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Icahn proposal reportedly calls for buyback of "at least" $50B

  • David Faber reports Carl Icahn's Apple (AAPL -0.3%) buyback proposal calls for "at least" $50B in share repurchases in FY14 (ends Sep. '14).
  • As a "precatory" proposal, the resolution won't be binding even if a majority of Apple shareholder votes are cast in favor of it.
  • Meanwhile, Time has published an Icahn cover story that focuses on his Apple efforts. Icahn tells the magazine he filed his proposal on Nov. 26 (thus making it eligible to be voted on at next year's shareholder meeting), and that he remains a supporter of Tim Cook.
  • Icahn: "A lot of people say Steve Jobs probably wouldn’t have talked to me, and maybe that’s true ... But I think [Cook] found our conversation sort of interesting. He said, `Look, you’ve accomplished a lot, and we want to listen to you.’”
Comments (32)
  • Valuable Insights
    , contributor
    Comments (485) | Send Message
     
    King Carl reading Valuable Insights on Seeking Alpha http://bit.ly/LVJMj9 - you heard it here first.
    4 Dec 2013, 04:03 PM Reply Like
  • monkey see
    , contributor
    Comments (606) | Send Message
     
    Icahn is a big supporter of Tim Cook just like he was a big supporter of Julius Caesar when his nickname was "Brutus".
    4 Dec 2013, 04:12 PM Reply Like
  • mphill47
    , contributor
    Comments (482) | Send Message
     
    Good one !!
    5 Dec 2013, 02:04 PM Reply Like
  • owens7301
    , contributor
    Comments (68) | Send Message
     
    Good strategy. He asked for too much at a $150B buyback and he knew it. I think he had some counsel to feather that back and save face by going to "at least $50B..." and AAPL will exceed expectations. I posted today that I think AAPL and TC will come out with $60B additional buyback to what is left of their first $60B and announce their first $60B is spent at their first quarter earnings report in late Jan '14....which should be a blowout quarter. On top of that, they do the China Mobile deal, buy a couple of companies that enhance their data(they need to mine their data) and technology knowledge on top of their Blackberry CEO hire and we are off to a stronger consumer electronics company with new products in the pipeline. This is all good.
    4 Dec 2013, 04:19 PM Reply Like
  • Hank890
    , contributor
    Comments (695) | Send Message
     
    Owen, I disagree. There is no good reason to buyback anywhere near $50 B. It would be largely a waste of funds. I will not vote for it.
    4 Dec 2013, 05:10 PM Reply Like
  • Braeburn
    , contributor
    Comments (873) | Send Message
     
    Do you mean Burberry CEO hire?
    4 Dec 2013, 06:11 PM Reply Like
  • xrugr
    , contributor
    Comments (49) | Send Message
     
    Hmmm, sitting on $150B (and growing) in cash, earning essentially zip, zero, nada, is a great use of capital, while buying a great, undervalued stock for a bargain is "a waste of funds". Not sure I understand that logic.
    4 Dec 2013, 06:30 PM Reply Like
  • gmmpa
    , contributor
    Comments (466) | Send Message
     
    I agree. $150B in cash is way too much to leave invested at short term rates without at least some idea of how to boost shareholder value. I have just a little less cash than that in my account and I am having trouble protecting it from inflation :-)
    4 Dec 2013, 07:05 PM Reply Like
  • CER4040
    , contributor
    Comments (60) | Send Message
     
    Hank,

     

    So basically if you had $50B in cash you would rather bury it in your back yard which is essentially what Apple is doing rather than have it earning 10% or more? Great idea!
    6 Dec 2013, 11:31 AM Reply Like
  • kimboslice
    , contributor
    Comments (1464) | Send Message
     
    Apple to iCahn: drop dead.

     

    iCahn is unclear because Cook being from the south is a bit more polite than guys in NYC where iCahn comes from.
    4 Dec 2013, 04:38 PM Reply Like
  • portatopia
    , contributor
    Comments (521) | Send Message
     
    Agree, icahn has absolutely no say of what APPL should do with their cash. Even he spent all his fortune to acquire APPL stock he still will not own enough shares to have any say in what the APPL BOD should or should not do.
    4 Dec 2013, 05:40 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2482) | Send Message
     
    All shareholders have a say in how the company should be run, since they own the company. Icahn owns 4.7 million shares and counting that he can cast to elect members of the Board, so he absolutely has a larger say than anyone here.

     

    Icahn's a smart man, he sees a company that clearly has more money than it knows what to do with, and is going after that big pile of cash. He's made a $20 billion fortune on buying assets when the time was right, doing shrewd deals, and accomplishing what he sets his mind to. O and he has access to vastly more resources than most (hes on the cover of Time tomorrow).

     

    If you dont think anyone should listen to Icahn, thats your prerogative. But if Tim Cook and the BoD at Apple think the billionaire activist investor is going to give up on the giant pile of money he thinks should be in his bank account instead of Apple's, they're in for a rude awakening.
    4 Dec 2013, 07:45 PM Reply Like
  • animus
    , contributor
    Comments (96) | Send Message
     
    I cannot understand these shareholders that say just keep all that cash in short term accounts making peanuts. I for one want some of that money returned to me by increasing the value of the stock. Certainly $50B out of a cash account of $150B that is increasing every year is prudent to any shareholder looking to increase the value of their shares. With interest rates still very low they could issue more bonds to finanace it without having to repatriat the money. Every time a buy back is mentioned you hear the same stories about taking money away from R&D and future porduct development. Apple has had as much money as needed to develop products or buy companies and still Apple has really not come out with any new products just reworks of exisitng product lines. This bauyback would not effect R&D or purchases.
    5 Dec 2013, 08:00 AM Reply Like
  • Glenway Fripp
    , contributor
    Comments (828) | Send Message
     
    God! I wish he would shut up! What advantage can it possibly yield; turning Apple's financial dealings into a public fiasco?
    4 Dec 2013, 04:51 PM Reply Like
  • Hank890
    , contributor
    Comments (695) | Send Message
     
    I see no reason at this time to vote in favor of 2014 buybacks anywhere near an additional $50 B. An additional $5-10 B, yes, perhaps. But I'd prefer to see a growing dividend before more share buybacks. Buybacks only make real sense when the equity is severely undervalued, and it is headed to $600 at present. Buybacks are a great weapon to punish over-zealous speculative shorts.
    4 Dec 2013, 05:07 PM Reply Like
  • Jonathan Almy
    , contributor
    Comments (48) | Send Message
     
    I really don't see any problem with a $50B buyback. Interest rates remain historically low and therefore incorporating additional debt in the capital structure is pretty cost effective. For those that would rather see an increase in the dividend, if Apple maintained their dividend payout, Apple could do that by simply reducing the outstanding sharecount. At the end of the of day, Icahn is invested in Apple for the same reason that the majority of us are - which is to make money. So what's the problem? Do you really think Icahn is interfering with how Cook and the rest of senior management runs the company? I think not.
    4 Dec 2013, 05:29 PM Reply Like
  • Keyser Smith Jones Soze
    , contributor
    Comments (97) | Send Message
     
    Yeah, God forbid that Apple should return too much capital to investors, or spend money buying shares of one of the most undervalued companies on the market. Better to waste it all buying a bunch of little dinky companies that have no proven value.
    4 Dec 2013, 05:44 PM Reply Like
  • Keyser Smith Jones Soze
    , contributor
    Comments (97) | Send Message
     
    Yeah, God forbid that Apple should return too much capital to investors, or spend money buying shares of one of the most undervalued companies on the market. Better to waste it all buying a bunch of little dinky companies that have no proven value.
    4 Dec 2013, 05:44 PM Reply Like
  • kimboslice
    , contributor
    Comments (1464) | Send Message
     
    Like you know what Apple plans to do with those companies?

     

    Apple paying a couple hundred million for a company is just using the change they find under the couch cushions in Cupertino.
    4 Dec 2013, 06:19 PM Reply Like
  • rrose39
    , contributor
    Comments (645) | Send Message
     
    "Better to waste it all buying a bunch of little dinky companies that have no proven value."

     

    And what in the hell would you know that constitutes better information than Tim Cook and the Apple BOD has?

     

    Please.
    4 Dec 2013, 05:52 PM Reply Like
  • Braeburn
    , contributor
    Comments (873) | Send Message
     
    Icahn is the Worm in the Apple
    4 Dec 2013, 06:14 PM Reply Like
  • CER4040
    , contributor
    Comments (60) | Send Message
     
    The irony here is that Icahn is invested in the stock and trying to make money for the stockholders and you attack him with name calling. It would almost be funny if your ignorance wasn't so sad. The parallels to just about any Ayn Rand novel are frightening. And before you reply with more stupid comments think about this...Carl Icahn is a billionaire- unless you have done better in the market you might want to think twice about telling the guy to go jump in the lake. He has made a career out of rescuing or turning around companies that were on the skids due to corp malfeasance and just all around mismanagement. Tim Cook listening to him is probably the smartest thing the guy has done since he has been in charge.
    4 Dec 2013, 06:46 PM Reply Like
  • janeksh
    , contributor
    Comments (17) | Send Message
     
    TWA? The Karabu deal? Cook knows exactly with whom he is dealing ...just prolonging Carl's agony.
    5 Dec 2013, 12:59 AM Reply Like
  • xrugr
    , contributor
    Comments (49) | Send Message
     
    Lighten up folks. I read some message boards and every Apple investor posting thinks Tim Cooke is a totally inept Steve Jobs replacement. On this board, Tim is revered almost as a deity who can do no wrong. Either that, or hatred of Icahn clouds peoples visions. I have no inside info, but spend as much as it can, Apple's cash hoard keeps growing and growing. It sits offshore like a dead weight, doing nothing. Apple at $400 was soooo undervalued that I thought it was a "no brainer" as an investment, so I jumped in. I believe that so strongly, that I think that the company using it's growing excess cash to purchase shares was a great idea. Not sure why fans of the stock think it is a stupid idea to buy a great company at a great price? Oh, I forgot, this thread is about bashing Icahn, not investing. My bad.
    Icahn can't tie Tom Brady's shoes and Tim Cooke can jump over skyscrapers in a single bound. There, that should fit in nicely.
    4 Dec 2013, 06:50 PM Reply Like
  • rubber duck
    , contributor
    Comments (193) | Send Message
     
    AAPL can easily afford to increase or hasten the current buyback, and with interest rates so low they wouldn't even need to tap into free cash flow. If you think AAPL is undervalued, I don't see why it's a bad idea, Icahn or no Icahn.
    4 Dec 2013, 06:54 PM Reply Like
  • Dre1012
    , contributor
    Comments (47) | Send Message
     
    Good job Icahn.. I would have left it at 100B$ though. I wanna see it happen.
    4 Dec 2013, 08:00 PM Reply Like
  • Elijahu
    , contributor
    Comments (4) | Send Message
     
    There is no reason whatsoever to hold that much cash on the balance sheet, the company continues to add to it quarterly, unless apple intends to invest it in growing the company or use it for acquisitions (which they have never done on a scale that demands that much cash), the capital should be returned to shareholders, prudently, personally I would prefer a dividend hike but a buyback or one time dividend on the scale that Icahn is proposed is very reasonable.
    4 Dec 2013, 08:02 PM Reply Like
  • User 18784671
    , contributor
    Comment (1) | Send Message
     
    Why not a reverse stock split - give cash back to investors and reduce number of shares outstanding. Win Win for all.
    4 Dec 2013, 08:07 PM Reply Like
  • CER4040
    , contributor
    Comments (60) | Send Message
     
    Buy back does reduce outstanding shares.
    5 Dec 2013, 11:13 AM Reply Like
  • Sacto_Joe
    , contributor
    Comments (255) | Send Message
     
    I support a stock buyback at these P/E ratios. I'd say buying back at anything under 18 is a go. Over 20, I'd actually rather see adding back to the float when stock options come due.

     

    BTW, please keep this basic math in mind: A stock buyback decreases the number of shares that a dividend is divided into. When (not if) Apple turns the stock buyback program off, any cash will be divided among appreciably fewer shares. Looked at another way, the shares that Apple buys back it doesn't pay dividends on in the future. Instead, those dividends get divided up among the remaining shares.
    4 Dec 2013, 08:37 PM Reply Like
  • flabingo1
    , contributor
    Comments (81) | Send Message
     
    The stock market has it right. When a company decides to keep 30% in cash and not leverage their income! you have a low PE.
    That decision is made by the Board of Directors, who the CEO and CFO report to. Cook has no background in finance, and with 200 million dollars in net worth and 64 years old, Peter Oppenheimer
    Is not the man to cause this company to change its policies. He acts like he grew up in the depression. Until the board changes its financial strategy, nothing will change. The market is efficient. Icahn could be the best thing that happened to Apple, and he put up his money, and now has a microphone. Al Gore other than inventing the Internet, adds very little business experience. And his Apple stock is 30 million dollars. You think that they would consider replacing Samsung and make their own chips? Do not think so?
    Or buying Tesla and make Elon Musk the CEO.
    4 Dec 2013, 08:39 PM Reply Like
  • surfcove
    , contributor
    Comments (220) | Send Message
     
    What makes anyone think that over paid managements and bods really consider share holders? Their option deals are like the price is right.

     

    Maybe there is something to the idea that the top paid person in a public corporation should make no more the least paid person.

     

    I have frowned at sports metaphors, but here is one. If the high profile head football coach made $500,000 a year, he might think about drifting off into retirement. But at 4 or 5 Mil a year, you're going to have to dynamite him out of there. (wink)
    4 Dec 2013, 10:32 PM Reply Like
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