Seeking Alpha

Icahn discloses larger Apple stake, calls for immediate $150B tender

  • As promised, Carl Icahn has published his letter to Tim Cook on his site, but connectivity issues make it largely inaccessible for now.
  • CNBC reports Icahn has disclosed he now owns 4.7M Apple (AAPL) shares (current value of $2.47B), up from a prior 4M, and is calling on the company to immediately launch a tender offer to buy back $150B worth of shares at their current price of $525.
  • Investors are viewing Icahn's latest comments as business as usual, Apple +0.2% premarket.
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Comments (35)
  • dctodd27
    , contributor
    Comments (119) | Send Message
     
    There are very few people who can tell Icahn to take a hike. Tim Cook is one of them. He should issue more shares just to show Icahn up and make him go away.
    24 Oct 2013, 09:24 AM Reply Like
  • vinchainsaw
    , contributor
    Comments (224) | Send Message
     
    Yeah, because taking an adversarial approach to an activist investor is such a good idea.
    24 Oct 2013, 09:28 AM Reply Like
  • dctodd27
    , contributor
    Comments (119) | Send Message
     
    Icahn is a mosquito flying in Tim Cook's face. He doesn't have the cash to play a meaningful "activist investor" role here.
    24 Oct 2013, 09:34 AM Reply Like
  • u01bsb0
    , contributor
    Comments (690) | Send Message
     
    If Icahn could do to Apple what he did to Netflix, that would just make my day...
    24 Oct 2013, 09:30 AM Reply Like
  • The Long Tail of Finance
    , contributor
    Comments (879) | Send Message
     
    Icahn is a green mailer, plain and simple. Activitst shareholder? Please. Is that what we call green mailers now?
    24 Oct 2013, 09:34 AM Reply Like
  • Mking30
    , contributor
    Comments (141) | Send Message
     
    Yah im thinking Mr. Cook will take a bow (not in the very few)
    24 Oct 2013, 09:35 AM Reply Like
  • bfmil
    , contributor
    Comments (221) | Send Message
     
    Cook should tell Icahn where to stick his shares. Talk about a pump and dump scheme ? How f,ing blatant can you get.
    24 Oct 2013, 09:37 AM Reply Like
  • bfmil
    , contributor
    Comments (221) | Send Message
     
    Will we all find out after the fact when Icahn eventually sells so we can ride the same train ?
    24 Oct 2013, 09:39 AM Reply Like
  • BRASIL
    , contributor
    Comments (65) | Send Message
     
    I hate to agree with Jim Cramer but why now? The timing of this makes me wonder....
    24 Oct 2013, 09:40 AM Reply Like
  • Michael Nau
    , contributor
    Comments (972) | Send Message
     
    Increased buybacks would be good, $150B seems imprudent to me. Icahn seems to be doing his cause harm by making such a wacky demand. Unless he's not interested in the long term.....
    24 Oct 2013, 09:44 AM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (9240) | Send Message
     
    Of course he's not.
    24 Oct 2013, 10:17 AM Reply Like
  • dfeldmone
    , contributor
    Comments (15) | Send Message
     
    Apple should focus on innovation vis a vis product lines, not financial engineering
    24 Oct 2013, 09:46 AM Reply Like
  • VAWhiz
    , contributor
    Comments (56) | Send Message
     
    Evaluating Apple as an average Value Stock, I get a share price of $705. I would like Apple to buy whatever is available as long as we make a 35% profit. That's $522, so I have no problem with Icahn's $525.

     

    OO Group
    24 Oct 2013, 10:09 AM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (9240) | Send Message
     
    This guy needs to piss off. Leave Apple alone.

     

    Anybody notice that IEP wasn't performing all that well until he started pumping stocks like Netflix and Apple?
    24 Oct 2013, 10:16 AM Reply Like
  • Quoth the Raven
    , contributor
    Comments (2118) | Send Message
     
    Icahn has officially gone batshit crazy.
    24 Oct 2013, 10:18 AM Reply Like
  • Jack Baker
    , contributor
    Comments (952) | Send Message
     
    I agree with Icahn. Apple could easily do 150 billion. It's only 3 years of free cash flow. Look at other large cap companies on a debt to free cash flow basis. Most of them couldn't pay off their debt in 3 years. Further, the carry cost of the debt would be negligible as Apple will not have to pay a dividend on the shares they retire.

     

    In any case, I don't think Apple will do it, but it is a wake-up call to Apple's feckless board. I expect them to increase the buy-back amount by 20 billion each year anyway. So, eventually, they will buy back 150 billion worth of shares. But, they will procrastinate and do it over 3-5 years. This will cost Apple A LOT more money than doing it all at 525 as Apples stock price will almost certainly be a lot higher years into the future.
    24 Oct 2013, 10:21 AM Reply Like
  • financeminister
    , contributor
    Comments (924) | Send Message
     
    He gave me a good laugh this morning. He's probably excited about his new twitter account and wants more followers.
    24 Oct 2013, 10:42 AM Reply Like
  • 7612841
    , contributor
    Comments (60) | Send Message
     
    The only thing this proves is that there is no bounds to greed.
    24 Oct 2013, 10:43 AM Reply Like
  • The_Hammer
    , contributor
    Comments (4258) | Send Message
     
    this action is NON-sense. Apple is a giant company with a good dividend and doing reasonable buybacks. Apple should use this capital to enter a related business line. buy out disney when the next economic downturn is in full force. get a better price.
    24 Oct 2013, 10:49 AM Reply Like
  • financeminister
    , contributor
    Comments (924) | Send Message
     
    Icahn's site is funny: "Unite and fight for our rights as shareholders".... sounds like a union or some green peace activism site.
    24 Oct 2013, 10:53 AM Reply Like
  • The_Hammer
    , contributor
    Comments (4258) | Send Message
     
    Icahn has done well for shareholders in the past. this situation no imo.
    24 Oct 2013, 10:56 AM Reply Like
  • financeminister
    , contributor
    Comments (924) | Send Message
     
    I think we can safely assume that Icahn will hold for atleast one year and he won't exit or even reduce his position unless he makes atleast 50% to 100% profit on this one. Does anyone else know his profits while exiting a holding? I only know of Netflix and he gained 400% from reducing his holdings considerably.
    24 Oct 2013, 10:56 AM Reply Like
  • kimboslice
    , contributor
    Comments (1578) | Send Message
     
    iCahn wrote a letter because Cook won't take his calls.
    iCahn is irrelevant to Apple management. He's a pain in the ass like Henry Waxman and just as worthless.

     

    Guys like iCahn are annoying. If he dislikes Apple management he can 1. write a letter (check) 2. vote his proxy 3. sell his shares.

     

    I have a friend who is always trying to get me to "use" some of my cash to buy Santa Cruz property, or other schemes to "make money". I like having a war chest just fine. So does Apple evidently.

     

    One thing is for sure: iCahn knows that hitching his wagon to Apple is not a bad idea. He surely isn't talking about Nokia, Blackberry, Microsoft, etc.
    24 Oct 2013, 10:59 AM Reply Like
  • J Mintzmyer
    , contributor
    Comments (4095) | Send Message
     
    Why is everyone so upset about the $150B idea? Why not? If AAPL had listened earlier they could have bought back more in the low $400s.

     

    Long AAPL and I don't understand why you all seem to think AAPL needs even 20% of their cash.
    24 Oct 2013, 11:00 AM Reply Like
  • The_Hammer
    , contributor
    Comments (4258) | Send Message
     
    well the stock is not at low $400's now. This is a aircraft carrier in size to manuever. The explosive stock price increases are over. it's all about dividend growth and total return. Buy disney when the next downturn hits.
    24 Oct 2013, 11:13 AM Reply Like
  • Mr. Durden
    , contributor
    Comments (24) | Send Message
     
    ...and Disney is going to provide explosive growth?
    24 Oct 2013, 01:52 PM Reply Like
  • The_Hammer
    , contributor
    Comments (4258) | Send Message
     
    no but it will provide reasonable growing cashflows and more stable business model. U think apple can stay on top forever with such short product cycles?
    when a company reaches $500 bil market cap it is real hard to grow fast.
    the company should have been buying shares back like madmen at under 400.
    24 Oct 2013, 02:52 PM Reply Like
  • pman6
    , contributor
    Comments (270) | Send Message
     
    looks like uncle carl can't move this stock.

     

    still hovering at 525
    24 Oct 2013, 11:05 AM Reply Like
  • The Long Tail of Finance
    , contributor
    Comments (879) | Send Message
     
    From Bill Gross on Twitter:

     

    “Icahn should leave Apple alone and spend more time like
    Bill Gates,” Gross, who runs the $250 billion Pimco Total
    Return Fund at Pacific Investment Management Co. in Newport
    Beach, California, wrote in a message on Twitter today. “If
    Icahn’s so smart, use it to help people not yourself.”
    24 Oct 2013, 11:14 AM Reply Like
  • VAWhiz
    , contributor
    Comments (56) | Send Message
     
    From an old Value investor. Is not this a large ado about nothing. Icahn's proposal is to offer to buy back shares at $525. How many shares could be available at $525 by the time this makes it past the Board?

     

    Rather, how about someone providing an adjusted yty comparison for the first nine months. It looks to me like the yty comparison is adversely skewed 10-15% based primarily on the extra week and the following launches that occurred in 2012 but were missing in the 2013 quarters; 1Q, iPhone; 2Q Initial launches with China Unicom and China Telecom; 3Q, iPad. It seems like all the smaller differences impacted 2013. FYI, when contacted Apple said they did not have any cumulative estimate. Is that irresponsible?
    24 Oct 2013, 11:18 AM Reply Like
  • VAWhiz
    , contributor
    Comments (56) | Send Message
     
    Treating Apple as an average Value Stock gives a share price of $705. I would like Apple to buy whenever we could get a 35% return. That's $522 so Icahn's price seems fine to me.
    24 Oct 2013, 11:25 AM Reply Like
  • Regarded Solutions
    , contributor
    Comments (17900) | Send Message
     
    I am a tiny shareholder....I want a 100% increase in dividends Carl......except for your shares.
    24 Oct 2013, 11:36 AM Reply Like
  • Keyser Smith Jones Soze
    , contributor
    Comments (101) | Send Message
     
    Because Apple's stock is still so undervalued, and because the cost of is still so rediculously cheap, it makes perfect sense for Apple to step up the buyback. If they spent 150B over the next 24 months, they still would likely have more than 100B at that point, 24 months from now. This is clearly what is in the best interest of shareholders, and should be done. It does no harm whatsoever to the company's long term health. The amount of cash is much, much larger than it should have been allowed to get to. Apple should immediately use half of it to buy back stock, and each quarter should spend most of cash increase doing the same. It makes perfect sense, and is the course of action that does make sense. It is a no-brainer. People who do not favor Apple doing this do not have a realistic understanding of finance.
    24 Oct 2013, 11:45 AM Reply Like
  • pocohonta
    , contributor
    Comments (610) | Send Message
     
    Apple should accelerated its current buy-back program while the share price is low (sub-550) then announce another buy-back (using its cash flow this time) after the earning.
    24 Oct 2013, 12:32 PM Reply Like
  • erickaye
    , contributor
    Comments (29) | Send Message
     
    I'm surprised no one has mentioned this, but as an owner of a company rather than say owner of a stock, I would prefer to see the 150bn returned to investors as dividends. Buybacks in the tech realm are often a cover for paying out more in stock based compensation. Share count may be lower, but never as low as the buyback suggests. Even when they raise the price you have to sell out to get the benefit.

     

    To me buybacks are for speculators, especially one of that magnitude. Let's give everyone a dividends equal to $16.66 which would come to $150bn for 900m shares. Ichan can get in line with everybody else.
    24 Oct 2013, 02:38 PM Reply Like
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