Arguing for the big man, that's either the act of a dupe or the act of one of the big men.
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Carl Icahn Presses for Apple Shareholder Vote on Increased Stock Buyback
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Arguing for the big man, that's either the act of a dupe or the act of one of the big men.
Actually, Icahn sold over half his position in NFLX, which was @5% of the company. What is this, MacRumors?
Every investor is expecting a return. If you think that late investors should not expect a return, you're against corporations as a whole because the entire system depends on just that very concept. It doesn't matter when you bought shares or at what price, your shares have an equal voice and equal expectation that there will be some return for your investment.
Now you're right, it's possible that certain corporate actions to give returns to shareholders today might hamper shareholder returns tomorrow. Corporations should not do that, and Apple won't. The debate now is over what will best ensure returns to shareholders, now, and in the future.
What Icahn is proposing to do will give shareholders higher returns today, and tomorrow too. Just because he might be inclined to sell his stock after higher returns today, doesn't mean those are the only returns anyone will ever get again. Quite the opposite. A buyback of stock will permanently raise the value of each share left in the world, earnings remaining equal. Since Apple has demonstrated for years now that they are earning more than they can spend to create earnings growth, hence the cash pile, spending that cash pile on the buyback will not negatively affect earnings one bit. Earnings will remain constant or grow no slower than they have previously, and each share will be earning more.
Is Icahn's proposal the best proposal? That's what's being debated. But it's not a bad proposal, and it will not ruin the company forever and ever, sucking all the other shareholders dry. The outcome Icahn gets will be the same outcome everyone else gets. He's merely a loud investor, throwing ideas out there for all to hear. Apple can ignore them or follow them as they wish. All the hatred of him from what I assume is mostly non-investors (judging by the ignorance displayed about investing, I should hope so for their sakes) is irrational. At least he's putting his money where his mouth is, and if he's wrong about his proposal and convinces most of the other shareholders to go along with it, he'll suffer for it more than most.
Okay...know that there isnt a right answer, hence why theres a debate. But I do have my opinions and i do think that there is a 'wrong' answer
a) the amount of money that is the right amount would be the amount that brings Apple's current ratio and debt/equity ratio down to a level near to what is comparable to other companies in the industry, after adjusting for outstanding and anticipated expenditures.
I'm not saying match industry standards, but $150 billion is ridiculous. That's 150 instagrams. or 150 tumblr acquisitions. it's getting a bit much
part of the problem is Apple's management has been keeping mum on its plans with the money since 2010. every year, the standard line is, were seriously thinking about it. well, its been three years and theres been no new information.
I understand if you dont want to hint at new ventures, but at least say that. tell me why you need $150 billion of my money in your bank account right now, and tell me why it's worth it.
b) not sure what's meant here. but, the average consumer, let's just assume apple users, would care about apple stocks because apple fans want continuing innovation - they dont want apple to shrivel up and die. I think $150 billion brings confidence. No doubt. But i argue it is overkill. with proper planning and transparency, as above, that confidence can be reached and it doesnt have to be bought with $150 billion in the bank.
c) At the end of the day, all carl can do is ask and put up annoying headlines like this.
d) if I value apple shares to be worth $600 a share, I should buy apple shares today, because i expect $600 of future values from apple and the market only prices the right over its future values at $560. Same goes from apple, especially if the alternative, the interest/returns earned from the bank provides a lower return rate than its own shares.
e) exactly, apple doesnt need the money. investors are here to place their money in the most efficient way. The argument right now is that $150 billion of the investor's money are not efficiently placed in a way that the investors intended. The investors have $150 billion at apple for it to earn money by way of Apple doing what apple does best. instead, that $150 billion is being put in the bank and the investors are being rewarded by the interest returns that Apple's bank provides.
The investors would have been better placed to put that $150 billion in a other shares.
That's icahn's argument.
um was this necessary when you're also talking to me via PM?
The general problem with people like you (I won't generalize and say "the left" because there are plenty on the left who understand the value of minimizing their tax liability) is you confuse paying only what is owed with tax evasion.
If you think taxes should be higher, win some elections and make them higher, then accept the consequences. But don't hold your hand out expecting anybody to pay more than the law says they owe. While you're at it, maybe if the taxes aren't there to bring in enough money to pay for services, stop offering so many services you can't afford?
You do a lot of selective reading. I have said multiple times that investors should expect returns. I have also pointed out that those investors have, for the most part, received those returns. I have also clearly stated that I do not begrudge any of those returns. Good on them. I foresee many more people making many more dollars speculating on the stock.
I just don't think it is, or should be, the job of the corporation to make its sole mission the maximization of those returns. I admit, it is a commonly held view though.
As soon as a well-established corporation starts spending lots of time trying to figure out how they can maximize the profit of Investor A making a personal transaction with Investor B, they are well and truly ****ed, because it means either the corporation is being run by people who stand to make a lot of money personally out of the deal, or the company is in a very shaky financial position and need to borrow money from banks on the basis of their perceived market value. This is just a recipe for disaster.
Apple is not in that position, so I don't think they should care very much about how fast Carl Icahn is making money from other entrants into the equities market.
When a company incorporated and put shares of itself out there in public to be traded, it was agreeing to work in the interests of the shareholders. It was that promise that allowed it to get IPO money to fund its rapid growth. Without corporations acting in the interests of the shareholders, there could be no corporations, the entire system would collapse.
Roll away. The poster's statement was:
"No shareholder, regardless of size or wealth will ever be prosecuted for exercising his rights as a shareholder and telling the board what he thinks they should be doing."
That statement was factually correct...whether you like it or not.
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I rest my case.
Is that the new argument against Republicans? They don't maximize the taxes they pay, so they're evil? Just tell me who DOES do that.
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Oh boy :/
It's a fact.
Not really. Corporations do not exist for the benefit of the shareholders, they exist for the benefit of the corporation itself. There is a fiduciary duty owed to shareholders but the primary duty is really to the living, breathing corporate entity.
I disagree, the promise was to give them a return on their initial investment, with the shareholders assuming the risks that a profit might not ever be generated or that the rate may be below their liking. Generalizing that to 'work in the shareholders interest' is too much. They retain the same rights, whenever they entered the market. They can exercise a vote at a shareholders meeting, or they can sell their share at a profit or loss. Their is no guarantee that all future derivative sales will be at a profit to the speculator. It is ridiculous to assume it would be, since it is fundamentally out of control of the issuer.
You have the right to resale, of course, if you think the stock is overvalued for your potential returns, you can always sell it.
I mean, think about an extreme case. The equity could be involved in a speculative bubble and could rise in value to obscene amounts. How could the corporation in that case be obligated to act in the shareholders interest? They can't control speculators and they can't guarantee profits to people speculating on paper they sold decades ago. It's _your speculation_, so it's _your risk_. At this point your profit should not be a concern to them, imo.
If indeed, they ever fell on low times, then the situation would change. If they needed to borrow against their market cap, or needed to do another offering. But that is not the case, is it?
as a shareholder... I don't give a **** what Apple does, and I don't pretend like I know what the best decision is and I'm not pandering my advice on the internet to a bunch of geeks who have no idea what this decision really means.
I'm not the person you asked but I can answer.
A) The right amount is what's being debated. Icahn has one theory. Apple has its own theory. Other investors have other theories. Nothing has been decided yet.
It's in Icahn's best interests to determine the "right amount" because if the wrong amount happens, the stock price will not rise as high as it would if it was the right amount. None of this is happening in a vacuum. Icahn still has to find somebody who wants to buy his shares at the price he wants AAPL to hit, and he'll struggle to do that if Apple destroys itself accomplishing the proposed buyback. He's a rather large investor, in absolute terms (not relative). To sell off his shares at the price he wants, the company still has to be worth that price, or there will not be the kind of trading volume at the price he needs to dump his stock, if any.
B) The average consumer should care for a few reasons. The first is that a company worth a lot of money on the stock market probably isn't going anywhere. That hardware you just bought will be supported. That software you bought will probably have an upgrade path. The second reason is that happy shareholders mean a board and management team with a lot of leeway in their actions. Apple can take more risks while the stock is doing well, because they're not worried about losing their jobs. This means Apple might add new product categories that are experimental and don't show a clear profit right away, but a couple iterations later you've got a world-changing new technology and services to match.
C) To go back to the first answer, it's not in Icahn's best interests to destroy the company. The company is profitable and he's only going to be able to get a return on his investment if it stays that way.
D) I'll answer your question with another question. How does keeping a massive cash store Apple's never going to be able to use help the long term health of the company? By its very definition, it's doing nothing for anyone except sitting there losing value from inflation and opportunity costs. While there's plenty of debate about how big a buyback Apple can do without hurting themselves, Apple should do as large a buyback as they can without hurting themselves. The higher the stock price goes up, the easier it will be for them to raise money later, if they should ever need it.
E) It's not the investors' job to help the company, it's the company's job to help investors. That said, it's in the investors' interests that the company is profitable and working well, so investors often make their opinions heard on how to do that. Investors likely also buy Apple products, and encourage others to do so. Every time Apple's stock price hits a new high, that's free advertising for Apple's brand on every news outlet.
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I think you're confused about the concept of ownership. When you sell something, you don't own it anymore.
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Let's come at this from another direction, since I think there's some fundamental misunderstanding here. Explain to me why you think Apple exists, if not to make money? And if that money is not made for the shareholders, who is it being made for?
as i explained in my pm, this is wrong
on another note - does anyone know where i can get a composition of apple's shares distribution? or something that approximates it
how much does icahn have?
Please...
Can somebody please step on this cockroach once and for all?? Like everyone can't see what this schmuck is doing.
Can somebody please step on this cockroach once and for all?? Like everyone can't see what this schmuck is doing.
Look at the stock price one year ago vs. what it's at today. Apple made a ton of money but its shareholders lost. It's not wrong of the shareholders to ask for a buyback to increase the value of the stock, especially given Apple's cash surplus.
To anyone saying that Apple should spend the money on R&D and buying smaller companies... it doesn't take $100 billion in the bank to do that. Apple's culture isn't like Google or Microsoft's anyway so regardless of their cash position, they won't create an Apple Research arm or get into silly things like Google does buying dozens of companies or a few Motorolas. This is a consumer products company and a good one.
When your stock is relatively low (which Apple's is) and you have extra cash (which Apple certainly does), you buy your own stock. That's unquestionably the smart thing to do. I'd suspect that Apple doesn't do that because of either tax concerns (for their original buyback it was cheaper to take a multi-billion dollar loan that repatriate their money) or because Apple's execs just don't really concern themselves with that too much - which is fine, but they shouldn't be sitting on over $100 billion, that is just silly. This shouldn't be a question of if a buyback is right, just a matter of how much.
If he just wanted to pump and dump, he's doing it wrong. A pump-and-dump scheme makes a stock price rise through deception (raising P/E while everything thinks it's staying the same), then gets out before anybody realizes it and the stock stabilizes back down at its original price (original P/E). What he's doing will make the stock more valuable per earnings (raising E), which will cause the price to rise naturally (P rises so P/E stays roughly the same throughout).
In the former scenario, somebody takes a large position in a low-volume stock, lies about the value of a stock so people buy the stock at a high price believing earnings are or will be greater than they really are/will be, and they get screwed once the deception is over. In the latter scenario, somebody sees a company that is successful and has large cash stores and takes a large position in it themselves, then gets the company to buy some stock back so the price to earnings ratio drops, making that stock's price rise naturally. They exit the stock at a new price that's appropriate for the earnings the company has, and everyone else who had stock in the company now owns more valuable stock, and no one was harmed or deceived.
As for whether it's worth it for Apple or not, they've been concerned about their cash store for a while now, long before Icahn invested, and have been discussing possible solutions. I'd say that's all the proof you need that it's worth it for Apple. The only questions are how much, and when, but any plan that hurts Apple's earnings is not in any investor's interests, Icahn's included, because the resulting price of the stock won't be as high after a buyback if Apple's earnings are lower.
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I'm a man with a big brain, at any rate.
Not that it takes a big brain to know that free speech isn't illegal, nor is it illegal for an owner of a company to suggest to those managing it how they want things done, as per the rules of the company.
The guy is basically trying to manipulate the stock price and thus make his stock worth more before he sells it to some poor sod or Apple buys it off him for a lot more than he paid for it. What he's trying to do isn't technically illegal (as it's not quite insider trading), but it is definitely morally questionable.
Let's hope the shareholders vote no and he end up loosing money when the stock price goes down as a reaction to it...
Let's hope the shareholders vote no and he end up loosing money when the stock price goes down as a reaction to it...
You misunderstand the terms being used, here, then. Let's drop the investor word and just use shareholder.
Nonetheless, it is the job of the corporation to maximize the returns for shareholders, no matter when they bought stock or from whom. You may not think it should be, but it is. The fact is, without corporations promising to maximize returns to shareholders, and not just the ones who first invested but all of them, the markets as we know them would not exist, nor would any of the major corporations we know today. Stock would be worthless and nobody would ever invest in any companies.
The only way you're right is that Apple shouldn't care about Carl Icahn anymore than they care about any other minority shareholder. All shares are equal. There's nothing magical about Icahn's shares that give him great influence over Apple's business. His only influence is over news outlets reporting on what he's saying and doing. Nonetheless, shareholders are important to Apple, and the returns of the entire shareholder body are important to Apple, and nothing Icahn has proposed hasn't already been discussed by Apple prior to his investment. The only areas they differ are on how much and when. Every shareholder has a right to speak, and many others are and have been for a very long time now about much the same things. Apple hasn't gone under yet as a result, so maybe we can cool it with the doom and gloom.
Has there ever been a single company founded that was not founded to make its owner(s) money?
A corporation has a fiduciary duty to shareholders, period. Seeing as how it can't continue to make money for its shareholders if it ceases to exist, to acts to preserve itself, in the interests of continued shareholder value.
That dude is very bad news for any company he is associated with.
Apple, Tim Cook and Apple's Board of Directors need to get a clue about what they have gotten themselves into here.
What is this talk of Tim Cook having lunch with that dude?
Tim Cook seems clueless.
Apple, Tim Cook and Apple's Board of Directors need to get a clue about what they have gotten themselves into here.
What is this talk of Tim Cook having lunch with that dude?
Tim Cook seems clueless.