Carl Icahn Presses for Apple Shareholder Vote on Increased Stock Buyback

[mrxak]

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?

The opportunity for a shareholder to sell stock to a another potential shareholder at a profit is not in any way relevant to a corporation seeking to maximize shareholder value and return on investment. We all know speculation happens but that's not what I'm talking about here. It's the responsibility of the corporation to provide a return on investment to whoever is holding the shares right now. That means increasing earnings, or paying out a dividend. Should the price of a stock go up because earnings per share have gone up, that's a happy side effect for shareholders but irrelevant to Apple's responsibilities.

One such method of increasing earnings per share is to spend cash reserves to grow the business. Apple is doing that, but the cash reserves are growing faster than Apple can spend to grow. So Apple started giving out a dividend, and there's talk of increasing earnings per share by reducing the number of shares in the wild. Apple claims they are already doing everything with their cash that they can to grow the business. Since there's money left over, they have a responsibility to provide a return. They're not a depository, they're a business.

 

[mrxak]

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...

As I explained above, when he does sell he won't be selling to some poor sod. The price of Apple stock will have stabilized at a new higher norm as a result of a buyback. It's not going to crash the moment Icahn sells his shares. First of all, he's a tiny little fish in a very big lake. His splash won't make much difference. Second, the reason the price will be higher when he sells will not be because of deception or anything else morally questionable. The value of the stock will have objectively increased. Quite frankly, the price will probably still be too low, and Icahn would be smart to hold onto his stock for a while after the buyback, at least until Apple comes out with the next big thing, though I suspect he won't. Meanwhile, every other shareholder will enjoy a larger share of the company and Apple's earnings will continue to be just as good if not better, and earnings per share will have increased.

The only way Apple or shareholders could be hurt by this, is if Apple has been deceptive, themselves. If they are not managing their cash wisely and are passing up opportunities to grow the business by spending some of it, then yeah, Apple could be hurt giving up this cash. But they keep saying they are doing everything they can, and I'm inclined to believe them. In that case, shareholders need to see either larger dividends or a buyback.

 

[Terrin]

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.

I am a long term Apple shareholder and I think both he and you are wrong. The money is not yours or his. It is the companies. If somebody doesn't like the way Apple is managed, the solution is obvious. That person can sell the stock.

Apple has already approved a hundred billion dollar stock buy back on top of a dividend. If Jobs was alive you can bet that would not have happened. He would not have taken meetings with Icahn's ilk either.

Depleting the companies savings is reckless. It diminishes Apple's ability to pay any liability stemming from lawsuits, prevents it from securing large component orders in advance, and hurts its ability to make large purchases. Moreover, Apple has borrowed money to buy back its stock to gain a lower tax rate. So, it eventually has to pay the hundred billion back.

Stock buy backs only help short term investors, which arguably aren't investors at all. Apple should not pay them any mind. Once the stock takes a targeted bounce, Icahn and those like him will liquidate. Apple along with its long term investors will still be around. If anything, dividends serve long term investors better. I, however, would like Apple to manage its money conservatively. I am happy with the current buy back and dividends.

 

[mrxak]

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.

They haven't gotten themselves into anything, unless you're referring to getting involved in a publicly traded company where any individual may choose to become a part owner of the company and tell that company what they believe the company should do. But that's hardly a new problem...

Tim Cook had a lunch with a guy because they were in the same city at the same time and Tim Cook needs to eat. Doesn't mean he listened to anything the other guy had to say, or changed his mind about anything. Apple's discussed dividends and buybacks as solutions to their excessive (and constantly growing) cash hoard for years now, long before Icahn bought even a single share of Apple.

 

[Smigit]

Stock is absolutely worthless to Apple. When they buy back stock, they are literally destroying it. Spending perhaps billions of dollars to appease some guy who bought a bunch a paper from some other guy, who, a thousand transactions ago bought from some other guy who gave you the money to build your company (who has already been handsomely rewarded) seems like a stupid way to run a company.

Let's say I started a baseball team 40 years ago and made promotional baseball cards that I sold to friends so that I could buy uniforms. These friends helped me with some of the initial decisions about our team. They were a penny a piece, so my short list of friends bought them by the hundreds to help me out.

My team went on to be a success. So much so that decades later, those cards are still out there, now fetching like a thousand dollars a piece as collectors items. Those first friend investors long ago sold their cards, some at little or no profit and some at a large profit. The cards have been sold and resold and resold again a thousand times over. My team had nothing to do with the transactions after the initial sale.

My team is an empire now, and we make our money selling tickets to our games and no longer have to beg friends to become card collectors to buy new uniforms. We're such a success that I have a pile of cash in the bank, which I might use to set up franchises or any number of things.

Then some guy comes along, decades afterwards and starts scouring ebay, spending thousands and thousands of dollars on these old baseball cards.

Now, sure, he could hold on to them for a month or a year and then sell them on ebay, just like everyone before him, and probably make a decent profit.

Instead, he comes to ME and says my team should buy them back for a thousand times what I got for them initially and then burn them.

Yeah, uh, not gonna happen.

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.

From your exmaple, it'd be the equivalent of buying the cards back for $1000, holding them for a few more years assuming the price will continue to rise, and then sell them back at $2000.

In particular, if the stock is expected to rise quick enough it may be a better return than having it stuck in bank accounts or invested elsewhere (where they have less control of growth potentially).

 

[Terrin]

As I explained above, when he does sell he won't be selling to some poor sod. The price of Apple stock will have stabilized at a new higher norm as a result of a buyback. It's not going to crash the moment Icahn sells his shares. First of all, he's a tiny little fish in a very big lake. His splash won't make much difference. Second, the reason the price will be higher when he sells will not be because of deception or anything else morally questionable. The value of the stock will have objectively increased. Quite frankly, the price will probably still be too low, and Icahn would be smart to hold onto his stock for a while after the buyback, at least until Apple comes out with the next big thing, though I suspect he won't. Meanwhile, every other shareholder will enjoy a larger share of the company and Apple's earnings will continue to be just as good if not better, and earnings per share will have increased.

The only way Apple or shareholders could be hurt by this, is if Apple has been deceptive, themselves. If they are not managing their cash wisely and are passing up opportunities to grow the business by spending some of it, then yeah, Apple could be hurt giving up this cash. But they keep saying they are doing everything they can, and I'm inclined to believe them. In that case, shareholders need to see either larger dividends or a buyback.

Personally, I trust Apple's management over Ichan any day. Apple's objective should be to safeguard its own interests and those of long term investors and customers. It should not care about short term investors at all.

Apple is historically a conservative company. Apple borrowing a hundred billion dollars on top of paying a dividend probably already has Jobs rolling over in his grave. You can bet he wouldn't have been meeting with Ichan.

 

[9000]

Stock buy backs only help short term investors, which arguably aren't investors at all. Apple should not pay them any mind. Once the stock takes a targeted bounce, Icahn and those like him will liquidate. Apple along with its long term investors will still be around. If anything, dividends serve long term investors better. I, however, would like Apple to manage its money conservatively. I am happy with the current buy back and dividends.

Stock buybacks help long-term investors if they're done right. But a buyback worth more than the company's entire cash cache? Sounds useless to me. He'd probably just sell his stock once it goes up from this.

----------

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).

Hmm, it appears I have accidentally used an actual stock market term that I didn't know about. Anyway, having raised the price through the buyback, as most buybacks (but not all) do in the short term, he could just sell his stock and make a profit before the long-term effects kick in. And if he's planning to dump it quickly, he probably thinks that it's doomed long-term.

Or he could honestly think this is good for the stock long-term. But that big of a buyback sounds reckless to me.

 

[FrozenInferno]

Icahn is in his late 70's and worth about $20 billion, if I were him I'd be taking the last 10-15 years of my life to enjoy my fortune instead of playing this game spending time, money and energy bullying companies into doing what he wants. It must truly be a hobby for him at this point, who could possibly need more money than that when you've got maybe a good decade left.

I'll never understand it, but I'll never be a billionaire either

 

[mrxak]

I am a long term Apple shareholder and I think both he and you are wrong. The money is not yours or his. It is the companies. If somebody doesn't like the way Apple is managed, the solution is obvious. That person can sell the stock.

Apple has already approved a hundred billion dollar stock buy back on top of a dividend. If Jobs was alive you can bet that would not have happened. He would not have taken meetings with Icahn's ilk either.

Depleting the companies savings is reckless. It diminishes Apple's ability to pay any liability stemming from lawsuits, prevents it from securing large component orders in advance, and hurts its ability to make large purchases. Moreover, Apple has borrowed money to buy back its stock to gain a lower tax rate. So, it eventually has to pay the hundred billion back.

Stock buy backs only help short term investors, which arguably aren't investors at all. Apple should not pay them any mind. Once the stock takes a targeted bounce, Icahn and those like him will liquidate. Apple along with its long term investors will still be around. If anything, dividends serve long term investors better. I, however, would like Apple to manage its money conservatively. I am happy with the current buy back and dividends.

I don't think you fully grasp the size of Apple's cash hoard. This goes quite a bit beyond "savings". Apple could pay off a hundred major lawsuits and still have too much cash on hand. Apple has never made large purchases, certainly nothing close to the size they could now with their cash, there's no reason to think they'd want to in the future. Certainly Apple is doing everything you think they can to grow their business, yet the amount of money they are spending every year is dwarfed by their hoard. If you don't think they're doing everything they can, perhaps you should sell your stock.

But if Apple, as they claim, is indeed spending as much money as they can to grow their business, yet still has a growing cash pile orders of magnitude larger than any other company in their market, then the money is doing nothing but losing money for Apple and the shareholders. There's inflation, there's opportunity costs, heck there's accountants who have to count it all. It makes absolutely no sense for Apple to keep that money when it could be given to shareholders to invest elsewhere for better return.

Frankly, if you're so concerned that Apple will someday need such a large pile of cash to save themselves from going out of business, you should sell your stock now. I for one have faith that Apple will be doing good business for many years to come.

Let's put it this way. Is there a point where you think Apple has too much cash on hand? If you don't, you might as well just "invest" your money in cash under your bed, because the longer this goes on, the more Apple's stock is just representing a warehouse full of cash that's sitting there losing value to inflation.

 

[9000]

Maybe he does own 1%, but 1% shouldn't be able to tell the other 99% what to do. No matter how much that 1% is worth it's still only 1%.

Shouldn't and won't. 1% of a company is small no matter how many billions it's worth. He's just making a suggestion to Tim Cook that Cook could easily accept or deny.

----------

Icahn is in his late 70's and worth about $20 billion, if I were him I'd be taking the last 10-15 years of my life to enjoy my fortune instead of playing this game spending time, money and energy bullying companies into doing what he wants. It must truly be a hobby for him at this point, who could possibly need more money than that when you've got maybe a good decade left.

I'll never understand it, but I'll never be a billionaire either

With that much money, I'd be spending too much time trying to build my Lamborgini train and designing my castle.

 

[elgrecomac]

I just don't 'get' some of you who hate this guy

Listen, investors invest in companies to make MONEY, not for altruistic reasons. Icahan is a hyper-capitalist, but, unless you believe that no publicly held company should make money, then you are also a capitalist. It is not a bad word. It is at the core of our economic system.

For those who say 'he just wants to maximize his investment and make more money" for himself, well then why do YOU invest in companies? To NOT make money? I don't think so. He will just make more than you...and that's OK.

Now if Icahn said 'screw new products, reduce, R&D and don't hire the best and brightest at Apple', then there is a legitimate issue. But he hasn't and won't say that. He is not out to hurt one of his largest investments, he wants to make it stronger to maximize his....and ALL OTHER ivestor's investment in the company.

Get over it folks. We live in the USA and our free market system is what makes our country's economy work.

Oh, and for the record, STEVE JOBS IS DEAD. It is asinine to say 'if Steve were here' or some other statement. He is dead and gone. There is new management in place that in part exemplifies the ideals that Steve held close to his heart but, again. STEVE JOBS IS DEAD and the existing management team will do what ever their collective wisdom tells them to do...not STEVE JOBS. Those days are gone and will never come back...so it is long past due to move on and embrace the future.

 

[meecect]

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.

From your exmaple, it'd be the equivalent of buying the cards back for $1000, holding them for a few more years assuming the price will continue to rise, and then sell them back at $2000.

In particular, if the stock is expected to rise quick enough it may be a better return than having it stuck in bank accounts or invested elsewhere (where they have less control of growth potentially).

not really. When a company buys back stock, that stock is typically retired. If thery were to hold the stock for re-issue, it wouldn't have the effect that Icahn is looking for because the total number of shares would remain the same. It could increase the price just because there are a large number of orders but it would be temporary. The only thing that would permanently increase the value os for Apple to retire the stock, which is essentially throwing away money.

You may argue they are buying 'investor goodwill', but someone needs to quantify that for me before I would believe Apple would get a good ROI for this move.

 

[Terrin]

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.

From your exmaple, it'd be the equivalent of buying the cards back for $1000, holding them for a few more years assuming the price will continue to rise, and then sell them back at $2000.

In particular, if the stock is expected to rise quick enough it may be a better return than having it stuck in bank accounts or invested elsewhere (where they have less control of growth potentially).

Yes, except here somebody who is not a part of Apple's management is trying to force Apple to aggressively buyback its own stock. It has already committed a hundred billion dollars, and he wants Apple to invest even more. What type of person would dump all of his savings into a single investment? Yet, that is what Icahn is asking Apple to do. It is good for Ichan, but potentially a big waste of money for Apple. As a long term investor, I would prefer Apple to do nothing, or increase the dividend.

 

[mrxak]

Personally, I trust Apple's management over Ichan any day. Apple's objective should be to safeguard its own interests and those of long term investors and customers. It should not care about short term investors at all.

Apple is historically a conservative company. Apple borrowing a hundred billion dollars on top of paying a dividend probably already has Jobs rolling over in his grave. You can bet he wouldn't have been meeting with Ichan.

Jobs is dead, man, let it go. I neither know nor care what Jobs would do in this situation, and he told those at Apple he left behind that he didn't want them to spend any time worrying about what he'd do either.

Now, I trust Apple's management too, over some random investor. But in this case, Apple's management and some random investor agree on the point. All they're doing is quibbling over how much and when. Said investor has every right to make his point of view known, and if other shareholders agree, well then that's the bed they all made together. Every shareholder shares in the outcomes of shareholder group decisions.

In this case, the proposal to be voted on isn't even binding. Everyone needs to calm down.

 

[Terrin]

Listen, investors invest in companies to make MONEY, not for altruistic reasons. Icahan is a hyper-capitalist, but, unless you believe that no publicly held company should make money, then you are also a capitalist. It is not a bad word. It is at the core of our economic system.

For those who say 'he just wants to maximize his investment and make more money" for himself, well then why do YOU invest in companies? To NOT make money? I don't think so. He will just make more than you...and that's OK.

Now if Icahn said 'screw new products, reduce, R&D and don't hire the best and brightest at Apple', then there is a legitimate issue. But he hasn't and won't say that. He is not out to hurt one of his largest investments, he wants to make it stronger to maximize his....and ALL OTHER ivestor's investment in the company.

Get over it folks. We live in the USA and our free market system is what makes our country's economy work.

Give me a break. He doesn't have to say cut R & D and all that other stuff. Instead, he wants Apple to borrow $150 billion dollars and sink all of that into Apple stock. The only parties that helps is short term investors. In the future, if earnings slow down for Apple and it has $150 billion in bonds to pay back, that will destroy Apple. Who in the world would invest everything they had on borrowed money in one investment. Nobody. Nor should Apple.

Apple is not required to cater to short term investors. It should only focus on its long term objective, long term shareholders, and its customers.

----------

Jobs is dead, man, let it go. I neither know nor care what Jobs would do in this situation, and he told those at Apple he left behind that he didn't want them to spend any time worrying about what he'd do either.

Now, I trust Apple's management too, over some random investor. But in this case, Apple's management and some random investor agree on the point. All they're doing is quibbling over how much and when. Said investor has every right to make his point of view known, and if other shareholders agree, well then that's the bed they all made together. Every shareholder shares in the outcomes of shareholder group decisions.

In this case, the proposal to be voted on isn't even binding. Everyone needs to calm down.

Icahn is allowed to make his point, but I am not? I am a shareholder. My view is Apple should adopt the conservative steps of the person who brought Apple to where it is at now. It should largely ignore Wallstreet, and not carelessly throw away the treasure chest.

Icahn is not rallying for an increased dividend, which would benefit long term investors. That is because he plans on dumping the stock after it gets to whatever price he is looking for. Apple should ignored Icahn. It worked for Netflix.

 

[mrxak]

Hmm, it appears I have accidentally used an actual stock market term that I didn't know about. Anyway, having raised the price through the buyback, as most buybacks (but not all) do in the short term, he could just sell his stock and make a profit before the long-term effects kick in. And if he's planning to dump it quickly, he probably thinks that it's doomed long-term.

Or he could honestly think this is good for the stock long-term. But that big of a buyback sounds reckless to me.

I suspect he will sell in the short term, but not because he thinks Apple is doomed, simply because he thinks AAPL is currently undervalued and he can make a quick buck getting its value to where it should be. Steady but slow growth after that, even rather good growth after that, doesn't interest him. He's looking for large, quick increases in his net worth. Staying with Apple too long, even if it's a good investment that makes lots of money, may have significant opportunity costs to an investor like Icahn.

Again, that doesn't mean Apple is doomed after a big buyback. It just won't offer the sudden increases in price that a buyback offers. He may be back again in a few years after Apple's accumulated another big cash hoard, and do this all again at higher prices.

Icahn's entire strategy actually requires Apple to be left in a good position afterwards. He's not going to be able to sell his stock at the price he wants unless other investors think the stock is worth that price. He's got a lot of stock to sell, which means he's going to need a lot of other investors willing to buy. Apple's a good, profitable company, and I don't expect he'll have any problems selling his shares at a post-buyback price.

I honestly don't know if the size of the buyback he's suggesting is reckless or not. But understanding all of the above, I don't have any reason to think Icahn thinks it's reckless. Apple keeps saying they're doing everything with their money that they can to grow their business, yet the money pile is getting bigger and bigger. If the entire money pile was given back to investors, it stands to reason that Apple would keep growing as fast as they can, and the money pile would keep growing too. It would probably be reckless to give up every single dime in their coffers, but Apple is making, what, a billion dollars a week? Surely their operating expenses are taken care of whether that money pile is there or not, so Apple should get rid of as much of that pile as they believe they can without impacting their growth. People may disagree how much of it they should keep, but then Apple's cash pile has been huge for years now at much, much smaller amounts.

 

[revenantananias]

apple has too much money on their balance sheet

so... apple has too much money. but he does not? if you are a billionaire- ****. if you cannot be bothered to part with money- do not expect others to.

 

[mrxak]

Icahn is in his late 70's and worth about $20 billion, if I were him I'd be taking the last 10-15 years of my life to enjoy my fortune instead of playing this game spending time, money and energy bullying companies into doing what he wants. It must truly be a hobby for him at this point, who could possibly need more money than that when you've got maybe a good decade left.

I'll never understand it, but I'll never be a billionaire either

Billionaires are billionaires (and rich people are rich people in general), because money for them is never about what it lets them buy. They care more about the money than enjoying what the money gets them. Most are notoriously stingy, though what a billionaire would consider stingy may be quite a bit different than what you or I would.

Now, their kids who inherit can be a different story entirely.

 

[Terrin]

I don't think you fully grasp the size of Apple's cash hoard. This goes quite a bit beyond "savings". Apple could pay off a hundred major lawsuits and still have too much cash on hand. Apple has never made large purchases, certainly nothing close to the size they could now with their cash, there's no reason to think they'd want to in the future. Certainly Apple is doing everything you think they can to grow their business, yet the amount of money they are spending every year is dwarfed by their hoard. If you don't think they're doing everything they can, perhaps you should sell your stock.

But if Apple, as they claim, is indeed spending as much money as they can to grow their business, yet still has a growing cash pile orders of magnitude larger than any other company in their market, then the money is doing nothing but losing money for Apple and the shareholders. There's inflation, there's opportunity costs, heck there's accountants who have to count it all. It makes absolutely no sense for Apple to keep that money when it could be given to shareholders to invest elsewhere for better return.

Frankly, if you're so concerned that Apple will someday need such a large pile of cash to save themselves from going out of business, you should sell your stock now. I for one have faith that Apple will be doing good business for many years to come.

Let's put it this way. Is there a point where you think Apple has too much cash on hand? If you don't, you might as well just "invest" your money in cash under your bed, because the longer this goes on, the more Apple's stock is just representing a warehouse full of cash that's sitting there losing value to inflation.

Icahn essentially wants Apple to use its entire savings to buy its own stock. Moreover, Apple will do it using borrowed money. You seem intelligent, so I should not have to explain the future risk of that. But Icahn will not be in the stock in the future, so he will be fine. It is Apple and long term stock holders that will have increased risk exposure.

Further, I have no problem with Icahn voicing his view. I just want Apple to ignore him. As a long term investor, I would prefer Apple to increase the dividend it pays, or do nothing for now, and be more conservative with buying back its own stock.

 

[SpamJunkie]

So let me get this straight:

1. he wants Apple to blow over $100b to buy stock, certain to raise the price by the end
2. then he thinks Apple will grow significantly over some period of time, all while not having significant cash reserves for things such as acquisitions
3. Then after growing the stock price, Apple sells all or part of the stock to recoup their initial spend, which could very likely depress the value of the stock

This makes NO sense to anyone buy Icahn, who could sell his stock after step 1 and not give a care in the world as to the success of steps 2 or 3. Apple should not do this, and if they do, it's a bad move.

 

[mrxak]

not really. When a company buys back stock, that stock is typically retired. If thery were to hold the stock for re-issue, it wouldn't have the effect that Icahn is looking for because the total number of shares would remain the same. It could increase the price just because there are a large number of orders but it would be temporary. The only thing that would permanently increase the value os for Apple to retire the stock, which is essentially throwing away money.

You may argue they are buying 'investor goodwill', but someone needs to quantify that for me before I would believe Apple would get a good ROI for this move.

I know you don't want to believe it, but I'll keep saying it. It's not Apple's job to hoard money, it's Apple's job to make money for shareholders. If Apple makes money but shareholders never see any of it, something's wrong. It may offend your anti-capitalist beliefs, but shareholders are supposed to get money for holding shares. If Apple can use the money it has to grow its business and thus increase earnings for shareholders, they should do that first, but if Apple is already doing everything they can and the money is still piling up unused, then it's time for shareholders to get that ROI. Apple is getting no ROI from its cash hoard. It's actually losing money on it, and by extension, so are the shareholders. Better that the shareholders get that money to invest elsewhere, putting that money back into the economy and growing again.

----------

Yes, except here somebody who is not a part of Apple's management is trying to force Apple to aggressively buyback its own stock. It has already committed a hundred billion dollars, and he wants Apple to invest even more. What type of person would dump all of his savings into a single investment? Yet, that is what Icahn is asking Apple to do. It is good for Ichan, but potentially a big waste of money for Apple. As a long term investor, I would prefer Apple to do nothing, or increase the dividend.

You have a very odd definition for "trying to force". This is a minor investor with essentially no power proposing a non-binding shareholder proposal.

 

[meecect]

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?

They exist to make money for the benefit of the corporation. That means its staff and customers and investments and future and increasing the odds that it will still be an ongoing concern in the future. If this makes their public common stock attractive to investors, then all the better for it.

Consider an extreme case. Let's say, for some reason, Apple's stock went up to 1million dollars per share tomorrow due to a speculative bubble. Would it still be the CEO of Apple's responsibility to manage the company to maximize those shareholders that purchased at a million? How could they possibly do that? It is not a market they control. Perhaps the only way would be to liquidate a large portion of their assets and buy back stocks so that the investors could still make a handsome return. So, following your theory, this is what they should do, right, since they exist to satisfy the investors. Is this the way you think a corporation is supposed to function? If the shareholders gathered en masse to force this decision, would it be right and proper? After all, they are the owners. Or is it more sensible that a corporation should do what the corporation needs and the investors can do what they need?

The corporations only responsibilities include giving each shareholder a vote, allowing resale rights of the certificate, and providing guidance and financial information to prospective buyers and sellers. Everything else is just economic philosophy, not financial or legal responsibility. If you believe that corporations exist to serve shareholders, then fine, but I'll point out that this is probably why we have so many terribly run corporations. This isn't inherent to the corporation as an entity, but it is a favored economic philosophy of our times.

I'll also point out that Apple has traditionally not operated under this type of philosophy, which I think is a big reason for its success. If it had, then it would have followed Michael Dell's advice and liquidated itself and returned the money to the bond holders (in the 90's). How stupid would that have been? Not just for Apple, but for the shareholders too.

If you say, well, that case is extreme, I would ask, ok, at what level is it unreasonable to ask Apple (or, reasonable to ask, but unreasonable to expect them to do) to orient its business to ensuring speculators profit margins? The only rational answer, imo, is after the first stock resale, because at that point they lose most control of the stock price and maximizing shareholder return starts to become in frequent opposition to having a good company.

Looking at the history of Apple, it seems like by focusing on making good products and investing in their company, they seem to have been doing just fine for themselves and their shareholders.

But, maybe you're right, maybe they need a CEO who is more friendly to the markets and more responsive to shareholder needs and interests. Someone who treats shareholders like owners instead of just speculators. I don't know, maybe someone like John Scully can take over and show everyone how to run a company focused on shareholder returns. That should really work out.

 

[sclawis300]

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.

I find it funny how this guy has the audacity to think he should have any control in Apples finacial descions. The word "investor" is not a job position my friend. Just because you invest a large sum of your money into a company, does not mean you gain any more control in what the company does or not do.

you both seem to have a fundamental misunderstanding of what goes into valuing stock and what owning stock entitles you to.

 

[mrxak]

Icahn is allowed to make his point, but I am not? I am a shareholder. My view is Apple should adopt the conservative steps of the person who brought Apple to where it is at now. It should largely ignore Wallstreet, and not carelessly throw away the treasure chest.

Icahn is not rallying for an increased dividend, which would benefit long term investors. That is because he plans on dumping the stock after it gets to whatever price he is looking for. Apple should ignored Icahn. It worked for Netflix.

A stock buyback benefits long-term investors as well, since long-term investors will have a larger share in the company as a result. 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.

It's not careless to throw money away, if you don't need that money and it's losing value the longer you hold it. Apple doesn't operate in a vacuum and a better economy overall is good for Apple like it's good for everyone. If shareholders get that money to invest or spend themselves, that's more money in the economy, new start-ups starting up, more tax income that can be spent by government on infrastructure, on and on and on. Heck, I bet more than a little of that money will be spent on Apple products.

By holding onto money and doing nothing with it, Apple is hurting themselves with inflation devaluing it and opportunity costs for nobody using it. If Apple cannot possibly use it, they should release it and watch it come back again even bigger.

 

[calaverasgrande]

Icahhn just wants Apple to be "buyable".
Then the mere speculation will drive the price up(remember when Apple was thought to be getting bought by Microsoft?).