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.Icahn isn't proposing anything that Apple wasn't already planning to do. The only difference is in how much and how soon.
With such an enormous valuation gap and such a massive amount of cash on the balance sheet, we find it difficult to imagine why the board would not move more aggressively to buy back stock by immediately announcing a $150 Billion tender offer (financed with debt or a mix of debt and cash on the balance sheet).
While this would certainly be unprecedented because of its size, it is actually appropriate and manageable relative to the size and financial strength of your company. Apple generates more than enough cash flow to service this amount of debt and has $147 billion of cash in the bank. As we proposed at our dinner, if the company decided to borrow the full $150 billion at a 3% interest rate to commence a tender at $525 per share, the result would be an immediate 33% boost to earnings per share, translating into a 33% increase in the value of the shares, which significantly assumes no multiple expansion. Longer term (in three years) if you execute this buyback as proposed, we expect the share price to appreciate to $1,250, assuming the market rewards EBIT growth of 7.5% per year with a more normal market multiple of 11x EBIT.
I am AAPL shareholder and would like Apple to return some money to me instead of hoarding it. It's my profits too and Carl is right.
Sell your stock.
Public companies cannot own stock in themselves. Repurchased share are erased from the books, it is not an "investment." OTOH, they also routinely create new shares with grants and options paid out to company execs. If they never do the former, then the latter continually dilutes earnings for every shareholder.
If Apple went ahead and just spend a major part of that money on new technologies or put some billions into a "Steve Jobs Foundation" - would that be considered "corporate trolling"?
Bill Gates opted for the latter. Great for humanity, not so great for humans using Windows.
Apple should be spending it's money on researching new technologies, not just hoarding it for its megamillionaire shareholders. They only had like $40B after the whole time Jobs was there and now Tim Cook the beancounter siphoned off another 70-80B in just two years? And all he's doing is churning out boring and predictable iterations of Jobs' iPhone and iPad? No wonder Apple's market share is plummeting, their CEO couldn't innovate his way out of a closet.
It's the responsibility of the corporation to provide a return on investment to whoever is holding the shares right now. ....
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Apple claims they are already doing everything with their cash that they can to grow the business.
making Apple buy back more shares to limit the number of outstanding shares and hopefully artificially increase the value of his investment. When that happens, he will dump and reap the profit.
He knows very well that Apple keeps that much cash on hand to buy companies outright (so they don't have to borrow to do it) and make themselves very hard to takeover.
Apple aren't "burning" the stock but. They are holding it under the assumption that it is currently undervalued. If the price rises, then they can sell it at that price or use it as part of bonus packages etc.
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Since Apple is already spending as much money as it needs to to grow and the cash pile is continuing to grow as well, a buyback will not affect Apple's business one bit, while giving investors a better share of earnings.
Apple claims they are spending as much money as they can to grow their business and make great products.
AKA throw it away? Nope. I just don't see the point of a buyback at this point, but that's because I no longer consider AAPL so undervalued (which is why I just sold).
Repurchases shares are not always erased, see "treasury shares".
The shares are limited though when they are held as treasury shares.
Ahh, just when I thought he'd gone away...
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.
What's the point of buying back your own stock?
I am AAPL shareholder and would like Apple to return some money to me instead of hoarding it. It's my profits too and Carl is right.
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).
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.
It's been explained at least five times in this thread.