Carl Icahn Asks for Accelerated Stock Repurchase Program in Letter to Apple's Tim Cook

[gnasher729]

And what happens to Apple when they've bought enough shares back that Carl owns 51% of what's left?

Icahn owns 0.88% of all AAPL shares. So Apple would have to buy back all but 1.8% of its shares, that is 98.2% of all shares. To do that, Apple would have to give 98.2% of all its value back to the share holders. Icahn would have 51% of a tiny company that isn't worth much.

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All correct. Just Icahn has a different opinion about the stock. He is saying that he thinks the shares are low. He is predicting that the market is going to catch on to this fact eventually. By saying "Apple is quite high at the moment", you are taking opposite view. If you are right, Apple should keep its money and continue to earn 1% on it investing in safe government bonds. If Icahn is right, Apple should buy shares for $101 today because they will be worth $203 in a year or two. We don't know which of you is right. However, we do know that Icahn was right when Apple was trading at 46% less a year ago. All of Apple's buybacks in the last year have been terrifically good trades.

Well, a year ago I would have agreed.

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That's mathematical gibberish. Given x number of shares owned by him, there's a specific number of shares that Apple could buy back and all he would need to do would be to hold on to his and he'd have 51%. No additional investing on his part required. Of course, he can use the dividends to continue buying shares, so the number Apple needs to buy back to give him control would be smaller. In addition, there's no reason he couldn't be working with a partner or partners on this, if control of the company is his ultimate goal. Together they could have more than 1% already.

If there are other shareholders owning 1.2% of the company right now, and these people don't sell, he can never get the majority.

 

[H2SO4]

Note to Carl: If you don't like the way the company is run, then don't buy their stock. Enough said...

Or buy the stock and have your say.
What you’ve said is if you don’t like the way the government runs the country, don’t vote.

 

[duffman9000]

Dear God,

Thank you for everything so far. Can I please ask you for something? Can you please take this evil man away? The world would be a much better place. I know I'm not supposed to ask for someone's death, but just look at this guy. He even looks like Satan.

 

[bandrews]

Can't he just give up and just enjoy being rich and old?

 

[Nacho3891]

Look at his nails! That must be...

 

[Michael Goff]

He's pretty much living proof that money definitely doesn't buy happiness.

 

[TallManNY]

That's mathematical gibberish. Given x number of shares owned by him, there's a specific number of shares that Apple could buy back and all he would need to do would be to hold on to his and he'd have 51%. No additional investing on his part required. Of course, he can use the dividends to continue buying shares, so the number Apple needs to buy back to give him control would be smaller. In addition, there's no reason he couldn't be working with a partner or partners on this, if control of the company is his ultimate goal. Together they could have more than 1% already.

I'm talking about in the real world. Yes, mathematically, Apple with its current market cap of $603 billion could do enough buy backs so that Icahn's current $5 billion position would end up being a majority position. However Apple doesn't have anywhere close to enough money to do that level of buy backs and even under Icahn's rosy scenario for future earnings, Apple won't have the money for many many years. Not to mention Icahn is predicting Apple's market cap to increase, and if he is right these buy backs are going to get progressively more and more expensive.

SEC rules require any one who acquires more than 5% to disclose that ownership position. This includes working with partner. Considering 5% would be a $30 billion position it is hard to hide positions of that size even if you aren't publicly disclosing them. Icahn Enterprises has a lot of money under management, but the scale of Apple simply dwarfs it.

 

[AppleHater]

He wants even more money as if he doesn't have enough already. It's sickening when I see someone who cares only about his money.

 

[koban4max]

he could expire anytime now.

 

[OriginalClone]

I have to say I agree with Icahn. Apple seems undervalued to me. The iPhone is the best in class and I agree that the smartphone market is the most important piece of technology. I also think that Apple is dominating that market and will continue to do and its dominance is on the the assent.

Icahn has been right about these stock buy backs for years now. Apple and their shareholders would have gotten a fantastic return if Apple had followed his advice more whole heartedly over the last few years. Now Apple has a continuing growing stockpile. The supper successful iPhone launch (one in which people are not recognizing will include sales at a much higher price point and probably higher margins (more people will buy the 64 GB 6 and the 6+, then in the 5s launch where the most common phone sold was probably the 16gb version)) is going to add tens of billions to this cash pile over the next two quarters.

Finally someone that makes sense. That's usually lacking around here on these Icahn-related posts. The majority of posters seem to be blind fanatics.

 

[AdonisSMU]

I'd rather Apple focus on making good products as opposed to manipulating the stock markets in Apple's favor.

 

[irnchriz]

Icahn is a parasite...

Hopefully he will pass on before he garners enough stock to influence board decisions further.

 

[Chastepe]

He acts as if he is going to get all this money he has in the afterlife...

 

[AdonisSMU]

I have to say I agree with Icahn. Apple seems undervalued to me. The iPhone is the best in class and I agree that the smartphone market is the most important piece of technology. I also think that Apple is dominating that market and will continue to do and its dominance is on the the assent.

Icahn has been right about these stock buy backs for years now. Apple and their shareholders would have gotten a fantastic return if Apple had followed his advice more whole heartedly over the last few years. Now Apple has a continuing growing stockpile. The supper successful iPhone launch (one in which people are not recognizing will include sales at a much higher price point and probably higher margins (more people will buy the 64 GB 6 and the 6+, then in the 5s launch where the most common phone sold was probably the 16gb version)) is going to add tens of billions to this cash pile over the next two quarters.

None of what you said proves anything. Apple may very well be undervalued. However, if no one knows it then it's not undervalued. It's not Apple's responsibility to manipulate the stock markets so billionaire investors can get rich quicker.

 

[Anonymous Freak]

Oh this guy again. Trying to manipulate the market again. Eugh.

I always wonder how what he does is legal.

"Hi, I own $5 billion of this company. This company is wonderful, they are perfect, you should buy all their products. Oh, and their stock is *REALLY* undervalued, you should buy it so its price goes up. Oh, and because I'm big and important, the company should listen to everything I say about how to run their business; and I say that it is best for them to pay as much back to the investors as possible."

I've never understood the "Wall Street" mentality or process, but some of it just strikes me as insanity.

 

[kerrikins]

Did you guys read his letter?

He praises Apple

He is totally right, Apple has been held back. Bendgate and all this nonsense for years.

Apple is way undervalued.

Interest rates are so low, Apple's best investment is to buy it's own stock. And they are doing that.

Why so negative on Carl Icahn?

He's obviously got his own interests at heart as part of this and that makes people distrust him.

 

[AppleHater]

This isn't a popular opinion around here, but shareholders own the company. Apple is worth more than 610 billion dollars. They're virtually printing money, and their future growth is going to be incredible. He's doing a good thing in the long run - with more value in the company, Apple can purchase more/larger corporations. When a company buys another, it's rarely done in terms of cash. It's done in stock. Under Icahn's projections, Apple would be worth over 1.4 Trillion dollars. That would allow them to acquire really, really big name players.

Apple truly owes money to the shareholders... because they own Apple... If the company does well, and is just sitting on a pile of cash, it is really their responsibility to give it back...

edit : Think - if they bring their stock up to a fair value, buying one of the big 2 US Cell carriers wouldn't be a problem. Or buying literally every cable company in the USA...

Truth to be told that the same market principle applies where if they feel Apple stock isn't good enough investment, sell it and move on. There are plenty of stocks that will get you lots of dividends regardless of the future of the company.

Surely, stock holders own the company which means they should care about the future of the company more than short term gains.

 

[BuddyTronic]

That, or have it make more money.

Yes but Apple has been sitting on the cash and not investing it.
So better to pay divs or buy back. Icahn is totally right on these points

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He's obviously got his own interests at heart as part of this and that makes people distrust him.

Yes, but he is Long AAPL, and has been right 100%

 

[TroyBoy30]

you would think you could have your eye brows trimmed if you had his money

 

[TallManNY]

None of what you said proves anything. Apple may very well be undervalued. However, if no one knows it then it's not undervalued. It's not Apple's responsibility to manipulate the stock markets so billionaire investors can get rich quicker.

It is actually Apple's responsibility to make money for its shareholders. Most of them are not billionaires. Apple has $166 billion in cash. I predict this is going to increase quickly with the successful iPhone 6.

If you don't want stock buy backs, what should Apple do with its money? Should all the money just go to senior management? That is a possibility. Apple could pay Ivy $50 billion a year. He is a nice guy and makes nice stuff.

Or should the money just sit in bank accounts overseas and continue to earn 1% a year? Is that your proposal?

 

[yaxomoxay]

So the dude has 53000000 shares.
Open price: $101.54
Current : $102.18

Profit for half day of "work": $3392000

I could retire after four hour of work

 

[BuddyTronic]

None of what you said proves anything. Apple may very well be undervalued. However, if no one knows it then it's not undervalued. It's not Apple's responsibility to manipulate the stock markets so billionaire investors can get rich quicker.

No, the market needs a kick in the butt on this.

AAPL has been hit with lots of hate from paid shills for years.

The financials are very clear (P/E 16.5, nice divs). Hard to go wrong. But CNBC talks about NetFlix and Panera bread stocks, lol, and feeds viewers sensationalist stories about bending iPhones. Thank goodness for Consumer reports debunking that one. But that Bendgate stuff did hit AAPL for 2%

 

[yaxomoxay]

Apple could pay Ivy $50 billion a year. He is a nice guy and makes nice stuff.

He would unapologetically accept it. And so would I.

 

[TallManNY]

So the dude has 53000000 shares.
Open price: $101.54
Current : $102.18

Profit for half day of "work": $3392000

I could retire after four hour of work

Hey, did you see that letter? It was long. It probably took a few days to write.

 

[SgtPepper12]

You'd think with all that loot he'd hire someone to control his eyebrow hair

Or his fingernails.