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

[FluJunkie]

[/COLOR]Too many people on these forums are quick to call this guy names and hate him because he's rich. Ever think that just MAYBE he got rich because he's smart and actually knows what he's talking about?

The problem is he is very smart, and very good at what he's doing. He does know what he's talking about.

And what he's talking about is making Carl Ichan rich.

Not making Apple successful.
Not necessarily benefitting other shareholders.
Just making Carl Ichan rich.

 

[MacSince1990]

You of all people should know that this is precisely how "the greatest investor of all time" has made his billions. The guy hasn't created anything or done anything producing actual value his entire life.

This particular quote is incredibly important, and yet, somehow, always overlooked.

What's good for the billionaire investor is rarely good for the average investor. And it's even more rarely good for people with long positions.

 

[The Barron]

Forget Carl

The Apple board & management are doing it properly and do not need to bow to Carl so he can "take the money & run."

Forget it!

Go Apple!

 

[cwt1nospam]

This particular quote is incredibly important, and somehow, always overlooked.

What's good for the billionaire investor is rarely good for the average investor. And it's even more rarely good for people with long positions.

Agree completely, and as a customer I have a very long position. As a customer I don't give a rat's behind about the stock price. I do care about what the company will be like in twenty or thirty years, and I see no way that Carl's influence can be anything but negative on their long term prospects.

As for investors, if you're not thinking long term then you're not really an investor, you're a leech, a vulture capitalist, and a scum bag. That seems to fit Carl to a T.

 

[sirozha]

Icahn is a parasite...

Explain this to me - why does Apple need so much cash? What are they doing with it? I wonder if they are able to keep it from devaluing due to inflation at all or are they losing a couple hundred million dollars annually by mere inflationary attrition?

Several years ago, I was advocating for Apple to start paying dividend on the Apple investor's forum (now defunct) on Macobserver, and I was ridiculed for even suggesting that. Less than two years later, Apple was paying dividend.

Steve Jobs was paranoid about hoarding cash to hedge Apple from a sudden downturn based on his previous experience while CEO of Apple the first time around. However, Steve Jobs is no longer there, and Apple has accumulated more cash than even the most paranoid CEO would want to stash away for the rainy day.

As an investor in AAPL, I feel that I have lost two years since September of 2012 with my stock portfolio having just now recovered to the September 2012 levels. I do not see anything wrong with the buyback program that Icahn is proposing. If Apple cannot find a place to invest billions per year, use these billions to buy back the shares and increase the value of the existing shares for the long-term investors along with paying dividend. The fewer shares will be left on the market, the higher per share dividend Apple can pay to reward its investors.

 

[cwt1nospam]

Explain this to me - why does Apple need so much cash? What are they doing with it?

They're building a supply chain — yes, still (it's an ongoing process) — and crushing Samsung. They're thinking long term while everyone else is thinking about this or next quarter.

As an investor in AAPL, I feel that I have lost two years since September of 2012 with my stock portfolio having just now recovered to the September 2012 levels. I do not see anything wrong with the buyback program that Icahn is proposing.

The only time the stock price matters to you is when you buy or sell. Since you want the price higher you must want to sell, so you're thinking short term. You should "invest" in a different company. And see my previous post about short-term "investors".

 

[H2SO4]

This bit made me chuckle……..

He even throws out some expected sales figures: 12 million 55-inch and 65-inch TVs in fiscal year 2016 and 25 million in 2017 at the suggested selling price of $1500
It’ll be a cold day in hell before Apple release a 55 inch set for $1500.

 

[0958400]

78, right?

Good news. 78!!!

 

[JeffyTheQuik]

Except, they don't. That's why it's a pile of cash, not a pile of investments. It's literally doing nothing to create new sources of profit.

Yep, and that's why I think they need to be wise in its use. After some more gets in the bank, it will start looking like, "Hey, we can buy all the AAPL stock, (at $600B) and get a horde of cash ($130B), plus a profit making company!"

I'm not saying that someone will do it, but it starts getting there.

 

[AlecZ]

All I can think of him saying from looking at that picture is "Why the **** isn't Apple buying back more shares?" Thanks to this meme:

 

[Vertigo50]

Dear Tim,

Can you let Vertigo know that Jeffy called, and he apologized for his driest sense of humor didn't translate over to the Internet, with it's lack of facial expressions and such.

Hugs and kisses,

Carl

Dear Carl,

Tell Jeffy that Vertigo also apologizes for missing the dry humor of the exchange. He hopes there was no harm done, only a little ribbing.

Also, aren't we supposed to be busy CEOs and investors? Why do we waste so much time on these guys? I need to go look into this lack of RAM issue with the iPhone. My browser tabs keep refreshing and it's driving me nuts!

Love,

Tim

 

[oatman13]

This doesn't happen. Repurchased shares aren't owned by the company, they are effectively retired.

The company either retires the repurchased shares or keeps them as treasury stock, available for re-issuance.

 

[franswa za]

iCahn troll

trim your bloody inordinate facial hair

 

[PinkyMacGodess]

He's obviously impatient. He doesn't understand that Apple isn't a high growth stock any more since they started paying out dividends and their profits have kind of flattened. It's normal for companies to do this since they can only be in high growth for so long. He should have invested in APPL back in the late '90's and just waited 15 years, then he wouldn't be complaining.

He got in too late to reap the benefits of Apple's high growth rate and now he wants Apple to increase their debt position by selling bonds against the profits in Ireland.

Apple has to make sure they don't rack up too much debt to negate the cash reserves.

In the business world, debt is the best weapon, and best defense...

 

[cwt1nospam]

Yep, and that's why I think they need to be wise in its use. After some more gets in the bank, it will start looking like, "Hey, we can buy all the AAPL stock, (at $600B) and get a horde of cash ($130B), plus a profit making company!"

I'm not saying that someone will do it, but it starts getting there.

Well, if you believe the Wall Street types here, the $130B is baked into the stock price so it's part of the value of the company and actually makes them harder to buy. The problem with that theory is that if Apple spends $130B on buy backs then it has no rainy day fund, so it's at greater risk and therefore worth less in the long run. So the "investors" get their spike in stock price followed by a longer term slide. They don't care though, since they'll have sold at a huge profit.

 

[flipperfeet]

But, he has 5.3 billion dollars worth of stock. Because of this, he owns a big chunk of Apple, and as a majority owner, Apple has to at least listen.

And if he does not sell his shares during the buy-back he will own a larger percentage of the company and be an even bigger thorn in the side of Apple Management. Even as the largest individual shareholder, in order to get Apple to do his bidding Icahn would have to force Cook out or replace the board. Something the rest of Apple shareholders are unlikely to support.

 

[PinkyMacGodess]

Please explain how Icahn's proposal screws the living poop out of Apple's shareholders.

Please explain how Icahn's proposal helps the living poop out of Apple's shareholders.

 

[Keirasplace]

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?

You do know that a great deal of this money is not in the us and not easily accessible. Theyd likely have to issue bonds to buy back if the amount is large. Oh and there are also tax issues in moving money around. It is not as simple as you think it is.

 

[PinkyMacGodess]

Explain this to me - why does Apple need so much cash? What are they doing with it? I wonder if they are able to keep it from devaluing due to inflation at all or are they losing a couple hundred million dollars annually by mere inflationary attrition?

Several years ago, I was advocating for Apple to start paying dividend on the Apple investor's forum (now defunct) on Macobserver, and I was ridiculed for even suggesting that. Less than two years later, Apple was paying dividend.

Steve Jobs was paranoid about hoarding cash to hedge Apple from a sudden downturn based on his previous experience while CEO of Apple the first time around. However, Steve Jobs is no longer there, and Apple has accumulated more cash than even the most paranoid CEO would want to stash away for the rainy day.

As an investor in AAPL, I feel that I have lost two years since September of 2012 with my stock portfolio having just now recovered to the September 2012 levels. I do not see anything wrong with the buyback program that Icahn is proposing. If Apple cannot find a place to invest billions per year, use these billions to buy back the shares and increase the value of the existing shares for the long-term investors along with paying dividend. The fewer shares will be left on the market, the higher per share dividend Apple can pay to reward its investors.

'Pump and dump'

He wants to push Apple's price higher so he can dump it, OR lower the number of shares so Apple can be taken private in a hostile takeover and sold off for scrap.

What part didn't I get right?

 

[franswa za]

If the old man is so confident the price will go to 203, then double down on the amount of shares he owns.. Put ur money where ur mouth is. Total manipulation .. The rich get richer

pity iCahnnot buy extra life expectancy...... that is priceless

 

[IJ Reilly]

iCon overstates things pretty seriously. Buybacks don't typically affect stock price the way he pretends they do, and AAPL is absolutely not "dramatically undervalued."

I can see it going up another 30% after profits come in, and yes, we all know they're going to be colossal and blow analyst predictions out of the water (I mean, really, this is going to be insane), but $200? Please.

You know how I *know* it's not undervalued though? Because it's selling at what it's selling at. Everything in this world, and that includes stock prices, are worth precisely what people are willing to pay, and nothing more.

This is something I've said many times. The correct valuation is what the market says it is at any particular moment. As for the future, it's a matter of educated guesswork. Icahn is apparently predicting growing earnings, a higher multiple, and of course is advocating for more stock being taken off the table. So yes, it is possible for AAPL to double if all these things happened.

 

[franswa za]

for once on mr, most of us agree

a special statistical incident

 

[IJ Reilly]

Listen, I get it, ok? If you are an investor, and you follow Icahn's lead, you stand to make a tidy profit on whatever you have in APPL stock.

But you do realise that it is all stock market manuevering and manipulation, of course. No actual value is being created, and the end result after all the sell offs for profit is APPL stock trading right back where it started or lower, and the market's confidence in the stock will have been damaged on the long term.

I try not to realize stuff that isn't actually true. People who believe, as you do, that the markets are all a big con, are condemning themselves to poverty. You have my sympathy.

----------

This particular quote is incredibly important, and somehow, always overlooked.

What's good for the billionaire investor is rarely good for the average investor. And it's even more rarely good for people with long positions.

I am sorry to hear you say things like this. This is just plain untrue.

----------

The company either retires the repurchased shares or keeps them as treasury stock, available for re-issuance.

Yes, as I already said.

 

[PinkyMacGodess]

The guy hasn't created anything or done anything producing actual value his entire life.

Not to sound like I'm defending the man I called a parasite, but he actually *did* create value. Look at Mitt Romney. He 'created value' out of the companies his ruthless investing strategy followed. He just didn't value actual people over the things his money would buy.

Somehow a vacation home with an elevator for your cars pales over real people... And I mean, of course, more than the servants...

 

[subsonix]

This is something I've said many times. The correct valuation is what the market says it is at any particular moment.

Not sure I get this, are you saying a stock can not be over or under valued?