shmancy restaurant:

     

    "Tim, let's toast to your helping me, and you, make millions off of Apple. It's a glorious day, isn't it? So glad old Steve-o isn't around, eh? He would have ruined things."
    22 Aug 2013, 04:34 PM Reply Like
  • kimboslice
    , contributor
    Comments (1464) | Send Message
     
    The Apple board can't rush Cook. Icahn and Einhorn don't tell him what to do.
    Slow and steady progress building more stores and new products is how to proceed.
    If Apple buys back shares they can give them to employees as bonuses, while shareholders today will experience higher share values, sounds OK to me.
    Apple is fine, it's our economy holding things back.
    GDP growth of 1.4% ain't great for selling retina iPads for $600+ apiece.
    Hisense sero7 pro=$129, selling like hotcakes for a reason.
    22 Aug 2013, 04:35 PM Reply Like
  • Randal James
    , contributor
    Comments (2326) | Send Message
     
    szed,

     

    I am sure you meant to say that the PE ratio would decline. Smaller = better.

     

    One problem facing Apple is that it has developed markets that saw rapid growth and then those markets have matured, leaving Apple not so much a growth company but more like a d***** utility or something with a fat dividend and not great prospects.

     

    As a premier technology company that sells electronics, the cash hoard should be aggressively invested in related fields - goofy fields, if necessary. In case you have not noticed, the last home run, great though it was, was several years ago.

     

    If you want a $1000 company, forget the dividend givebacks and stop thinking of minimizing the company through buybacks. Find the next series of iSomethings and get to work.
    22 Aug 2013, 04:38 PM Reply Like
  • june1234
    , contributor
    Comments (2498) | Send Message
     
    This guy is the best. Cleared 6% inside 24 hrs off a couple of Apple tweets and now the sequel "Dinner with Tim". I still don't know what Ackman was thinking messing with that guy
    22 Aug 2013, 04:38 PM Reply Like
  • Alfa164ls
    , contributor
    Comments (16) | Send Message
     
    I agree. Also, how is this not a violation of Reg FD on Tim Cook's part?
    Gee, maybe the discussion actually occured before iCahn's purchase.
    22 Aug 2013, 04:41 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (8817) | Send Message
     
    Sell while Icahn keeps pumping the stock. This is borderline comical.
    22 Aug 2013, 04:57 PM Reply Like
  • chopchop0
    , contributor
    Comments (3130) | Send Message
     
    Already back below 500 today
    22 Aug 2013, 10:21 PM Reply Like
  • Gary Bushwacher
    , contributor
    Comments (508) | Send Message
     
    If I was Cook, I'd be more than a little pissed that Icahn was blabbing private discussions. I'd have made it very clear after the first escapade, that if it happened again. It would be the last time they spoke.

     

    From Cook's perspective, you can't have contacts that pull that schit.
    22 Aug 2013, 04:58 PM Reply Like
  • financeminister
    , contributor
    Comments (610) | Send Message
     
    After the dinner in september discussing the size of buyback, Icahn tweets "Had dinner with Tim. He agreed to increase buyback but not by how much I wanted. So I sold my position. AAPL still undervalued #seeyasuckaaaas".
    22 Aug 2013, 05:03 PM Reply Like
  • J Mintzmyer
    , contributor
    Comments (3601) | Send Message
     
    Who cares. $AAPL buyback is moronically obvious. $MSFT needs to do the same. Any company with a P/E of under 10 with business that will at least stay flat needs to buyback.

     

    Did ANYONE pay attention in corporate finance class?

     

    If earnings yield (inverse P/E) is less than mid/long-term (5-10y+) debt, it's a no brainer leverage play. Right now these bonds are 3-5%. Earnings yields are 10%+ Duh!
    22 Aug 2013, 05:13 PM Reply Like
  • The Long Tail of Finance
    , contributor
    Comments (695) | Send Message
     
    Sorry, must have slept through that lecture.

     

    Will try to Google this topic. If you have a link you could share on this topic, would be much appreciated.
    22 Aug 2013, 05:44 PM Reply Like
  • Clayton Rulli
    , contributor
    Comments (2468) | Send Message
     
    JM-- you forgot to account for the dividend! If a company can borrow money for a less percentage than it pays in dividends, the company can pay the interest with its own dividend on the shares it bought back-- as long as it's sustainable of course.
    22 Aug 2013, 05:48 PM Reply Like
  • J Mintzmyer
    , contributor
    Comments (3601) | Send Message
     
    Long Tail, not sure if you are trolling (or if I was...), but in case not:

     

    WACC:

     

    Reduce it.

     

    http://bit.ly/T7G6jW
    22 Aug 2013, 09:27 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1153) | Send Message
     
    Yes, but what about debt covenants, and future needs for capital should need arise. That ability to move quickly, make acquisitions without lining up financing etc is worth something for most companies. Apple is an exception of course and should do a buyback and and a 1-10 stock split on the financial engineering side. On the real engineering side, Apple needs a 5" iPhone.
    22 Aug 2013, 10:00 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (11015) | Send Message
     
    Talk about trying to manipulate the stock. Also, shouldn't someone make this a material disclosure because Icahn sure thinks it is and is claiming its a market moving event. I just wonder how stuck he is in this stock that he feels the need to try to pump it this badly. Did he buy it at the top?
    22 Aug 2013, 05:43 PM Reply Like
  • jb8967
    , contributor
    Comments (439) | Send Message
     
    No issue in my book as long as he wasn't trading on his public statement beforehand.
    22 Aug 2013, 06:15 PM Reply Like
  • Valueplay98
    , contributor
    Comments (580) | Send Message
     
    Anyone paying attention should figure out by now that AAPL won't increase the buyback or dividend until after the next annual meeting.

     

    They haven't even spent half of their buyback allowance, and Icahn pumping the stock doesn't make it cheaper for them to buyback their shares.
    22 Aug 2013, 08:55 PM Reply Like
  • RobbyRob
    , contributor
    Comments (358) | Send Message
     
    AAPL should buyback iCahn and replace/integrate Siri with him. The iphone 5C...for Carl. Then the AI 5C could tweet all day and we ALL could make some money on this market.
    22 Aug 2013, 09:42 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1153) | Send Message
     
    Instead of dissecting the legalities, those who put in long orders for options and stock could have easily made a tidy sum on resumption of trading.
    22 Aug 2013, 09:57 PM Reply Like
  • nickysg
    , contributor
    Comments (488) | Send Message
     
    I am amazed by the arrogance of Icahn.Trying to influence Apple policy by tweeting just because he bought shares in the company is arrogant and unethical at best.
    If I were Tim Cook,I'd tell Icahn to go find the nearest lake and make a flying jump.
    22 Aug 2013, 10:12 PM Reply Like
  • KJP712
    , contributor
    Comments (437) | Send Message
     
    If he spoke to Steve,I would be impressed then.
    23 Aug 2013, 01:06 AM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    I can't hate on Icahn because he is using his influence to make money, but on the other hand this kind of activity should not be allowed.

     

    This also says a lot about Apple the company moving away from technology and towards financial engineering.

     

    It was technology and engineering that made all that money in the first place.
    23 Aug 2013, 02:13 AM Reply Like
  • JeffCRTM
    , contributor
    Comments (2) | Send Message
     
    I'd like to know if these Tim Cook knows and agrees with the tweets from Icahn ? Is it orchestrated ?
    23 Aug 2013, 09:21 AM Reply Like
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