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Carl Icahn Presses for Apple Shareholder Vote on Increased Stock Buyback
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You apparently didn't read Icahn's original plan. If he were just encouraging them to, say, use half of their cash on hand to buy back shares, there'd be a strong argument.
That's not what he was asking at all. He wanted Apple to use their cash in the bank as leverage to take out a loan of as much as $150 billion and then service the interest on that loan with standard income. Which would boost the stock price "longer term" (which is three years, in his own words), but as far as what Apple actually does as a company is nothing at all. It's borrowing money to buy its own stock to increase the share price, then spending its income to service that debt.
If something goes wrong a few years down the line--say, income falls significantly--they now have to dig into their cash hoard just to float the debt they racked up, the stock price is pretty much guaranteed to crash, but Icahn will have long since sold and gotten his profit.
In his own words:
That is not simply returning some of their cash hoard to the investors.
Doesn't he just want his stock price to go up? Is he having a hard time thinking of retiring? Didn't he make enough money already in his life?
I feel like Jobs's reality distortion field is still going strong at apple. Especially when it comes to profits and cash, I feel like apple is ignoring the truth. They have over $100,000,000,000.00 in cash, yet it seems as though they're not sure what to do with it.
Repurchases shares are not always erased, see "treasury shares".
The shares are limited though when they are held as treasury shares.
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Not sure what you are trying to get at here.
Bill Gates put his own money from Microsoft shares he owned into his foundation. He did not raid Microsoft funds for it.
johnnyturbouk
macrumors 68000
You forgot all the magical things cook has done!
-Created a dustbin looking mac pro.
-Removed customisability ie upgradeability across the MBPs, Imacs, and even the mac pros in some respect!
-Plummeting quality control, thus the consumers are left with $3k bricks - and accept the privilege of having an apple item.
- Increased patent trolling and legal quarrels, to a whole new dimension.
-Added a massive 0.5" to the iphone 5(s).
- took an excellent idea, TB: ie more consistent and standardised, high speck i/o tech, and royally raped this! Ok intel has not really been any better in supporting TB (with high costs), but apple could of done more: e.g. added TB to time capsules.
I am sure i may of missed a few things!
Sorry to sound cliched, but nostalgia grips me when thinking of when Steve was at the helm of Cupertino, and macs were upgradeable,
No, and no. The responsibility is to the short, medium and longterm benefit/health of the corporation. Just as some corporations will act to benefit execs with excessive short term results to the detriment of the long term holders, a well run corporation will make decisions that might sacrifice short term, immediate benefits to the shareholder for the longer term greater benefit to the corporation, and its shareholders if they continue to hold.
That is not exactly the claim AAPL is making. It makes a difference.
This is exactly what he wants to do. It's not illegal, but very immoral. I think Apple should be banned from talking to him about this issue. As I would consider it insider trading. He would know about the stock buy up and would know in advance when to buy or sell his Apple shares.
No. A relatively small part of the buyback program is for benefits to prevent dilution, the major part is buying back to retire, i.e., "burn".
You keep saying that but you have absolutely no idea whether it's true. AAPL's statements on its cash have been far more nuanced. You should review them.
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Enough. You keep posting that. Provide a citation.
Why is it so hard for some to understand the word "reduce" does not mean free.
Apple could, for instance, sell the Cellular version of iPads for $99 more instead of $129, or memory upgrades for $80 instead of $100 and still make large margins.
Icahn has no interest but his, period. He wants to max. his profit.
Whether they should buyback more shares with cash would be fine, so long as it s done without creating debt or losing there ability to acquire technology and R&D for long term corporate health.
I am a shareholder and Icahn can F himself. I would never vote for his idea.
Whether they should buyback more shares with cash would be fine, so long as it s done without creating debt or losing there ability to acquire technology and R&D for long term corporate health.
I am a shareholder and Icahn can F himself. I would never vote for his idea.
Pretty Clear
Just because you put money into a company because you want to make money doesn't mean you have any particular "right" to make money. Apple has never before given any dividends, but it's been one of the hottest stocks for the last ten years. If you invested in Apple and left your money in there, your stock has done pretty damned well. You make money on it by buying it, holding it, and selling (part of) it, then buying some more. And selling it. I suggest waiting until the right moment just after a keynote or major product announcement and selling at the peak. Then it will fall back, after everyone's gorged on the stock. Buy some more. Rinse. Repeat.
The customers have much more right to Apple's attention. The workforce has much more right to Apple's attention. Don't think Apple can keep capital lying around? Okay, you're Carl Icahn. Once you get some money from Apple out of the front door, then you get more out of them by forcing them to give you their cash reserves. Then, once the first peep comes out of "analysts" that says, "Oh, maybe Apple doesn't have enough cash on hand now," then the next round begins. Eventually, you pry the whole company apart for cash.
Idiotic companies are run by the stockholders. Smart companies are run by the customers.
Just because you put money into a company because you want to make money doesn't mean you have any particular "right" to make money. Apple has never before given any dividends, but it's been one of the hottest stocks for the last ten years. If you invested in Apple and left your money in there, your stock has done pretty damned well. You make money on it by buying it, holding it, and selling (part of) it, then buying some more. And selling it. I suggest waiting until the right moment just after a keynote or major product announcement and selling at the peak. Then it will fall back, after everyone's gorged on the stock. Buy some more. Rinse. Repeat.
The customers have much more right to Apple's attention. The workforce has much more right to Apple's attention. Don't think Apple can keep capital lying around? Okay, you're Carl Icahn. Once you get some money from Apple out of the front door, then you get more out of them by forcing them to give you their cash reserves. Then, once the first peep comes out of "analysts" that says, "Oh, maybe Apple doesn't have enough cash on hand now," then the next round begins. Eventually, you pry the whole company apart for cash.
Idiotic companies are run by the stockholders. Smart companies are run by the customers.
Thanks for pointing this out, though it's really little more than a technicality, as these shares only exist on paper, have no voting rights, and pay no dividends. The point being, companies don't repurchase shares in themselves in order to invest in themselves.
Ridiculous.
First, the factual error: Apple did pay a dividend before, until the mid-1990s. They stopped when they began losing money but did not start again until they'd accumulated tens of billions, more than 15 years later.
Second, not every stockholder is a trader. Some of us (the smart ones, I'd like to think) are investors. We don't buy and sell stocks on the pretense that we're smarter than the market. Pretending that any stock behaves in a predictable way is a fool's game.
Third, Icahn can't "force" Apple do to anything. He can express his opinions, and that's about all.
It's odd, but so many people seem to take such a sentimental view towards investing. They get emotionally involved with the comments of a pro investor like Carl Icahn, presumably because he is so good at making money. Take a lesson from him: the only sentiment you should have as an investor is making money. Your goal is to reach retirement with an account containing enough zeros such that you will be comfortable, or at least won't be surviving on Social Security, food stamps, or charity. The sentimentalists will never get there, and probably neither will those who think they can outsmart the markets.
You seem to assume that Apple share cannot go down in value after it's gone up, but the reality is that no share is immune from from the up's and down's of the stock market. It's fairly obvious that during and shortly after the buyback the stock price will go up, but as always after going up, a stock price always eventually comes down.
Another thing to remember is that Apple's stock price is HIGHLY overvalued and other companies with a similar worth are always MUCH bigger and often make a lot more money (thou not on a per employee basis). Apple themselves haven't put this up, it's the stock market that's had it's hand in it. What Icahn is basically trying to do is further inflate Apple's already overinflated share price by claiming Apple's share value is underpriced and that Apple should share more of it's wealth with it's shareholders (Steve Jobs famously stopped Apple handing out dividends when he came back).
What Icahn is doing is basically a pump-and-dump and like any smart investor he'll de-invest only just before he thinks the stock price will start falling as this will make him the most money. Screwing over the next buyer is basically standard faire in this kind of business.
This is basically why no sane person should have to deal with the stock market and it's should basically stay as it's own little game that actual companies dabble in only when they want to take over another company or prevent themselves from being taken over.
Uh, no. it is not your money. you own stock in Apple out of the hopes that you bet right and that their stock becomes more valuable so you can sell it and make profit. you however, DO NOT deserve a single cent for owning their stock, nor do you deserve a single penny from the money they've made by creating sought after products.
if you want to say you deserve money for creating good products, become employed by Apple and do something.
Apple's P/E is well below the industry average even now. The price itself isn't always a great indicator, but the number of outstanding shares as well (each share being more valuable if there are fewer of them). With stock splits rare for Apple, they haven't really tried to make individual shares "more affordable".
It's really hard to say something is overvalued when the P/E ratio is this low. If anything it is a tad undervalued compared to their earnings, but that may also be fairly normal depending on the attitude of the CEO and the board (are they stingy with dividends in a non-growth stock?), and other factors. At this point, I'd say the stock is probably fairly valued, but I'm not sure I'd flag it as a buy right now unless you are playing the long game, and believe a post-SJ Apple can pull the next big product out of their hat.
Then what are dividends and stock buybacks for other than to return investment money back to investors? Keep in mind the initial stock sales are to raise up funds to run the company. Those shares are sold with the intent that the investor gets their money back over some period of time (usually in the form of buybacks and dividends).
At one point, the fluctuations in the value of the shares themselves became the main motivator for investors. Although those who benefit the most from that are those who get in on the ground floor, and then let someone else reap the later dividends. Part of that is because dividend rates can be pretty low, well under 5% per year, which means it would take decades to repay the value of the share.
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Yeah, I hadn't read any of the comments when I posted this, and I was wondering if it did anything more than the obvious make-money-for-the-billionaire-investor chill.