Seeking Alpha

Apple urges shareholders vote against Icahn buyback proposal

  • In its proxy filing for its Feb. 28 annual meeting, Apple (AAPL) urges shareholders vote against Carl Icahn's Prop. 10, a "non-binding advisory resolution" calling for Apple to spend at least $50B on buybacks in FY14 (ends Sep. '14).
  • Apple defends itself by stating competitive conditions and the company's pace of innovation "require unprecedented investment, flexibility and access to resources."
  • At the same time, Apple says its board and management are "thoughtfully considering options for returning additional cash to shareholders and are currently seeking input from shareholders as part of the Company’s regular review." Tim Cook stated in October Apple would hold off on making new capital allocation decisions until early 2014.
  • Icahn, who owns over $2.5B worth of Apple shares (less than a 1% stake), has said he would "test the waters" regarding a proxy fight if his calls for a bigger buyback were ignored.
  • RBC estimated in August Apple could boost its FY14 EPS by $4 by raising $55B in debt to finance additional buybacks.
  • More on Apple/Icahn
Comments (112)
  • As a shareholder I plan to vote in favour of Prop 10 because apple can afford to give us some money and this will still leave it with lots of cash for future flexibility. Hope other apple shareholders feel they same way
    27 Dec 2013, 06:23 PM Reply Like
  • I don't think shareholders of Apple understand the effectiveness of a repurchase program. It does increase shareholder value, however when they are bought back at an elevated price (higher than a cheap estimated value, i.e. <450) you receive diminishing returns. Instead the money should be put directly into the business at their executives stated...Icahn is ridiculous, he's the pump and dump master...he really doesn't care about Apple for the long haul.
    If you remember when Apple mgmt talked with Warren Buffett - he said to buyback shares if you think they are CHEAP. Apple was clearly discounted below $450 (and that's what they did) but I think many will argue it's much less attractive at current levels.
    So sure they can afford it. But is it the best allocation of capital for Apple itself? Probably not.
    27 Dec 2013, 09:42 PM Reply Like
  • By doing a buyback it will raise debt raising the EPS and beat estimates and raise the share price from which they already bough profiting from it and they're shares are quiet cheap if they feel obligated to spend cash they should do this or jus invest in R&D's.
    27 Dec 2013, 11:09 PM Reply Like
  • I do not agree... Icahn said they were cheap at 570$...and even at 650$ they're not that expensive. As a shareholder I would like a big buyback at these levels.
    28 Dec 2013, 11:51 AM Reply Like
  • Anybody here care to tell me what Apple's current R&D budget is? Yes, $5 billion. Let's say you quadriple that to $20 billion. There is still north of $100 billion of idle, completely idle cash left. What is Apple doing with this money other than let it sit in an Irish bank account?
    28 Dec 2013, 05:39 PM Reply Like
  • Not cheap at 450. With increasing growth rates it's trading at half of GOOG's earnings multiple. Just look at their size of their acquisitions. The only effective way to spend the cash hoard is to do a massive buyback instead of letting it sit idle. And if they spread it out over time like they have been doing, it will be less effective. Think outsideresque buybacks in the past along the lines of Tom Murphy and Henry Singleton as master capital allocators. By going against Icahn Tim Cook is clearly taking a stand against returning what belongs to shareholders. And implying that innovation in the future will require higher reinvestment rates is clearly not a vote of confidence when Steve Jobs strongly believed that innovation was not highly correlated with increasing R&D spend. As a shareholder iCahn's buy back proposal would help immensely by greatly reducing business strategy execution risk.
    28 Dec 2013, 06:57 PM Reply Like
  • I meant not overvalued at these levels as Brian sanders thinks. An adjusted EBIT (earnings power) discounted conservatively by 15% and using expected growth as a margin of safety implies a wide valuation gap.
    28 Dec 2013, 07:05 PM Reply Like
  • I think Apple can afford to give us some money back too, but just because they buy back shares does not guarantee the stock will go up, keeping a consistent P/E. I'd rather they take the money and buy Sony if they think they can create Television sets with the same quality and image as their lap tops and PCs. Otherwise I would prefer a special Cash Dividend.
    29 Dec 2013, 12:15 AM Reply Like
  • Disagree completely. I never said Apple is overvalued, shares are simply not discounted enough for most value investors...I think it's closer to being fair valued.

     

    "The only effective way to spend the cash hoard is to do a massive buyback instead of letting it sit idle." And let it be taxed? Good luck with that.

     

    "By going against Icahn Tim Cook is clearly taking a stand against returning what belongs to shareholders." Tim Cook is looking to improve the quality of the business; maintaining revenue growth and margins as best they can ---> looking for acquisitions is Apple's BEST alternative at this point. Also how is a massive share repurchase program and a dividend not shareholder friendly? It seriously helps to understand the effectiveness of proper capital allocation.
    29 Dec 2013, 01:16 PM Reply Like
  • Why would a buyback be taxed when it's done on a levered basis with historically low interest rates?
    29 Dec 2013, 02:16 PM Reply Like
  • Stephen Aniston,

     

    Do you not understand the concept of P&L? Apple raises its R&D budget to $20B and the company's profitability TANKS.
    29 Dec 2013, 04:50 PM Reply Like
  • wrong. it will ever so slightly increase shareholder value, plus analysts recognize EPS adjustments made by repurchase programs. R&D is already full steam, maybe an acquisition?
    7 Jan, 08:52 PM Reply Like
  • Nope.
    27 Dec 2013, 06:24 PM Reply Like
  • Apple seems pretty ungrateful to me. AAPL was floundering *after* the buyback--down below $400 a couple of times. The executive team and Board just seemed helpless and impotent to create value--Mr. Cook was even quoted as saying they didn't care about the stock price!!! Icahn stepped up, made a number of bold buy calls and AAPL took off. He led the cavalry charge that saved Apple's stock in '13. Some on WS feel Apple views the stock simply as their own private compensation system and they aren't shareholder friendly. Even Board members have been given tens of millions of dollars in stock--hundreds of millions in aggregate, which many of them have completely dumped. What Icahn is proposing is that Apple become more shareholder friendly. They say they need flexibility and they have over 100 Bn in cash, much of it earning next to nothing. I think they should put one of Icahn's financial experts on the Board and listen to him. I hope the shareholders will vote with Icahn. Apple's stock will likely keep climbing. WS respects Icahn's team. If he sells, Apple could head back down into the $400s.
    27 Dec 2013, 06:30 PM Reply Like
  • Apple massively accelerated the buyback before Icahn started saber rattling. They borrowed $17 Billion before Icahn started into the scene. Basically Icahn has done nothing aside from make a few well timed tweets.

     

    Who should Apple be grateful too? Icahn for investing in the stock when it was beaten up? What would the stock look like now without Icahn? They would still have announced the Docomo deal, the China Mobile deal, the iPhone 5s would still be 64 bits, the iPad would still be amazingly light and fast, and the iPad mini retina would still be pretty damned awesome.

     

    I find it amazing that you fawn over a billionaire Johnny-come-lately while ignoring the fact that Apple's stock is recovering simply due to doing business as usual. No, Apple's stock isn't plummeting to $400/ share if Icahn gets out and stops his dog-and-pony show.

     

    I'm all for buybacks and I'm even ok with financing them like they did this summer (before Icahn showed up). Its a terrible idea to commit to a large financing deal for a buyback when the stock is in the middle of a rally though. Financing buybacks is a great idea when the stock is in a rut and showing little signs of life, not when the stock is near it's 52 week and has tons of momentum.
    28 Dec 2013, 12:16 AM Reply Like
  • This is about being smart, Dennis. Who was right, Icahn or the Apple BOD? Do you think it would have been smarter to issue 40-50Bn (at next to nothing) in debt when Icahn (and a lot of other people) were screaming for them to do it and buy the stock back in the low 400s, or do you think the Apple BOD got the buyback perfect? Do they really need 140Bn in cash making nothing in treasuries along with the massive cash flow (while paying a higher dividend) to maintain flexibility? Seriously! What I hear you arguing is that Apple failed to take advantage of the low rates and stock price, so now we should reward them for not following Icahn's advice. You do remember he was pushing them to buy more when the stock was low, don't you? If you don't think they are capable of being aggressive and bold, just look at how much stock the BOD and executive team are giving themselves/receiving! It is unbelievable. It could be the greatest, most aggressive, and boldest equity give-away in human history--all while shareholders took a >40% hit. If one of his financial experts had been there, maybe Apple would have been buying the stock back for the last five years and we would be at $800. And yes, I do think the stock will go down if Icahn sells. If isn't fawning; it is reality. When Buffett or Icahn take big positions in stocks they go up, Dennis. You really think there isn't an effect?
    28 Dec 2013, 07:08 AM Reply Like
  • Tim Cook couldn't even decide for himself how to allocate capital. He had to ask for Buffett's advice on whether to do a buyback. The heart of the company is Jony Ive, not Tim Cook.
    28 Dec 2013, 07:12 PM Reply Like
  • You need to check your timing. Apple's board was executing a massive buyback when the stock was at the very bottom of it's rut. Icahn didn't even arrive on the scene until well after Apple had financed $17 billion and spent 3 quarters dropping a huge percentage of the company's cash-flow into buybacks. Icahn wasn't around when Apple was in the low 400s, he didn't even show up until Apple was on the upswing in the late summer leading up to the iPhone announcement.

     

    Did the board get the buyback "perfect"? No, but they were actually executing the largest buyback in corporate history exactly when they needed to.

     

    Lets compare this to Icahn's suggestion. He came on the scene in September, well after the company had executed their buyback at rock bottom prices. He wanted a $150 Billion buyback which and it would have taken about 2-3 months to get the financing together so we'd be buying back shares right now... at $550/ share not at $400/ share. Not only that, Apple would have committed to a ridiculous $150 Billion buyback which would take months to roll out and would likely have resulted in months of buying back shares at the current price or higher... great for Icahn and short timers, but neutral at best for the company and long term investors.

     

    For the TL;DR crowd: Apple's BOD bought back $30 billion+ worth of shares at or near the 52 week low; Icahn wants to buy back $50 billion at the 52 week high.

     

    Hmm. I know which I think is smarter.
    28 Dec 2013, 09:25 PM Reply Like
  • "Floundering"? I think not. Why would I trust a pump and dump master, even if he's made gazillions ? My bet is against prop 10. With Apple for the long term.
    29 Dec 2013, 12:39 AM Reply Like
  • @Sammy Lee - Cook hired a controller who is known to be a master at shareholder rewards. Luca Maestri started in March and by all appearances he is responsible for the buyback plan. Not sure where you get the idea he's letting Buffett make the calls, neither Cook nor Buffett ever suggested as much. As far as I know Buffett's comments on the topic was a casual comment in response to an interview question on a talk show.
    29 Dec 2013, 05:29 AM Reply Like
  • Dennis,
    >> For the TL;DR crowd: Apple's BOD bought back $30 billion+ worth of shares at or near the 52 week low; Icahn wants to buy back $50 billion at the 52 week high.

     

    Hmm. I know which I think is smarter.<<

     

    Realize that you are arguing with an Apple bull. I feel like you are simply trying to win an argument rather than deal with the facts, Dennis. There is a fatal flaw with your reasoning here and it is easily seen from the SEC form 4s. Icahn announced a large position in the second week in August. So, his team was adding millions of shares throughout the Summer. We know from the SEC form 4s that this is precisely when the Apple BOD and executive team were dumping their Apple holdings--between the high 300s to low 400s!! Some did wait until Icahn helped run the stock up to about $500 to dump. They could very well have been selling their shares to Icahn's team!! Members of the Apple BOD sold over 40,000 shares days before Icahn's announcement, and that was close to 100% of their holdings! The executive team sold hundreds of thousands of shares in the same time frame and some sold all of their holdings, or very close to it. Icahn believes in Apple--he has demonstrated it with his pocketbook. He also now owns a lot more Apple stock than every member of the executive team and BOD put together. They certainly have the right to sell all of their Apple stock, but what does that say about their faith in Apple? So, please don't tell me how smart they were for selling their Apple stock in the high 300s and low 400s to Icahn.
    30 Dec 2013, 07:30 AM Reply Like
  • First, I thought you were referring to corporate actions not the actions of individuals. Second, they weren't unloading a position in the stock, almost all of them were tied to options exercises. Either at the earliest option exercise date or just before their expiration date. Third, when you have insider information, many of your investments and divestitures are on a schedule, usually one set up with your broker months or even a year or more in advance. Icahn has no similar constraints so comparing their actions as individuals is pointless.

     

    What I'm suggesting is simply that Apple *the company* has no business committing to a huge finance deal to buy shares at an unknown price while the stock is at it's 52 week high. If/ when we have another great window of opportunity like we had over the summer, I'd love to see Apple float some more debt to buy back shares. Making massive purchases when the stock is in a rut makes a ton of sense. Making purchase commitments 2-3 months in advance on the tail of a 40% run while the stock has tons of momentum is stupid.

     

    Well it's stupid for Apple, it's very clever if you stand to benefit from a short term increase in share price.
    30 Dec 2013, 04:21 PM Reply Like
  • I agree with most of that, but they do make decisions on the programmed sales. The fact that they sold down to almost nothing says a lot. What you are arguing is that Apple is overvalued and they shouldn't buy their stock back until it drops back to lower prices. I hope you are wrong, but will admit I don't know the future. Unfortunately, this has become a personality contest--reminds me of a high school election. Icahn is "out," and the BOD is "in." I wish it were about the issues, instead. Apple should have been buying the stock back in the past, as Buffett advised Jobs to do. They haven't really been great on the financial end imo. Although they produce great consumer electronics, they could use some help in the finance department. I think Icahn could provide that expertise.
    30 Dec 2013, 05:08 PM Reply Like
  • If Apple raises $50 Billion and the share price appreciates another 20-30% by the time the financing comes through, what does Apple's management do? Buy back shares regardless? Sit on the $50 Billion?

     

    Keep in mind, this spring Apple hired a new controller, Luca Maestri, who is "a champion of shareholder return". Within six months of his getting hired, Apple executed the biggest largest share buyback ever. Is it an unreasonable assumption to think that the new guy who managed to retire 5% of shares at the time when it made absolutely perfect sense to do so will continue to serve us (shareholders) well?
    30 Dec 2013, 11:00 PM Reply Like
  • What is it with iCahn? He said what he wanted to Tim and got a couple of very nice dinners. I wrote to Tim and didn't hear back. What more does he want? Just because he has purchased more shares than me doesn't mean that my opinion is meaningless. It just means that he has a couple of more shares than I do. Ok more than a couple, but still not enough to move the needle as far as Apple is concerned.
    27 Dec 2013, 06:36 PM Reply Like
  • Backseat drivers bunch my panties. Let Cook drive. Tugging on the driver's sleeve is asking for trouble. The kid with his hand out wanting more candy is just another distraction. Apple need to focus on how to produce 10 phones per second by next fall. In addition, they likely have more than one new product coming this year, and getting those to market is more important than feathering Carl's nest egg.

     

    Icahn reminds me of the guy with the guitar outside the liquor store. Dare to glance in his direction and the next thing he's in your face. Offer to pay for a meal and you simply encourage him.

     

    Apple management need to drive and backseat drivers need to know their place. They are asking us to reinforce their right to choose course, duly noting all concerns. This is not a taxi catering to a single rider. It is a multi-passenger train that needs to be kept on track rather than pulled onto sidings at the whim of a someone who thinks it would be fun to pull the cord.

     

    I think Carl has Carl's interests at heart, not Apple's. When Apple management told Icahn they determine strategy and timing and their's don't mesh with his, he kicked up a fuss, with this mini tantrum.
    27 Dec 2013, 08:30 PM Reply Like
  • Icahn is only out for Icahn !
    Since TWA, has he brought any value to anything except to himself ? :-)
    2 Jan, 04:48 PM Reply Like
  • I'll vote in favor of an additional buyback unless Apple shows what specific use it has planned for that money. Even Cook admitted that Apple has more than enough cash to finance operations, and they continue to add to an already huge war chest. There's a reason why the market currently discounts Apple's cash when valuing its stock.
    27 Dec 2013, 06:38 PM Reply Like
  • Apple are not about to tell you what they are going to do with the money, unless you think it's a good idea to give Samsung/Google an even bigger head start on future products than they can get from their current industrial espionage techniques.....!
    Icahn needs to get as much return on his investment for his own shareholders by being a glorified gambler, Apple is one of his biggest bets for a short term return because he doesn't have the ability to run a company that actually produces things from ideas and innovation.
    I'd prefer the Buffet approach as they will still be around in 10 years time, while Icahn's team will be sitting on a beach somewhere living off the proceeds of their investors commission....!
    28 Dec 2013, 05:56 AM Reply Like
  • Not looking for tech diagrams, just an overview of where the company is heading in the next year and what they plan to use the cash for. If the plan is to let it sit in treasuries and continue to add to the pile then I like a bigger buyback to get EPS growth.
    28 Dec 2013, 05:19 PM Reply Like
  • Voting for proposition 10 will not harm Apple in any form. But will continue to listen to opposing viewpoints till its time to vote.
    27 Dec 2013, 06:41 PM Reply Like
  • Apple can't say they are "thoughtfully considering options for returning additional cash to shareholders and are currently seeking input from shareholders as part of the Company‚Äôs regular review" to avoid Icahn's proposition. What are the options? Give us the right to choose the options. If Apple doesn't, a proxy fight will probably occur. Apple has had the money in the bank way too long to suddenly hide behind "competitive conditions and the company's pace of innovation "require unprecedented investment, flexibility and access to resources."" Seriously?
    I was born at night, not last night.
    27 Dec 2013, 06:47 PM Reply Like
  • If this was any company but Apple Tim Cook would be in serious hot water by this point as a CEO. He doesn't have the personality or charisma to inspire investors and the share price has suffered as a result. By not increasing the buyback Tim is effectively saying Apple stock is not worth buying, that Apple believes cash is better to hold than Apple stock. Maybe Tim Cook believes Apple's share price has topped out, is going lower and they will buy more back then. Not an encouraging message for those looking to go long. It is Tim Cook's job to increase shareholder value and he is increasingly looking like Apple's Steve Balmer.

     

    Icahn on the other hand has a proven track record of activism unlocking shareholder value. Icahn believes Apple is undervalued and that Apple should be buying itself hand over fist as he believes Apple stock is a good investment for anyone, including Apple. This is a much more positive message for investors, and makes me feel better about being long than anything Tim Cook has said or done.

     

    In fact, Apple should have been buying back Apple from the 2008 crash onward, the float would be significantly smaller and the share price much higher, and those shares would have been bought at a much better price than today's $560. However as is so common, success has bred hubris and a belief at Apple that they know it all and you can't tell them anything.

     

    I hope Tim Cook and the rest of the executive team at Apple are listening to the message Icahn is whispering in their ears, "Memento homo".
    27 Dec 2013, 06:50 PM Reply Like
  • Ditto. TC a supply chain expert, but a dud when it comes to capital allocation.
    28 Dec 2013, 07:16 PM Reply Like
  • Steve Jobs heard "Memento homo" and chose Tim Cook
    28 Dec 2013, 10:19 PM Reply Like
  • I wonder if Apple would have been under this much pressure if Steve Jobs was still CEO.

     

    Issue $55B in debt? That's a massive debt offering, even if it's small relative to Apple's market cap. Apple investors, dig your own grave.

     

    Bulls make money. Bears make money. Pigs get slaughtered.
    27 Dec 2013, 06:53 PM Reply Like
  • I'd love to hear any and all predictions as to what this skirmish will do to $AAPL's share price as we head toward earnings in Jan. '14.
    27 Dec 2013, 07:08 PM Reply Like
  • I'll vote with Cook.
    27 Dec 2013, 07:16 PM Reply Like
  • They could appease the Gods and increase the dividend and buy back the shares they already stated they would and then finally come out with a new "game changer."
    27 Dec 2013, 07:20 PM Reply Like
  • i will vote my 300 for carl! ... need to keep the "drum beating"
    27 Dec 2013, 07:36 PM Reply Like
  • I either have confidence in management or I am not a shareholder. Compared to management Icahn has a different time-frame and strategy for unlocking value in the company. In my view Icahn has not made a compelling argument for his time-frame and strategy. On the other-hand Apple's results speaks well for its management team. If Icahn wants to run Apple he should buy a controlling interest in the company. Otherwise, let Apple's management team focus on running the company. For Apple I still look at the income statement for assessing the company's value not its balance sheet. I am sure everyone who follows Apple has an opinion on how to manage the balance sheet, tell me why one idea is better or worse than another - revenue and margins are what really matter at this time.
    27 Dec 2013, 07:44 PM Reply Like
  • You guys crack me up. AAPL rose all of 5% last year and believe they need their 150 billion for their big innovative iPhone 6.

     

    See here is the thing.... why go into business if you aren't going to reap the benefits. They could have twice the revenue and the stock wouldn't rise that much. Why? Because the profit isn't going anywhere and investors know it. No demand for a company stock wise that won't do anything with the profit.
    27 Dec 2013, 08:45 PM Reply Like
  • That's the funniest part right?

     

    These guys remind me of the Joker from the Dark Knight, when he's talking to Harvey Dent in the hospital..... "I'm like a dog chasing cars. I wouldn't know what to do with one if I caught it".

     

    AMZN opening up new lines of business in an effort to lose money in every endeavor they take on. AAPL spending billions on advertising to the lemmings in an effort to make lots of money so that they can do nothing with it. That's like going out with the hottest girl on the planet, spending lots of money on her and then when she's ready to rip your clothes off you kick her out of the car.

     

    Idiots, lol

     

    Good luck!
    27 Dec 2013, 09:09 PM Reply Like
  • A 5 star hotel room is better than a car, even if she is not the hottest girl on the planet. I don't own Apple shares for a short-term gain. I trade options for short term gains. With my options trades I don't care about about cash being returned to shareholders, just technical price movements.
    28 Dec 2013, 11:32 AM Reply Like
  • I think it's dangerous to go Long term on AAPL one disruptive technology away from becoming the next BBRY.
    28 Dec 2013, 07:19 PM Reply Like
  • Um, doesn't this same risk apply to virtually every other tech company? Yet, how many have a multiple like Apple's? How many have a similar cash/market cap ratio? Why AAPL is more likely to be "disrupted" than the others? The comparisons of Apple to Blackberry are ludicrous. Do investors worry that Toyota is going to become the next Chrysler? Your comment makes it sound like Apple is a house of cards. If Apple can build a phone that's "only" 4 inches and yet sell 9 million in the first weekend, what makes you think there's a significant risk of Apple falling apart?
    29 Dec 2013, 12:53 PM Reply Like
  • Apple should mange it's balance sheet, not a minority investor.
    27 Dec 2013, 08:28 PM Reply Like
  • They have a pretty flawless balance sheet. I think they should be more focused on revenue growth...the I/S
    27 Dec 2013, 09:48 PM Reply Like
  • Agreed, its about time that Tim Cook got a spine.
    28 Dec 2013, 06:16 PM Reply Like
  • I think the board is in the best position to tell whether the further increase will be beneficial to the long term success of the company. I will be voting against it for sure.
    27 Dec 2013, 08:56 PM Reply Like
  • Every board in every company advises to vote against every measure.
    27 Dec 2013, 08:57 PM Reply Like
  • The Board may be Apple's problem and not Tim Cook. With all this money earning next to nothing Apple continues to have a miserly R&D budget of 2% of sales while other tech companies like Samsung, Google, Microsoft, Facebook, Intel etc.etc have R&D Budgets of 10% to 20% and even higher. No wonder "the next best thing" is taking so long and the product cycles are also so long they are hoarding the money instead of enhancing Apple's value and stockholder value.

     

    True Einhorn and Icahn may not know much about software and supply chain management but they are among the World's leading experts concerning the allocation and management of capital. Icahn is like the Steve Jobs of capital and stockholder rights, we stockholders are lucky to have them involved with Apple.

     

    Cook may be the right guy at the helm and a moribund Board, that has been amply enriched by Apple, may indeed be at the root of Apple's current problems. Maybe some turnover at the Board level is needed to reignite the Apple fire before the Apple brand begins to fade away.

     

    Icahn knows how to manage capital and enhance both Company and Stockholder value and protect stockholder rights he has proven this time and again. Apple's management has proven they may be very good operational managers but have also proven that for some reason they are clueless when it comes to the allocation and use of capital. Maybe the Board is hindering management and is the root cause of the problem?

     

    I say let's give the price of our stock another upward shot in the arm and vote for Icahn's very reasonable and financially conservative proposal.
    27 Dec 2013, 10:18 PM Reply Like
  • Mr. M changes the oil on his car every 1000 miles, and does a complete engine overhaul every year. Me. A follows recommended practice and changes his oil every 10,000 miles, and does an overhaul every 100000 miles. He spends 20% of what Mr. M spent. Is Mr. A foolish, or is Mr. M foolish? Same for R&D. A company can spend huge amounts on R&D, and not commercialize much. Or they can have laser-like focus and spend a fraction, but get major commercial benefit. Picking on Apple's R&D spending is disingenuous. What did Microsoft get for their R&D spending on the Courier tablet? Besides, you should count Apple's purchase of smaller companies for their technology as R&D spending.
    28 Dec 2013, 02:01 AM Reply Like
  • but...if they do take on more cheap debt like they managed to do at the $17b offering it could be beneficial.

     

    Debt financing is cheaper than equity financing as you can offset your debts against your profits meaning the company does not have to pay as much in tax. As long as interest rates stay very low it is a bonus.
    28 Dec 2013, 07:49 AM Reply Like
  • You want apple to be spending 20b$ on R&D? The stock price would be cut in half.,.
    28 Dec 2013, 11:54 AM Reply Like
  • Let Cook and company do what they do best, and that is to manage one of the best high tech companies in the world. Icahn neither has the experience, knowledge nor temperament to manage a firm like Apple. Icahn is like a former high school football player trying to tell a head coach of an NFL team how to manage his team. Cook should politely listen and value Icahn's proposals the same as any other stock holder.
    My hope is for a ten for one split to spread the stock to more long term, small investors, hopefully reducing the influence of the Wall Street traders.
    27 Dec 2013, 09:26 PM Reply Like
  • I'm having my doubts that Carl will actually win this fight with Tim Cook (-.-)
    27 Dec 2013, 09:26 PM Reply Like
  • Doubt it. He looks/acts smarter than he is imo :)
    27 Dec 2013, 09:43 PM Reply Like
  • I don't want a short term gain in stock value as Icahn wants. I'm a long term investor awaiting at least a 25% gain in stock price due to good management and great ideas. No to Icahn. Can't wait to vote no
    27 Dec 2013, 09:39 PM Reply Like
  • ^^^^^^ thank you! smart guy right here ^^^^^^
    i'm not even a shareholder of Apple, but those are words of simplicity and wisdom
    27 Dec 2013, 09:51 PM Reply Like
  • Why not have the company itself invest in its shares like you did. That 25% gain will then be compounded. That would be a great use of the 150b$ like the use of your own money to buy the stock.
    28 Dec 2013, 11:56 AM Reply Like
  • Apple should be buying themselves back. Their free cash flow should be increasing quite nicely with the new iPhones and iPads. I will vote with Icahn for the buyback. The stock is too cheap.
    27 Dec 2013, 09:52 PM Reply Like
  • So many miss the point here. Without any "agitation" the past 24 months, there would have been no buyback of shares or any initiation of a dividend. I WILL DEFINITELY HELP CARL NOW BY SENDING A MESSAGE TO MANAGEMENT ONCE AGAIN!!!!!! Indeed, it is a "no brainer" when you can borrow money so cheaply that, in effect, it doesn't cost anything because you can deduct interest expense and the dividend is not paid out on any redeemed shares. You have to be pretty ignorant (from the Latin word: ignore: to ignore) not to recognize this opportunity. I think Tim and Peter are smart enough to do two things early in 2014: announce a 20-25% increase in the regular quarterly dividend, AND expand the buyout authorization by perhaps another $25 billion. Not as much as Carl wants, but it is a fine gesture in the spirit of a more shareholder friendly company going forward.

     

    Big J in L.A., retired security analyst, The Foristall Co.
    27 Dec 2013, 10:03 PM Reply Like
  • Look at the recent hires of senior non-tech people. Combine them with lots of capital in a risk aware corporate world and let your imagination run.
    27 Dec 2013, 10:19 PM Reply Like
  • Why should shareholders have to resort to wild imagination when there are safer ways of allocating capital commensurate with higher returns?
    29 Dec 2013, 09:56 AM Reply Like
  • Vote no!
    27 Dec 2013, 10:22 PM Reply Like
  • No to Icahn . He is a short term, thinking of himself player and not out for the best for AAPL .
    Brukap
    27 Dec 2013, 10:23 PM Reply Like
  • No more debt. Apple must have cash fir divie and future expansion.
    27 Dec 2013, 10:24 PM Reply Like
  • During a major buy back isn't the company, at least in one sense, operating at odds with current stock holders? In the short run the company wants to buy low to achieve the greatest benefit of the buy back for themselves, thus they may be acting to keep the stock price as low as possible for as long as possible.
    27 Dec 2013, 10:25 PM Reply Like
  • Apple should make new products
    Other than iPhone, iPad etc
    27 Dec 2013, 10:27 PM Reply Like
  • I held the shares at $700. I held them at $385 and bought some more. I am still holding them and like what the team at Apple are doing.

     

    Mr. Icahn is trying a pump and dump but is not interested in the company or its great products for the long run.

     

    I vote for Mr. Cook and his team.
    27 Dec 2013, 10:29 PM Reply Like
  • I will vote against Icahn's proposal. Apple already has enough debt. Rather than increasing their debt, Apple should repatriate some of their foreign cash and just pay the damn tax.
    27 Dec 2013, 10:30 PM Reply Like
  • I agree with this ^
    27 Dec 2013, 11:25 PM Reply Like
  • The best way to repatriate cash is to return to shareholders by dividends not a stock repurchase to the tune of 50 billion. Not a these levels. I wonder how many of you are loading up on new stock at this moment? I'll bet you Icahn isn't and if he isn't why should Cook? Icahn is an ego maniac who likes to be noticed and he's certainly succeeded at that.
    Be smart, be patient, and "stay thirsty my friends."
    28 Dec 2013, 10:33 AM Reply Like
  • Vote with Cook. Icahn's an ass without the best interest of the company in mind.
    27 Dec 2013, 11:24 PM Reply Like
  • But at the moment he seems to care about the owners of the company a lot. And isn't' that the point?
    29 Dec 2013, 04:16 AM Reply Like
  • Give me a break. Icahn cares about himself a lot. He would be the first to tell you as much.
    29 Dec 2013, 05:21 AM Reply Like
  • What honest enterprising capitalist doesn't care about himself? Icahn is a non-controlling shareholder like the rest of us, and there is a difference between what's good for the company (i.e. Management) and what's good for the owners (shareholders). I don't believe in speculating short term, but the time horizon for the shareholder must be shortened due to the risks inherent in technology dependent companies. It requires an active mindset, not buy and hold no matter how good the company seems on paper. In this unique instance ICahn's interest are congruent with the smaller shareholders, not with Tim Cook or even CALPERS.
    29 Dec 2013, 07:17 AM Reply Like
  • Umm. No.

     

    The best companies are the ones that plan and execute on the long term, not the ones that try and figure out the best ways to turn a buck for shareholders today. Apple didn't get where they are now by pandering to short timers and the future of the company (and best interest of medium or long term holders) isn't served by executing short term market plays.

     

    At least you are honest about wanting your $2 and out as opposed to the number of people who are suggesting this silliness is good for the company and investors in the long term.
    29 Dec 2013, 08:06 AM Reply Like
  • "The best companies are the ones that plan and execute on the long term..." - Therein lies the fundamental problem with a buy and hold strategy for companies like AAPL, the same reason why Buffett chooses to invest in Coke rather than AAPL. Innovation is subject to a high variability in outcomes independent of R&D budgets. Coke just keeps making coke to stay great, AAPL has to place a fingerprint sensor and update its OS just to keep up with competition.
    29 Dec 2013, 10:04 AM Reply Like
  • So apple should just focus on cashing out short-timers instead of focusing on their business? You've ceased making any sense.
    29 Dec 2013, 10:55 PM Reply Like
  • Vote yes because it is a non-binding "suggestion" to let the board know that they should listen to shareholders' concern about the stock's underperformance in 2013.
    28 Dec 2013, 12:01 AM Reply Like
  • I trust Tim to do the best for Apple and shareholders so my vote is with him. He is smarter than any of us here.
    28 Dec 2013, 02:37 AM Reply Like
  • give us a buyback so I can cash this bish out.

     

    I'm done with apple after this.
    28 Dec 2013, 02:49 AM Reply Like
  • If Tim needs all that cash then he really must have some big plans for Apple. My guess is that he will need to do some huge investments in order to make the Apple TV to a worldwide success. Tim(e) will tell.
    28 Dec 2013, 03:26 AM Reply Like
  • Yes Apple can afford a $50 billion buyback but in the arc of time (by the time of the vote proceedings) $Apple may be $650 which, as a relative value proposition is less good than when the share price was closer to $400 and almost definitely undervalued!

     

    Apple management clearly believes this surplus cash tucked away can be used as a shield in future; for crisis or opportunity.

     

    To conclude, Apple believes that only using its surplus US cashflow for its capital return program and retaining the current conservative leverage position gives it greatest flexibility. As a UK citizen I believe Apple should use its cash to acquire Barclays (PE 10) and leverage it's Barclaycard asset to reform financial services, in an ever increasingly mobile world. Wishful thinking I think!
    28 Dec 2013, 06:38 AM Reply Like
  • Apple should issue Employee Stock Options instead of the restricted stock that they issue to executives and employees. Employee Stock Options align the employees with the shareholders much longer and cheaper . ESOs also generate far more cash flow and more certain tax deductions to the company. This would generate larger and earlier cash flows. The recent grants of large amounts of restricted shares to the top five executives have questionable tax deductions, and thereby generate no cash flow.

     

    If Apple wanted to get serious about their equity compensation and choose to grant Dynamic Employee Stock Options, which I invented. See the link below:

     

    http://slidesha.re/JkpGDF

     

    This would reduce their borrowing and make more cash available for buy-backs.

     

    John Olagues
    28 Dec 2013, 09:46 AM Reply Like
  • I struggle to make sense of this. The $50B asked for is roughly equal to the additional amount likely to be added for FY2014. They must be planning something that is tantamount to taking over the free world. If they prevail in this, and stockholders vote down Icahn, then if a year later nothing really huge has been done and the cash pile is approaching $200B, the stockholders will feel like they have been duped and will never trust Cook or the board again. In fact, if that happens there may well be a call for his ouster. I sure hope he knows what he is doing.
    28 Dec 2013, 09:50 AM Reply Like
  • My guess is that Apple will increase the dividend and buy back this year but by an amount they are comfortable with long term, not what mr Icahn declares. I will. Vote with management.
    28 Dec 2013, 10:30 AM Reply Like
  • What I see as a stock holder is Apple fiddle fa*ting around for several years with a ton of cash overseas. They remind my of my broke grandpa that was so paranoid about $$ that he died with several hundred thousand dollars buried in his mattress. They need to sh*t or get off the pot. And that's why Icahn may very well be successful in his proposals. Arrogance by management will only draw more activists like Icahn.
    28 Dec 2013, 01:37 PM Reply Like
  • I'm voting with Cook. Apple's superb results over the past ten years speak for themselves and have bought them a certain level of trust from this shareholder.

     

    Carl Icahn's problem is that he's Carl Icahn. We've all met Carl before.

     

    BTW how slick is it that Apple released this as a Friday night news dump? Carl can't even get his say on the big financial news infotainment shows until next week and it must be killing him. Point goes to Apple. Very cagey, Mr. Cook.
    28 Dec 2013, 02:11 PM Reply Like
  • I have followed MR Icahn all the way back to TWA and his shenanigans. I will vote with MR Cook.
    28 Dec 2013, 03:47 PM Reply Like
  • It boggles my mind that any long term investor would vote for Ichann's solution. When I invested in Apple my intention was to invest in one of the worlds greatest corporations. I would like to see Apple do what Google is doing right now. Investing in NEW IDEAS. I did not invest in the company to squander its cash reserves in poorly conceived share buybacks. Share buybacks are a trick to convince naive investors that somehow the company they are investing in a more prosperous than they actually are. Buybacks increase EPS and make the company appear more prosperous. I am in favour of share buybacks when the stock is a good investment. Like when the stock has been trashed by the market and the company can get its stock for dirt cheap prices. I am emphatically NOT for share buybacks if the company's stock is rising and getting more and more expensive. That's a very poor use of shareholder capital. Sure it may give the stock a temporary lift, but the long term interests of shareholders is not being considered. Carl Ichann is a TRADER. He is not a long term investor. This thesis of his to squander all of Apple's cash to buy back overprice stock is short term and misguided. I would much rather see Apple BUY A CLAPPED OUT INDUSTRY and use its philosophy of creating great products and incredible design to revitalize that industry.
    28 Dec 2013, 04:56 PM Reply Like
  • here's the deal....Icahn's request is better for short term health of the stock, but it is at the expense of AAPL's long term. Being a shareholder, I always support what is best for the short term. Case closed.
    28 Dec 2013, 06:33 PM Reply Like
  • "Being a shareholder, I always support what is best for the short term."

     

    Say what?
    28 Dec 2013, 11:31 PM Reply Like
  • None of this addresses AAPL's real problem - the lack of a new blockbuster product.
    28 Dec 2013, 06:39 PM Reply Like
  • Share buybacks help short term at the expense of long term.... its like you some of you don't understand how share buybacks work.
    28 Dec 2013, 08:23 PM Reply Like
  • Apple isn't Google and never will be. Apple will never invest in far-off initiatives such as self-driving cars. Unfortunately, what made Apple tick is now dead and in his footsteps there is a long line of pretenders. Johnny Ivy is not Steve Jobs and never will be. If he was, he'll be out on his own by now, raiding Apple's management and churning out products that obsolete anything that Apple can put forth. What do we have since Steve Jobs has died - new and improved versions of hardware and a Windows Vista type disaster in iOS7?!? I am so "impressed" that Apple is selling more units into China so that it obscures the degradation everywhere else. No company needs more than 2 years of operating expenses (including R&D) on its balance sheet. The rest should be returned to shareholders one way or another. If they need to make an acquisition, there are plenty of ways to make acquisitions by putting 10% of the money down, just ask any P/E shop. Honestly, I kind of feel sorry for the people working in Apple now - yes they have money, but their future is boring.
    28 Dec 2013, 09:15 PM Reply Like
  • When I bought AAPL shares I had no interest nor desire for any involvement by guys like iCahn in Apple management.

     

    iCahn isn't going to increase Apple's longterm shareholder value in any way.

     

    I will vote for iCahn to drop dead.
    28 Dec 2013, 10:54 PM Reply Like
  • I see your 300 and I'll vote my 390 for Tim.
    29 Dec 2013, 12:04 AM Reply Like
  • I do not care how much Apple he owns. We, the smaller investors , do not dance to his drumbeat. I will vote against his proposal and make my money without meeting with Tim Cook. I have made my fair share in buying and selling great companies, of which Apple is one. The
    end is not in sight, even with Icahn out of the picture.
    29 Dec 2013, 12:14 AM Reply Like
  • The best approach is usually somewhere in between. Increasing buy backs somewhat along with dividends. However, driving innovative new media platforms or biometric devices could create new cash flow. Think about what the business might look like if they bought a content company like TWX or DIS and had more devices to consume it?
    29 Dec 2013, 12:46 AM Reply Like
  • Stay the course. Debt is not necessary and always comes back to haunt you. As one of the above posts stated, if a company is one disruptive technology away from being a Blackberry you want enough cash to float a big parachute. R&D, capital expenditures to become a self reliant manufacturer and buying small unique technologies all cost money. A lot of it. The next big thing will require a big war chest. Don't worry about short term gains. Apple is and will continue to be like no other company because they think different at their core. Icahn is a genius at making money not making products. Big difference.
    29 Dec 2013, 12:56 AM Reply Like
  • So that's how Icahn does business: Buy a bunch of shares in a company and then get the naive shareholders of the very same company to believe, an even more enormous buyback program than the already imposed one is a good thing no matter what. And in the process, he probably sells his shares at elevated prices.

     

    He sees a company with a lot of cash and uses his name to get what he wants. He really is a smart man...

     

    Maybe it's a case of: Be grateful for the stupidity of others.
    29 Dec 2013, 01:16 AM Reply Like
  • Voting with Icahn on this one. No reason for Apple to retain $150BB on its balance sheet earning money market interest rates.
    29 Dec 2013, 02:53 AM Reply Like
  • Personally I oppose Icahns proposal. Unlike most I don't have major analysis to back up my "No" vote. But, I very strongly feel Icahn could give a rat's rump about me or you or Apple and is only wanting to score some major cash for himself and to Hell with everyone else.
    29 Dec 2013, 08:46 AM Reply Like
  • Btw- Steve never gave a darn about the stock price.
    29 Dec 2013, 09:24 AM Reply Like
  • With his mastery of innovation and marketing and lack of viable competitors he really didn't need to; but now it's being run by TC who doesn't possess the Jobs craziness and bravado. I think Jobs didn't give a damn about Wall Street, and not necessarily AAPL's stock price.
    29 Dec 2013, 10:11 AM Reply Like
  • Eventually, a company like Apple needs to innovate and lead the pack. If not, they lose their luster. For he moment though, they have products they need to make enough of and bring them to market while maintaining or improving profit margins as best they can. Those things are Cook's strength. in my opinion, at this moment in time, he's the right man in the right job.

     

    No one knows what's in the pipeline, but my guess is that if they had a hotproduct, they'd need to form extra manufacturing and assembly chains to support it. Why, when they can barely make enough phones and Pads??

     

    Anyone who truly thinks Apple's innovators and designers are asleep is not looking at things clearly. Profitability requires making strategic timing decisions. Right now it's time to reap. The re- seeding will start again mid 2014, my guess. The stock price will reflect all of that. Carl Icahn is after some rapid plunder. That's never been what Apple was about.
    29 Dec 2013, 05:26 PM Reply Like
  • Why buy Sony for 18 B to get the contents for the iPad...?

     

    After you have built a better mouse trap, you need to enhance its functions. Buyback is not a good way to grow a tech company.
    29 Dec 2013, 08:08 PM Reply Like
  • I don't own 1% of Apple like Carl Icahn and don't carry much weight as a stockholder. I owned my Apple shares longer than Icahn and have been reasonable happy with Apple's performance to date. I share his views the 150 billion in cash and growing may be an excess. That said, I didn't like Congress's intervention into Apple operations telling Apple it should change their tax accounting policies. Similarly I resent a billionaire opportunist using his power and money to influence to disrupt Apple's operations and affect the markets for Apple stock.

     

    Government creates nothing and deserves no said in Apple operations. Carl Icahn creates nothing and deserves no more than any other person investing his funds into the capital markets to fund American business and economic activities. Like me Icahn believes Apple is cheap and has unlocked shareholder value with more upside stockholder potential. He has expressed his opinion directly to Cook unlike me. He is free to buy more, sell his shares, or short Apple me. All of those moves will effect the share price of Apple and indirectly influence management's behavior.

     

    All billionaire's should spend their energy in time doing other things for themselves and not using their money and influence to destroy companies, economies of countries and introducing corruption into governments for personal gain.
    30 Dec 2013, 07:30 AM Reply Like
  • I'm a little on the fence about this one. On one hand Apple is already executing huge buybacks. Theoretically, additional Icahn driven buybacks would raise the share price which sounds great. But would that price hike hold in the way wall street continuously undermines Apple's stock price advancement ? Make no mistake about it, Apple is in an increasingly not seen before, competitive environment with faster and faster advances being made and product cycles shortened.

     

    It is critical for Apple to keep it's powder dry to meet these accelerated challenges through smart acquiring of additive product feature companies and to be able to navigate this landscape. Tim Cook is telling the truth. As an investor, I want Apple to dominate long term and not take the quick money that could be a lot less than we'd otherwise achieve long term. So do I vote for the possible quick stock rise that may not hold in the market with an Icahn incremental buyback or do I allow Apple to most likely increase its dividend, be well positioned to release new categories of products and defend its IP, and to advance more rapidly by acquiring companies that advances Apple's competitveness into the future.

     

    I got to tell you as is implied by my words and a turnabout from my original inclination, that I am likely going to vote with Apple and against Icahn. Afterall, we are already getting substantial buybacks and I don't want to see wallstreet washout any temporary price hike with the Icahn buyback only to watch him make his billion and than make an exit. It all still really comes down to rather or not Apple brings out some successful new categories of products this year which I believe is going to happen. I do believe however, Apple should have bought back (maybe they did) tons of stock when it was below $400 to $450.
    6 Jan, 01:51 AM Reply Like
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