or Connect
AppleInsider › Forums › Investors › AAPL Investors › Carl Icahn urges Apple to make immediate tender offer for $150B in stock
New Posts  All Forums:Forum Nav:

Carl Icahn urges Apple to make immediate tender offer for $150B in stock

post #1 of 85
Thread Starter 
In an open letter to Apple Chief Executive Tim Cook, billionaire investor Carl Icahn has pushed the company to issue an immediate tender offer for $150 billion in stock from shareholders at current market value.

Icahn


In a tender offer, a company offers to purchase some or all of its investors' shares. Though tender offers usually come at a premium over the current share price, Icahn wants Apple to borrow money to make its offer at $525 per share, which is the level at which shares of AAPL are currently trading."We find it difficult to imagine the board would not move more aggressively to buy back stock immediately announcing a $150 billion tender offer." - Carl Icahn to Apple CEO Tim Cook.

In the letter, Icahn notes that his goal is not to criticize management, which he thinks has done a great job running the company. Instead, his issue lies with "the size and timeframe of Apple's buyback program."

He noted that Apple currently holds $147 billion of cash on its balance sheet, which is forecasted to generate $51 billion of EBIT -- or earnings before income tax -- next year. However, if you back out net cash, Apple currently trades at only 9x forward looking earnings, compared to an average of roughly 14x forward earnings for the companies that comprise the S&P 500. For Icahn, time is of the essence.

"With such an enormous valuation gap and such a massive amount of cash on the balance sheet," he wrote, "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)."

Icahn admitted that such a buyback would be "unprecedented" in size, he feels it would be appropriate because of the relative size and strength of Apple.

Icahn


"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," he wrote.

"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."

Icahn used the letter to Cook as a promotional tool for his new website, debuting the note exclusively at "Shareholders' Square Table" Thursday morning. Interested parties must register an account and provide their email address to read the note, allowing Icahn to send out "timely information" on subjects he finds to be important.

"While there are many good CEOs and boards there are far too many ineffectual ones that are strangling shareholders and the economy," the investor's new website states.Icahn now owns 4.7 million shares of AAPL, or nearly $2.5 billion.

In the letter, Icahn revealed he now owns 4.7 million shares of AAPL stock, up from a previous total of 4 million. That means he owns nearly $2.5 billion in shares of the iPhone maker.

Icahn first teased his letter to Cook via his official Twitter account on Wednesday, a day after the company unveiled its latest iPad lineup. For months now, Icahn has been attempting to persuade Apple to initiate a larger buyback of its own shares.

Apple is already in the process of spending $100 billion through 2015 on share buybacks, as well as dividend payouts. But Icahn believes Apple should increase its share buyback program and spend $150 billion on its share buyback.

The investor has a history of causing trouble with tech companies, most famously opposing Michael Dell's efforts to take PC maker Dell private. He also won three seats on the Yahoo Board of Directors, and is credited with helping to oust the CEO of Motorola, essentially forcing the company into the arms of Google.

Icahn's clout on Wall Street was enough to get him a private dinner in New York last month with Cook, as well as Apple Chief Financial Officer Peter Oppenheimer. Apple's executives did not comment on that meeting, but apparently did not accept Icahn's proposals, as the billionaire has continued his pursuit.

Icahn's letter is included in full below:

Dear Tim:

It was a pleasure meeting you for dinner at the end of September. When we met, my affiliates and I owned 3,875,063 shares of Apple. As of this morning, we owned 4,730,739 shares of Apple, an increase of 22% in position size, reflecting our belief the market continues to dramatically undervalue the company, even when taking into account the recent market appreciation, which in turn makes our proposal unchanged with respect to a $150 Billion buyback. We were pleased to hear at our dinner that you appreciated our input and that you would speak to us again in three weeks to continue the dialogue. In anticipation of doing so soon, we aim to reiterate in this letter the point of view already expressed to you directly with the hope of effectively summarizing it for the company's board of directors and our fellow shareholders.

From our perspective, Apple is the world's greatest consumer product innovator and has one of the strongest and most respected brand names in history. We consider Apple to be our most compelling investment. I first informed my followers on Twitter on August 13, 2013 of my "large position." I also expressed to you my opinion that "a larger buyback should be done now." At that time, we owned 3,448,663 shares and the stock price was $467. Since then we have purchased an incremental 1,282,076 shares (bringing the total value of my position to $2.5 Billion) and we currently intend to buy more.

We want to be very clear that we could not be more supportive of you, the existing management team, the culture at Apple and the innovative spirit it engenders. The criticism we have as shareholders has nothing to do with your management leadership or operational strategy. Our criticism relates to one thing only: the size and timeframe of Apple's buyback program. It is obvious to us that it should be much bigger and immediate.

When we met, you agreed with us that the shares are undervalued. In our view, irrational undervaluation as dramatic as this is often a short term anomaly. The timing for a larger buyback is still ripe, but the opportunity will not last forever. While the board's actions to date ($60 billion share repurchase over three years) may seem like a large buyback, it is simply not large enough given that Apple currently holds $147 billion of cash on its balance sheet, and that it will generate $51 billion of EBIT next year (Wall Street consensus forecast).

The S&P 500 trades at roughly 14x forward earnings. After backing off net cash, Apple trades at just 9x (not factoring into account that the company has a significantly lower cash tax rate than the rate Wall Street analysts use). This discount (cash adjusted) becomes even more compelling given our confidence that Apple will grow earnings per share at a rate well in excess of the S&P 500 for the foreseeable future. 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.

It is our belief that a company's board has a responsibility to recognize opportunities to increase shareholder value, which includes allocating capital to execute large and well-timed buybacks. Apple's Board of Directors does not currently include an individual with a track record as an investment professional. In my opinion, any further delay in executing the buyback we hereby propose will reflect this lack of expertise on the board. My firm's success and my expertise as an investor would be difficult for anyone to argue. Per my investment thesis, commencing this buyback immediately would ultimately result in further stock appreciation of 140% for the shareholders who choose not to sell into the proposed tender offer. Furthermore, to invalidate any possible criticism that I would not stand by this thesis in terms of its long term benefit to shareholders, I hereby agree to withhold my shares from the proposed $150 Billion tender offer. There is nothing short term about my intentions here.

Sincerely,

Carl Icahn
Chairman, Icahn Enterprises (IEP)

post #2 of 85
Or instead of signing up for the square roundtable for exclusive access to this missive, we can read it in its entirety above (or skip over it as I did).

WTF is that cartoon supposed to represent?
post #3 of 85
Icahn to Apple: give me money for doing no work. I "saved" Moto.
post #4 of 85
What a pointless waste of $150 billion in cash ... to just own more of yourself. Part of Apple's strength is its enormous cash hoard ... and the option and freedom to do as it pleases when the opportunity arises. Not to be squandered lightly.
post #5 of 85
G*D D**M is this guy the CEO of Apple ?.... Carl you own one-half percent of Apple... get lost, and earn some money!.... go fix Blackberry!...
Edited by haar - 10/24/13 at 6:58am
post #6 of 85
Icahn got some great points. I hope Apples board listens, and issues a $150b tender offer at $525. Apple must invest in itself now, and reduce the share count by 30%. The $60b was a good start, now lets add another $150b. In a couple of years, Apples balance sheet will still hold more than $200 billion. Time to buy Apple, when Apple is clearly underpriced!
post #7 of 85

Carl does what's best for Carl.

 

... but I smell a lawsuit coming up in the near future.

na na na na na...
Reply
na na na na na...
Reply
post #8 of 85
Bad idea. Apple just needs to re-purchase sufficient shares to keep annual growth rates in earnings per share in-line with a random target. Reducing float by that much (by taking on debt and paying taxes you hope to eventually avoid) is simply stupid.

Arguably what Apple should (and I think does) do is use their investment subsidiary to make strategic options bets for long-term share repurchase. Microsoft did this during the boom years, but I think more of it was for investment return than a goal of reducing float.

I can see Apple wiping 10% of their float off the table each year, but 30% in one quarter serves no long-term investor-- or the company!
post #9 of 85

this guy needs to be taken down a notch. tim cook should take a lesson from steve's handbook and hand him his balls back on a platter.

 

how about apple stockholders band together and take a full page ad out in the new york times or wall street journal and tell this clown to go **** himself. now that would be worth the price of either newspaper.

 

[edit] so...now it's not okay to use the 'f' word on the web? what's next? mandatory skinny jeans?

 

[2nd edit] american culture: what a bunch of pussies.

post #10 of 85
Interesting, I didn't know about his role in the demise of TWA.

http://www.investopedia.com/articles/financial-theory/08/carl-icahn-lift.asp
post #11 of 85
I'd just like to know why Google doesn't have to do anything to make its stock rise to $1200 a share and yet Apple has to bribe everyone on Wall Street just to get to $600 a share. Larry Page is making Tim Cook look like an damn idiot. The way I figure, Apple will stay underpriced forever. No one can put any shareholder value into Apple because of the way the company is run strictly for profits. Google is practically giving everything away for free and that in turn is making the company wealthier by the day in Wall Street's standards.

Apple needs to take that huge chunk of reserve cash and challenge Google's search engine business. Apple's mobile hardware business has been completely strangled by Android and now there are no revenue gains to be made because Android occupies 80% market share. Global consumers will no longer buy Apple products because Android products are far less expensive for consumers to buy. Apple needs to steal at least some of Google's search and ad click business to grab more revenue. If this current trend continues Google will easily pass Apple in market cap considering how fast Google's share price is rising. Apple is becoming an embarrassment to Apple shareholders as Google continues to biatch-slap Apple all over the place in value. Apple is just letting its cash hoard go to waste because right now it has zero value when it comes to shareholders.

To hell with Icahn. He's just interested in making quick money for himself. I want Apple to expand it's business into non-hardware ventures and not let Wall Street gobble up it's money with buybacks. I'm fine with getting increased dividends because it might also interest mutual fund managers to invest in Apple. Apple stock is totally stagnant and there has to be some practical way to get it moving up again. If Google and Amazon can do it, so should Apple be able to find a way.
post #12 of 85
Originally Posted by malax View Post
WTF is that cartoon supposed to represent?

 

If he really believes what he’s saying, he should die? :p 

Originally posted by Relic

...those little naked weirdos are going to get me investigated.
Reply

Originally posted by Relic

...those little naked weirdos are going to get me investigated.
Reply
post #13 of 85
Constable Odo,

If you believe either GOOG or AMZN are the better stocks, put your money where your mouth is.

I wouldn't buy either.

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #14 of 85

Since Apple is "publicly" traded, Cook et al cannot prevent bullies like him from buying into the company. But they sure don't need to listen to them or do what they ask, unless and until Icahn buys one share over 50%.

 

Icahn is free to sell his shares of APPL at any time. 

And he should.

Please.

post #15 of 85
Quote:
Originally Posted by Constable Odo View Post

Apple needs to take that huge chunk of reserve cash and challenge Google's search engine business. 

 

The never worked out for Microsoft.

 

Given Apple's track record in cloud services I'm guessing it wouldn't work out for them either.

post #16 of 85
Quote:
Originally Posted by mac_dog View Post
 

...

 

[edit] so...now it's not okay to use the 'f' word on the web? what's next? mandatory skinny jeans?

 

[2nd edit] american culture: what a bunch of pussies.

Or you could grow up.

post #17 of 85

" My firm's success and my expertise as an investor would be difficult for anyone to argue."

Of course, we know that you want to increase 1/2 percent share in the company to 1% without adding any more cash and do it immediately.

 

"I hereby agree to withhold my shares from the proposed $150 Billion tender offer."

Of course, as soon as the share price jumps,  you would be more than happy to take it off the table.

 

"There is nothing short term about my intentions here."

We know, your long term commitment is anywhere from 6-12 months.

 

He has a point in technical terms and his objective is very clear.  As much as I want to believe that Apple has good plan to invest the money for strategic reasons, its hard to conceive why a company like Apple would need such a huge pile of cash. The fact that Cook and Oppenheimer met with him indicates to me that they are running out of ideas/opportunities to put that money to good use.

post #18 of 85
Quote:
Originally Posted by nht View Post

The never worked out for Microsoft.

Given Apple's track record in cloud services I'm guessing it wouldn't work out for them either.

Considering the largest reason for Google's recent mobile growth was Apple (that's right, iOS, not Google's own Android) should give the GOOG cheerleaders great pause.

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #19 of 85
Buy all our shares at $750 then rebuild Apple .
post #20 of 85
Quote:
Originally Posted by firhill07 View Post

" My firm's success and my expertise as an investor would be difficult for anyone to argue."
Of course, we know that you want to increase 1/2 percent share in the company to 1% without adding any more cash and do it immediately.

"I hereby agree to withhold my shares from the proposed $150 Billion tender offer."
Of course, as soon as the share price jumps,  you would be more than happy to take it off the table.

"There is nothing short term about my intentions here."
We know, your long term commitment is anywhere from 6-12 months.

He has a point in technical terms and his objective is very clear.  As much as I want to believe that Apple has good plan to invest the money for strategic reasons, its hard to conceive why a company like Apple would need such a huge pile of cash. The fact that Cook and Oppenheimer met with him indicates to me that they are running out of ideas/opportunities to put that money to good use.

There may come a time when Apple is able to manufacture at a significantly lower cost per unit (using manufacturing methods unknown today) and all of the profits will derive from simply using the device. An Apple product could become as essential as cash or credit to function in our society. At that point, Apple would be able to afford to give the product away.

Until that time, it is far better to be rich than poor.

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #21 of 85

Okay Timmy. How about a $150B stock buyback?

 

Timmaaah?

 

Come on . You are breaking my balls Timmy! You are breaking my balls. 

 

Timmaaah !  Timmaaah Timmaah Timmah !

 

 

 

Carl Icahn = Libbin a Lie !

post #22 of 85

As a small shareholder of Apple (own about $150,000) I agree with Mr Icahn in theory.  Warren Buffet himself told Steve Jobs to buy back stock if he believed the shares were vastly undervalued.  So far Apple has bought back about $30B in shares and the stock has gone up about 15% since then.  That's about $5B they saved right there.

 

Looking at a 5 year cash flow perspective I see no problem with such a plan:

 

Cash at 6/30/13 - $150B

Cash at 12/31/13 - $180B

Less buyback - $150B

5 years @ $50B free cash flows per year

 

Cash at 12/31/18 -  $280B

 

That's almost enough money to buy Google.  Without an increased buyback the balance would be $400B.  That's totally ridiculous.  Keep in mind that IBM bought back about 40% of its shares in a 10 year period.  It's not unprecedented.  Just the dollar amounts seem so ridiculous because of Apple's size.

 

I do disagree on a tender offer.  I'd rather Apple buyback shares strategically instead of all at once.  I'd start with buying back when the stock drops for stupid reasons and also buyback BIG on OPEX fridays.  That would really screw up market makers who tried to manipulate during monthly options expiration days.  They would need to buy back about 280,000,000 shares.  That's only about 28 trading days worth of volume.

 

Don't forget its the SHAREHOLDERS that own Apple.  Not Tim Cook.  Not the Board of Directors.  I'd love to see this proposal being voted on during the next annual meeting.  Let the SHAREHOLDERS decide.

post #23 of 85
post #24 of 85
Quote:
Originally Posted by Constable Odo View Post

I'd just like to know why Google doesn't have to do anything to make its stock rise to $1200 a share and yet Apple has to bribe everyone on Wall Street just to get to $600 a share. Larry Page is making Tim Cook look like an damn idiot. The way I figure, Apple will stay underpriced forever. No one can put any shareholder value into Apple because of the way the company is run strictly for profits. Google is practically giving everything away for free and that in turn is making the company wealthier by the day in Wall Street's standards.

Apple needs to take that huge chunk of reserve cash and challenge Google's search engine business. Apple's mobile hardware business has been completely strangled by Android and now there are no revenue gains to be made because Android occupies 80% market share. Global consumers will no longer buy Apple products because Android products are far less expensive for consumers to buy. Apple needs to steal at least some of Google's search and ad click business to grab more revenue. If this current trend continues Google will easily pass Apple in market cap considering how fast Google's share price is rising. Apple is becoming an embarrassment to Apple shareholders as Google continues to biatch-slap Apple all over the place in value. Apple is just letting its cash hoard go to waste because right now it has zero value when it comes to shareholders.

To hell with Icahn. He's just interested in making quick money for himself. I want Apple to expand it's business into non-hardware ventures and not let Wall Street gobble up it's money with buybacks. I'm fine with getting increased dividends because it might also interest mutual fund managers to invest in Apple. Apple stock is totally stagnant and there has to be some practical way to get it moving up again. If Google and Amazon can do it, so should Apple be able to find a way.

 

Google sells ads. and supposedly controls only 3% of global expenditure in an industry that is rapidly moving more and more towards online ads.   Apple sells hardware and competes only in the premium end of that market (recent iPhone and iPad launches push them even more firmly into that niche).   It already owns much of that market today.  

 

The market rewards future earnings and has 'guessed' that Google will grow earnings significantly faster.  

post #25 of 85
Quote:
Originally Posted by Constable Odo View Post

I'd just like to know why Google doesn't have to do anything to make its stock rise to $1200 a share and yet Apple has to bribe everyone on Wall Street just to get to $600 a share. Larry Page is making Tim Cook look like an damn idiot. The way I figure, Apple will stay underpriced forever. No one can put any shareholder value into Apple because of the way the company is run strictly for profits. Google is practically giving everything away for free and that in turn is making the company wealthier by the day in Wall Street's standards.

Apple needs to take that huge chunk of reserve cash and challenge Google's search engine business. Apple's mobile hardware business has been completely strangled by Android and now there are no revenue gains to be made because Android occupies 80% market share. Global consumers will no longer buy Apple products because Android products are far less expensive for consumers to buy. Apple needs to steal at least some of Google's search and ad click business to grab more revenue. If this current trend continues Google will easily pass Apple in market cap considering how fast Google's share price is rising. Apple is becoming an embarrassment to Apple shareholders as Google continues to biatch-slap Apple all over the place in value. Apple is just letting its cash hoard go to waste because right now it has zero value when it comes to shareholders.

To hell with Icahn. He's just interested in making quick money for himself. I want Apple to expand it's business into non-hardware ventures and not let Wall Street gobble up it's money with buybacks. I'm fine with getting increased dividends because it might also interest mutual fund managers to invest in Apple. Apple stock is totally stagnant and there has to be some practical way to get it moving up again. If Google and Amazon can do it, so should Apple be able to find a way.

 

Lets not forget that little over a year ago Google was $550 and Apple was $700.  Has Google or Apple changed fundamentally since then?  Hell no.  Its called the great rotation.  It goes in cycles.  Imagine if Google bought $60B in stock when it was $550?  The point is if you have free cash it is wise to buyback shares when the rotation has your shares vastly undervalued.

post #26 of 85

I fail to see what benefit Apple would get from this buyback scheme.

 

I like that Apple has a large war chest of security, am not interested in Apple throwing this away just to get a bigger valuation on my AAPL shares. I bought AAPL because I love Apple long-term, not to make money short-term.

 

Is there even a cast-iron guarantee that AAPL shares would go up in value? I wouldn't be surprised if the market priced in any EPS share increase and the share price hardly moved, (or moved up then back down again).

 

And why exactly should AAPL try to increase shareholder value anyway? How does that benefit Apple?

 

Tim Cook should just ignore this self-serving money-grabbing f-wit.

post #27 of 85
Quote:
Originally Posted by JamesMac View Post
 

 

Google sells ads. and supposedly controls only 3% of global expenditure in an industry that is rapidly moving more and more towards online ads.   Apple sells hardware and competes only in the premium end of that market (recent iPhone and iPad launches push them even more firmly into that niche).   It already owns much of that market today.  

 

The market rewards future earnings and has 'guessed' that Google will grow earnings significantly faster.  

 

This is the same story when Google was $550 and Apple was $700 about a year ago.  Wall street loves to rotate in and out of stocks and steal money from Main Street.

 

Google is just hot right now and Apple is just warming up.  I would not be surprised that within 12 months Google will be $800 and Apple at $700.

post #28 of 85
Quote:
Originally Posted by Constable Odo View Post

I'd just like to know why Google doesn't have to do anything to make its stock rise to $1200 a share and yet Apple has to bribe everyone on Wall Street just to get to $600 a share. Larry Page is making Tim Cook look like an damn idiot. The way I figure, Apple will stay underpriced forever. No one can put any shareholder value into Apple because of the way the company is run strictly for profits. Google is practically giving everything away for free and that in turn is making the company wealthier by the day in Wall Street's standards.

Why do you care so much about Wall Street standards? You just said that they were the ones keeping Apple's stock undervalued. All companies are run strictly for profits unless they are run poorly. Google is making plenty of money but not as much as Apple. Apple has brand value that Google dreams about and Google needs Apple (for mobile device ad revenue) much more than Apple needs Google (just dropped Google maps for their own and search for Bing). The only way for Apple to needlessly attain instant marketshare is to cut the price and quality of their product line which would permanently damage their brand value.

 

Stock price has nothing to do with long term success. Even Carl Icahn knows that. So should you.

post #29 of 85
Quote:
Originally Posted by aderutter View Post
 

I fail to see what benefit Apple would get from this buyback scheme.

 

I like that Apple has a large war chest of security, am not interested in Apple throwing this away just to get a bigger valuation on my AAPL shares. I bought AAPL because I love Apple long-term, not to make money short-term.

 

Is there even a cast-iron guarantee that AAPL shares would go up in value? I wouldn't be surprised if the market priced in any EPS share increase and the share price hardly moved, (or moved up then back down again).

 

And why exactly should AAPL try to increase shareholder value anyway? How does that benefit Apple?

 

Tim Cook should just ignore this self-serving money-grabbing f-wit.

 

You need to remember that the SHAREHOLDERS own Apple.  Apple does NOT OWN Apple.  Tim Cook does not own Apple (he does own some) neither do the Board of Directors.  Shareholders will benefit from a buyback because their shares will increase in value if all things are equal.  Basically you are sharing $50 Billion in profits with 600M shares instead of 900M shares. 

 

Think about Bob who owns Bob's Hardware.  A buyback would be like Bob withdrawing $100,000 from the business for personal use.  Does the withdraw help Bob's Hardware?  Not really.  But it helps Bob the owner.  Same thing with Apple.  Apple does not OWN Apple.  The SHAREHOLDERS own Apple. 

 

I agree that you need some cash.  But $400B?  That's how much they will have in 5 years if they don't increase the buyback and assuming ZERO growth. At $400B and a 10% investment rate Apple shareholders are literally losing $40B alone from opportunity costs (assuming 10% return) and $20B a year on inflation (5%).  At close to zero % interest rates you are literally losing billions of dollars a month when the cash is just sitting in a money market fund returning 1%


Edited by sog35 - 10/24/13 at 8:31am
post #30 of 85

Apple should just buy Vodafone and some other profitable big companies and reduce their hoard that way and tell Eyebrows to go ....

post #31 of 85

Carl needs to STFU already. 

 

I'm not sure there's anything more transparent than Icahn telling Apple to use it's entire cash reserve to buy shares back (which will drive share price up) in order to maximize his own profitability when he turns around and dumps his position.

 

I fucking hate this guy.

post #32 of 85
Quote:
Originally Posted by sog35 View Post
 

 

You need to remember that the SHAREHOLDERS own Apple.  Apple does NOT OWN Apple.  ... At close to zero % interest rates you are literally losing billions of dollars a month when the cash is just sitting in a money market fund returning 1%

 

No I don't need to remember anything. I care about Apple the company and would rather they still exist in 100 years time than have them give me even double what my hundreds of shares are worth. Shareholders come, shareholders go. If you don't want to own AAPL shares, sell them, nobody asked you to buy them or promised you anything in return. Apple owes short-term (less than say 10 years) shareholders nothing.

post #33 of 85
Quote:
Originally Posted by Constable Odo View Post

I'd just like to know why Google doesn't have to do anything to make its stock rise to $1200 a share and yet Apple has to bribe everyone on Wall Street just to get to $600 a share. Larry Page is making Tim Cook look like an damn idiot. The way I figure, Apple will stay underpriced forever. No one can put any shareholder value into Apple because of the way the company is run strictly for profits. Google is practically giving everything away for free and that in turn is making the company wealthier by the day in Wall Street's standards.

Apple needs to take that huge chunk of reserve cash and challenge Google's search engine business. Apple's mobile hardware business has been completely strangled by Android and now there are no revenue gains to be made because Android occupies 80% market share. Global consumers will no longer buy Apple products because Android products are far less expensive for consumers to buy. Apple needs to steal at least some of Google's search and ad click business to grab more revenue. If this current trend continues Google will easily pass Apple in market cap considering how fast Google's share price is rising. Apple is becoming an embarrassment to Apple shareholders as Google continues to biatch-slap Apple all over the place in value. Apple is just letting its cash hoard go to waste because right now it has zero value when it comes to shareholders.

To hell with Icahn. He's just interested in making quick money for himself. I want Apple to expand it's business into non-hardware ventures and not let Wall Street gobble up it's money with buybacks. I'm fine with getting increased dividends because it might also interest mutual fund managers to invest in Apple. Apple stock is totally stagnant and there has to be some practical way to get it moving up again. If Google and Amazon can do it, so should Apple be able to find a way.

 

What you are seeing here is a game of chicken to see who blinks first. Apple is being punished by wall street for having a lot of cash. They are trying everything they can to get at it. For over a year they have floated unfounded speculation in the press that Cook may not be the best CEO for Apple. Their goal was to get a wall street player in that seat that could write checks on Apple's bank account. Make big purchases, buy back shares, throw some money at some lobbyist, etc.. When that didn't work they took it out on the stock price. So other investors would start to question Apple's leadership. 

 

The reality is now that Apple is performing too well and the operations of the company are not affected by the share price. Other than employee compensation packages, Apple really does not need its stock to be of any value. With cash in the bank they don't need a decent share price to leverage purchases, establish a good credit rating or even ward off a hostile take overs. That scares wall street because it makes them outside of their field of influence. The other problem for investors is nobody alone as a sizable enough stake to have any influence on the board.

 

What Icahn is doing is trying to rally support and form a consortium among other investors to force Apple's hand into executing a buyback. Basically expending their entire nest egg on keeping the shareholder's happy. Apple is quietly calling their bluff. Apple could do a buy back at anytime (for any price). They could just as easily wait until the price is $300 or even $250 a share. Wall Street can only suppress the share price for so long before A) Large institutions dump it to move on to richer pastures driving the price down and affecting everybody left holding it or B) Other investors start to see it as a real good value and invest in droves and run the price up which makes apple even stronger with their cash on hand and self-owned equity.  In either case Ichann and his ilk loses and Apple roles on. 

 

In a perfect world, in Wall street's eyes, a corporation has just enough cash on hand to operate and maybe survive a few bad quarters. Make some small strategic purchases and maintain a decent credit rating. Everything else they do with their stock. And by being very dependent on their stock price, companies are very sensitive to Wall street's whims and influence. This opens them up to be manipulated by analysts trying to swing the price. Apple doesn't play that game and that is why they are being punished. 

post #34 of 85

This is bad for Apple, Icahn is only interested in lining his pockets, the fact he suggest Apple go into debt if needed to to buy back more stock more quickly proves that. He does not care if Apple is making the right investments with its money or whether the company is doing all the right thing to grow the company, he is only interesting in making sure the stock value goes up. As we seen there is a much larger group who have been trying to drive the stock value down as fast as possible since they make money on the down side. Icahn is attempting to drive the stock up quickly so to drive out the people who are shorting the stock to drive its value down.

 

Icahn has screwed every company he go involved with, he did not make it better for investors he made it better for him.

post #35 of 85
Quote:
Originally Posted by aderutter View Post
 

 

No I don't need to remember anything. I care about Apple the company and would rather they still exist in 100 years time than have them give me even double what my hundreds of shares are worth. Shareholders come, shareholders go. If you don't want to own AAPL shares, sell them, nobody asked you to buy them or promised you anything in return. Apple owes short-term (less than say 10 years) shareholders nothing.

 

Legally the shareholders OWN Apple.  PERIOD.  I dont' care what your personal stance is about the company it is a FACT.  Apple went public and now the shareholders own the company.  Buying company shares is BUYING OWNERSHIP.  This is not rainbowland with Unicorns and care bears. 

post #36 of 85
Quote:
Originally Posted by Maestro64 View Post
 

This is bad for Apple, Icahn is only interested in lining his pockets, the fact he suggest Apple go into debt if needed to to buy back more stock more quickly proves that. He does not care if Apple is making the right investments with its money or whether the company is doing all the right thing to grow the company, he is only interesting in making sure the stock value goes up. As we seen there is a much larger group who have been trying to drive the stock value down as fast as possible since they make money on the down side. Icahn is attempting to drive the stock up quickly so to drive out the people who are shorting the stock to drive its value down.

 

Icahn has screwed every company he go involved with, he did not make it better for investors he made it better for him.

 

Netflix went up 450% since Ichan bought.

post #37 of 85
Quote:
Originally Posted by sog35 View Post
 

 

This is the same story when Google was $550 and Apple was $700 about a year ago.  Wall street loves to rotate in and out of stocks and steal money from Main Street.

 

Google is just hot right now and Apple is just warming up.  I would not be surprised that within 12 months Google will be $800 and Apple at $700.

 

The key concern about Google a year ago was how the move to mobile would affect its profitability, as mobile ads. sell for less than desktop ads.  Since that time, and with it's recent earnings, Google has shown that its increase in quantity of ads. has been more than enough to offset the reduction in price.   Hence the reason that Google's value has increased.

 

The concern about Apple is the increased competition from Samsung et al., its ability to grow in developing markets (read China) and its recent inability to create new product segments as it has in the past. 

 

If you wish to believe in conspiracy theories that's up to you.

post #38 of 85
Quote:
Originally Posted by wozwoz View Post

What a pointless waste of $150 billion in cash ... 

This, I cannot agree with. This money -- which, after all, belongs to shareholders -- can certainly be put to good use by the shareholders at least as well as Apple doing so on their behalf. If a particular shareholder does not believe that to be the case, they have the option to not sell to Apple.

 

Granted, a massive buyback at a price of $400 - $450 would have been even better, but if we truly believe that the stock is substantially undervalued even at the current $530, then it is a good use of money. In fact, I'd rather that Apple had done buybacks instead of initiating dividends in the first place. It is more tax-friendly to investors, sends a positive signal to the market, does not have the de facto permanency of a dividend, and can be kept as treasury stock to reissue later to mitigate the employee stock option dilution effect.

 

All this assumes that there is enough cash available for reinvestment (capex, working capital, R&D, acquisitions).

post #39 of 85
Quote:
Originally Posted by sog35 View Post
 
Quote:
Originally Posted by Maestro64 View Post
 

This is bad for Apple, Icahn is only interested in lining his pockets, the fact he suggest Apple go into debt if needed to to buy back more stock more quickly proves that. He does not care if Apple is making the right investments with its money or whether the company is doing all the right thing to grow the company, he is only interesting in making sure the stock value goes up. As we seen there is a much larger group who have been trying to drive the stock value down as fast as possible since they make money on the down side. Icahn is attempting to drive the stock up quickly so to drive out the people who are shorting the stock to drive its value down.

 

Icahn has screwed every company he go involved with, he did not make it better for investors he made it better for him.

 

Netflix went up 450% since Ichan bought.

Icahn's purchase had nothing necessarily to do with it, except perhaps for a short-term bump around the time of the purchase announcement. He just got lucky, as anyone who bought the company last year did.

post #40 of 85
Quote:
Originally Posted by sog35 View Post
 

 

Legally the shareholders OWN Apple.  PERIOD.  I dont' care what your personal stance is about the company it is a FACT.  Apple went public and now the shareholders own the company.  Buying company shares is BUYING OWNERSHIP.  This is not rainbowland with Unicorns and care bears. 

 

Totally agreed but as an Apple shareholder I, like most, represent a very tiny minority. If you were to ask the majority of shareholders (the millions of people like me with under 1000 shares not the few people like Ichann with millions) what they want most would agree they want the price to go up. Maybe a small (but vocal) minority would want a buy back.  Many (I can't say most because I don't know the actual numbers)  shareholders don't see the company's management as being the reason for the stock price being undervalued. We see the problem as coming from other shareholders and wall street manipulators. 

New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: AAPL Investors
AppleInsider › Forums › Investors › AAPL Investors › Carl Icahn urges Apple to make immediate tender offer for $150B in stock