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Preliminary Apple proxy filing details Carl Icahn's $50B stock buyback plan up for shareholder vote

post #1 of 140
Thread Starter 
Apple on Friday posted its preliminary proxy statement with the U.S. Securities and Exchange Commission, which included, among other operating necessities, details of a $50 billion stock repurchase proposal submitted by Carl Icahn.

Icahn
Investment guru Carl Icahn.


With its preliminary proxy filing, Apple covered the goings on of 2013 and outlined its plan for the upcoming 2014 fiscal year.

While much of the preliminary proxy is comprised of standard information to satisfy shareholder and SEC requirements, a few bits of data are of particular interest to those following Apple's operations.

As per usual, proposals up for shareholder vote are among the most contentious issues in the statement. Of particular interest is Proposal No. 10 for a "Non-Binding Advisory Resolution Relating to the Company's Capital Return Program," which involves billionaire investor Carl Icahn's push to return additional cash to AAPL shareholders by picking up the pace of its stock repurchase program to $50 billion by the end of fiscal 2014.

Icahn intends to submit the following proposal at Apple's upcoming shareholders meeting:

"RESOLVED, that the shareholders hereby approve, on an advisory basis, High River's proposal that Apple commit to completing not less than $50 billion of share repurchases during Apple's fiscal year ending September 27, 2014 (and increase the amount authorized for share repurchases under its Capital Return Program accordingly)."


In October, Icahn said he would consider bringing the $50 billion proxy vote up during Apple's Annual Meeting, which would force Apple executives to buy back more of their own shares. Icahn offiically filed the proposal in December, saying "Apple is not a bank" in reference to the company's gigantic overseas cash hoard.

At the end of the fourth quarter of Apple's fiscal 2013, the company held $148.6 billion in cash, $35.5 billion of which was held domestically. At the time, there were no plans to repatriate any portion of the cash pile.

Icahn revealed in October that he had at the time 4.7 million shares of AAPL stock, up from a previous total of 4 million. That would give him nearly $2.7 billion stake in the company at its current value.

For its part, Apple recommends a vote against the proposal, saying "The Board and management team are thoughtfully considering options for returning additional cash to shareholders and are currently seeking input from shareholders as part of the Company's regular review." According to the proxy statement, Apple will complete a regular review and analysis of the issue and announce any changes to the current program by March or April of next year.
Apple spent a combined $43 billion on dividends and share repurchases over the program's first six quarters.
During fiscal 2013, Apple spent $23 billion of an expanded $60-billion share repurchase authorization, which contributed to combined dividend payments and repurchases totaling over $43 billion since the program was initiated some six quarters ago.

Apple notes that, while against this particular repurchase plan, it is "fully committed to returning cash to shareholders." The board of directors and upper management believe any such returns should be conducted on an "efficient and sustained" basis that considers the long-term interests of the company and shareholders.

Apple's existing plan, which is already in action, is to buy back $100 billion worth of stock through 2015 and dish out dividend payouts to shareholders.

In addition to the proposals up for vote, Apple's preliminary proxy offered a look at the previous year's operating expenses, including a peek at executive salaries.

Apple CEO Tim Cook was paid a total of $4.25 million for 2013, not including restricted stock units scheduled to vest at a later date. Other top executives like CFO Peter Oppenheimer, SVP of Internet Software and Services Eddy Cue, and SVP of Hardware Engineering Dan Riccio all received salaries of about $2.6 million.

Apple's shareholders meeting will take place on Feb. 28 at the company's headquarters in Cupertino, Calif.

post #2 of 140
Quote:
Originally Posted by AppleInsider View Post

Apple CEO Tim Cook was paid a total of $4.25 million for 2013, not including restricted stock units scheduled to vest at a later date. Other top executives like CFO Peter Oppenheimer, SVP of Internet Software and Services Eddy Cue, and SVP of Hardware Engineering Dan Riccio all received salaries of about $2.6 million.
Anyone know why Ive is the only SVP not listed as an executive officer and thus his salary and stock options aren't required to be disclosed with the SEC? One would assume his salary and options are equal to what the other SVPs receive. 1hmm.gif
post #3 of 140
Quote:
Originally Posted by Rogifan View Post


Anyone know why Ive is the only SVP not listed as an executive officer and thus his salary and stock options aren't required to be disclosed with the SEC? One would assume his salary and options are equal to what the other SVPs receive. 1hmm.gif

Maybe being a knight means he's exempt.

post #4 of 140
Quote:
Icahn revealed in October that he had at the time 4.7 million shares of AAPL stock, up from a previous total of 4 million. That would give him nearly $2.7 billion stake in the company at its current value
The buyback should be only for those with less than, ~100,000 shares.
This puts money in the pocket of the "little" man and not institutions/large shareholders, to stimulate the economy.
post #5 of 140
Icahn just worried about $$$$$$! For himself. 50 billion buyback will not benefit shareholders unless stock goes up and P/E ratio goes down
post #6 of 140
Quote:
Originally Posted by Creep View Post

Maybe being a knight means he's exempt.
I suppose he's perfectly fine with keeping his salary and stock options private.
post #7 of 140
What are icahns plans after the $50B buy back? Fire sale every stock he's got? I personally am upset that he would openly dictate business decisions that so obviously benefit himself over the company he has stock in. Greed is apparently his closest friend. Apple is supposed to spend another $50B for one persons benefit? Good idea. If you're not interested in a company succeeding over the long term, don't buy their stock and stay out of their business... actually, stay out of their business, period. Aren't you happy with the tons of money they made you? Or is it never enough - so you keep brazenly squeezing out every last dime at everyone else's expense.
post #8 of 140

Why would larger buybacks not be a good thing? Any economists here? 

post #9 of 140
Quote:
Originally Posted by Creep View Post

Maybe being a knight means he's exempt.
Quote:
Originally Posted by Rogifan View Post

Anyone know why Ive is the only SVP not listed as an executive officer and thus his salary and stock options aren't required to be disclosed with the SEC? One would assume his salary and options are equal to what the other SVPs receive. 1hmm.gif

British title have no sway in the US.

I suppose he's not considered a SVP with a “policy-making function.”
post #10 of 140
Quote:
Originally Posted by Richard Getz View Post

Why would larger buybacks not be a good thing? Any economists here? 

No economist but I once stayed at a Holday Inn Express.

More debt for Apple. A rise in stock price due to a buy back would just be a short term play.

Vote No and tell Crazy Carl to scheme another company.
post #11 of 140
Quote:
Originally Posted by jungmark View Post

Vote No and tell Crazy Carl to scheme another company.

it bears repeating.
post #12 of 140
Quote:
Originally Posted by jungmark View Post



British title have no sway in the US.

I suppose he's not considered a SVP with a “policy-making function.”

*whoosh*

post #13 of 140
Quote:
Originally Posted by jungmark View Post

...
Vote No and tell Crazy Carl to scheme another company.

Since I finally own some AAPL stock, I should be getting any voting forms and will definitely vote NO. Apple management might not be perfect but at least they care about Apple and not whether some stock manipulator like Icahn makes any more money than he already has with the raising stock prices. Talk about being greedy!

post #14 of 140
Quote:
Originally Posted by Richard Getz View Post
 

Why would larger buybacks not be a good thing? Any economists here? 

 

Its a good thing.

 

A decrease in share count means each share represents a larger percentage of the company.  For example if there were 100 shares available and you owned 10 shares you would own 10% of the company.  If a buyback purchases 50 shares then you would own 20% of the company.  You would have 20% stake in all of Apple's assets.  As far as stock price it should go up also since Earnings PER SHARE will go up since there are less shares outstanding.

 

There are also very good reasons to start a $50B buyback this fiscal year:

 

1.  Interest rates are near all time lows.  We won't be able to say that in a year or two.

2.  Apple's stock price is severely under-valued

3.  Apple pays a 2% dividend

4.  Apple has over $150B in cash and generates $50B free cash flows a year

5.  The $150B cash is generating 1% returns

 

Unless Apple is planning on making acquisitions of over $150B in the next 12 months I see no reason for them to continue to hoard the cash.  Even if they payout $50B in buybacks they still will have $150B at the end of 2014.  Floating a bond at today's interest rates would cost Apple basically ZERO.  They would not have to pay the 2% dividend and would be able to write off the interest expense. 

 

I hold 300 shares of Apple stock and I will vote yes to the buyback

 

The only way the Buyback is a bad idea is if LONG-TERM you think the stock will be worth less than $560.  If that's the case you should just sell your shares and invest in something else.

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post #15 of 140
Quote:
Originally Posted by Rogifan View Post


Anyone know why Ive is the only SVP not listed as an executive officer and thus his salary and stock options aren't required to be disclosed with the SEC? One would assume his salary and options are equal to what the other SVPs receive. 1hmm.gif

maybe as a result of the fiasco that is iOS 7 he is being shown the door and Scott Forstall is coming back to take his spot.  /s

post #16 of 140
Quote:
Originally Posted by rob53 View Post
 

Since I finally own some AAPL stock, I should be getting any voting forms and will definitely vote NO. Apple management might not be perfect but at least they care about Apple and not whether some stock manipulator like Icahn makes any more money than he already has with the raising stock prices. Talk about being greedy!

 

Explain to me why you think the buyback is a bad idea.

 

And saying Ichan is greedy is NOT a good reason.  A person can be GREEDY and correct.  People can be charitable and WRONG.  Bottom line is you buy stock to make money.  Right?

 

So explain to me why a buyback is a bad decision.  If you think the stock will be $650 by the end of 2014 why wouldn't you buyback stock when its $560?  Why would you hold on to $200B (that's how much cash Apple will have by 12.31.14) if you won't be making huge acquisitions?  You do know that they are only earning 1% on the $150B right now?  You are literally losing hundreds of millions of dollars each month just on inflation.

 

$150,000,000,000 x 8% (a decent average return less 1%) = 12,000,000,000

 

Because Apple is doing nothing with $150B there are losing 12 Billion every year to opportunity cost.  And that will grow to $200B and $16B lost to opportunity cost if they do nothing in 2014.  Of course Apple needs about $30B just to keep cash flow for operations but I'm just illustrating how much value is being wasted away because the cash is only returning 1%.  Can I do better than 1%?  I think so.  That's why companies return cash to investors with dividends/buybacks when there is excess cash.  And its doubly a good idea because of the low interest rates and undervalued stock price.

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post #17 of 140
Quote:
Originally Posted by sog35 View Post
 

 

Its a good thing.

 

A decrease in share count means each share represents a larger percentage of the company.  For example if there were 100 shares available and you owned 10 shares you would own 10% of the company.  If a buyback purchases 50 shares then you would own 20% of the company.  You would have 20% stake in all of Apple's assets.  As far as stock price it should go up also since Earnings PER SHARE will go up since there are less shares outstanding.

 

This is what worries me about iCahn. I don't want some short-termer destroying Apple to make money for himself. I would rather see Apple go private and get rid of all these outside distractions. 

post #18 of 140
Icahn put up his money, was given a microphone and has spoken. The Apple PE is 14, which suggests that the market does not think it is a growth company. Now the microphone is now in management's hands. If Warren Buffet made the same suggestion, would he be considered GREEDY. Is it the message or the messenger? Compare the amount of stock that Icahn has, is it more that the total stock held my senior management and directors? Seems years ago the directors of Apple FIRED a guy named Jobs. We live in interesting times, but bottom line the stockholders will decide. Imagine if all stockholders had to own stock for five years? People now buy weekly options. Do we call them much more greedy than Icahn?
post #19 of 140
Quote:
Originally Posted by rob53 View Post
 

This is what worries me about iCahn. I don't want some short-termer destroying Apple to make money for himself. I would rather see Apple go private and get rid of all these outside distractions. 

 

buying back stock is the first step to going private.

 

Again saying Ichan is GREEDY is not a good reason to vote no.

GREEDY people can be right.

Charitable people can be wrong.

Especially when it comes to finances.

 

Again explain to me why its a bad idea.  And don't say because its short-term thinking.  EXPLAIN WHY.

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post #20 of 140
Go away Carl. Go away

Apple should stop engaging with him directly. It's a waste if management's time. Let him sell his 1% of stock. No one gives a shi*

Windows survivor - after a long, epic and painful struggle. Very long AAPL

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Windows survivor - after a long, epic and painful struggle. Very long AAPL

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post #21 of 140
Quote:
Originally Posted by Flabingo View Post

Icahn put up his money, was given a microphone and has spoken. The Apple PE is 14, which suggests that the market does not think it is a growth company. Now the microphone is now in management's hands. If Warren Buffet made the same suggestion, would he be considered GREEDY. Is it the message or the messenger? Compare the amount of stock that Icahn has, is it more that the total stock held my senior management and directors? Seems years ago the directors of Apple FIRED a guy named Jobs. We live in interesting times, but bottom line the stockholders will decide. Imagine if all stockholders had to own stock for five years? People now buy weekly options. Do we call them much more greedy than Icahn?

 

Excellent post.

 

The Board of Directors are not all knowing.  They are the same guys who forced Steve Jobs out of Apple.  People need to use their brains.  The formula is quite simple with buybacks:

 

If the stock is undervalued its a good decision. 

 

Only exception is if you have cash flow problems (which Apple does not) or they need cash to make an VERY LARGE acquisition (which Apple still could with $150B in cash even AFTER a $50B buyback)

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post #22 of 140
I plan on voting against the Icahn proposal. He's not a long on AAPL and his motives are well-known. He'd rather bleed Apple dry and kick the corpse than let Apple maintain their leadership position.
Edited by SpamSandwich - 12/27/13 at 5:45pm

Proud AAPL stock owner.

 

GOA

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GOA

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post #23 of 140
Apple will have to bring back $75B to clear the $50B after 30% tax. 1% return vs taking a $25B bath until some form of lower repatriation % is struck seems like a good decision.
post #24 of 140
Quote:
Originally Posted by ChristophB View Post

Apple will have to bring back $75B to clear the $50B after 30% tax. 1% return vs taking a $25B bath until some form of lower repatriation % is struck seems like a good decision.

 

WRONG.  They paid $0 with the current buyback of about $20B this year.  They used foreign cash and floated a Bond at 2%.  After taking out the dividend the interest on the bond is basically ZERO. 

 

They don't need to repatriate anything to pay $50B in 2014.  Please be more informed about the situation before you pass judgement.

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post #25 of 140
Quote:
Originally Posted by SpamSandwich View Post

I plan on voting against the Icahn proposal. He's not a long on AAPL and his motives are well-known. He'd rather bleed Apple dry and kick the corpse than let Apple maintain their leadership position.

 

What are your motives?  Isn't it to make money?  Or you do buy AAPL stock to say 'hey I own apple stock'.

 

Did he kick the corpse of Netflix? or Herblife?  Those companies are doing 100x better since Ichan bought shares shook up the board.  He sold Netflix recently and Netflix is much stronger than when he bought them.

 

Ichan's company has returned an average of 22% per year the last 10 years.  He ain't no day trader or vampire.  He is more Warren Buffet than typical Gordon Gecko

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post #26 of 140
Quote:
Originally Posted by ChristophB View Post

Apple will have to bring back $75B to clear the $50B after 30% tax. 1% return vs taking a $25B bath until some form of lower repatriation % is struck seems like a good decision.

There is no political will in Congress or the White House to get behind a change in tax policy.

Proud AAPL stock owner.

 

GOA

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GOA

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post #27 of 140
Quote:
Originally Posted by AppleInsider View Post
 
Icahn

 

When Keyser Söze puts his kids to bed at night, if they’re naughty, he threatens them with this picture.

 

“Don’t go to sleep for your pop and Carl Icahn will get you."

If you want to make enemies, try to change something.
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post #28 of 140
Quote:
Originally Posted by sog35 View Post

What are your motives?  Isn't it to make money?  Or you do buy AAPL stock to say 'hey I own apple stock'.

Did he kick the corpse of Netflix? or Herblife?  Those companies are doing 100x better since Ichan bought shares shook up the board.  He sold Netflix recently and Netflix is much stronger than when he bought them.

Ichan's company has returned an average of 22% per year the last 10 years.  He ain't no day trader or vampire.  He is more Warren Buffet than typical Gordon Gecko

His short term motivation to make money is at cross-purposes with my long term motivation to make money and provide capital that supports Apple's LONG TERM survival and success.

Also, I don't own shares in Icahns company...do you?
Edited by SpamSandwich - 12/27/13 at 6:03pm

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post #29 of 140
Quote:
Originally Posted by GTR View Post

When Keyser Söze puts his kids to bed at night, if they’re naughty, he threatens them with this picture.

“Don’t go to sleep for your pop and Carl Icahn will get you."

He grinds the bones of children to make his bread.

Proud AAPL stock owner.

 

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GOA

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post #30 of 140
Quote:
Originally Posted by sog35 View Post

WRONG.  They paid $0 with the current buyback of about $20B this year.  They used foreign cash and floated a Bond at 2%.  After taking out the dividend the interest on the bond is basically ZERO. 

They don't need to repatriate anything to pay $50B in 2014.  Please be more informed about the situation before you pass judgement.


Is that Carl's plan? Apple borrowed $17B and paid the rest with domestic cash on hand. Your saying borrow another $50B? Can you cite the details of Carl's plan? Mi only read the apple proxy filing summary which doesn't mention where the cash will come from.
post #31 of 140
Quote:
Originally Posted by sog35 View Post
 

 

Its a good thing.

 

A decrease in share count means each share represents a larger percentage of the company.  For example if there were 100 shares available and you owned 10 shares you would own 10% of the company.  If a buyback purchases 50 shares then you would own 20% of the company.  You would have 20% stake in all of Apple's assets.  As far as stock price it should go up also since Earnings PER SHARE will go up since there are less shares outstanding.

 

There are also very good reasons to start a $50B buyback this fiscal year:

 

1.  Interest rates are near all time lows.  We won't be able to say that in a year or two.

2.  Apple's stock price is severely under-valued

3.  Apple pays a 2% dividend

4.  Apple has over $150B in cash and generates $50B free cash flows a year

5.  The $150B cash is generating 1% returns

 

Unless Apple is planning on making acquisitions of over $150B in the next 12 months I see no reason for them to continue to hoard the cash.  Even if they payout $50B in buybacks they still will have $150B at the end of 2014.  Floating a bond at today's interest rates would cost Apple basically ZERO.  They would not have to pay the 2% dividend and would be able to write off the interest expense. 

 

I hold 300 shares of Apple stock and I will vote yes to the buyback

 

The only way the Buyback is a bad idea is if LONG-TERM you think the stock will be worth less than $560.  If that's the case you should just sell your shares and invest in something else.

 

That is my thought, so why is Apple against it? What is the downside for them? 

post #32 of 140
Quote:
Originally Posted by GTR View Post

When Keyser Söze puts his kids to bed at night, if they’re naughty, he threatens them with this picture.

“Don’t go to sleep for your pop and Carl Icahn will get you."

He reminds me of an old man I'd expect to see on The Muppets.
post #33 of 140

Everyone here who is against the buyback is saying the same thing:

 

Icahn is GREEDY so he must be wrong.

 

Give us GOOD reasons why not to do a buyback when Apple is at historically low valuations (14 PE) and historically low interest rates to float a bond.

 

Again don't just say Icahn is greedy.  Thats not a good reason.  Show me stats and figures.  Give me reasons.

 

My reason is that $200,000,000,000 in cash languishing in 1% CD's is losing over $15,000,000,000 in opportunity cost a year (vs 8% rate of return)

My reason is Apple will still have $150B in cash even with the buyback.  Probably closer to $180B if they float a bond.

My reason is net of dividends the interest on the bonds are costing Apple ZERO.

My reason is I believe this stock should be valued at $675-$700.  Why wait till the stock is $700 to buyback?  Current buyback runs all the way to 2015.  The time to buy shares is now when its dirt cheap.

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post #34 of 140
BRAVO
You said it all in a few words
post #35 of 140
Quote:
Originally Posted by Richard Getz View Post
 

 

That is my thought, so why is Apple against it? What is the downside for them? 

 

I have 3 possible reasons:

 

1. Board is extremely risk adverse.  Which is NOT a good thing in business.  Yes the stock price may go down and you may look stupid.  But you are guarantying failure if you do nothing and let the cash sit at 1% year after year.

 

2. Board knows of a massive acquisition costing over $100B

 

3. Board does not want to appear weak or an enabler to Ichan.

 

My guess is #3.  But if shareholders vote yes the board would probably go with the shareholders to save face. IMO the shareholders should decide, they own the company after all.


Edited by sog35 - 12/27/13 at 6:10pm
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post #36 of 140
Quote:
Originally Posted by sog35 View Post

I have 3 possible reasons:

1. Board is extremely risk adverse.  Which is NOT a good thing in business.  Yes the stock price may go down and you may look stupid.  But you are guarantying failure if you do nothing and let the cash sit at 1% year after year.

2. Board knows of a massive acquisition costing over $100B

3. Board does not want to appear weak or an enabler to Ichan.

My guess is #3.  But if shareholders vote yes the board would probably go with the shareholders to save face.

Give it a rest. Neither you nor any of us here know what Apple's future plans are. And I'm pretty sure Icahn has no knowledge in this matter either. I trust the board over Icahn with few exceptions (and a board that included Icahn would be a massive mistake if he has designs on such a thing).

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post #37 of 140
Apple's market cap is over 500B. How in the world could they possibly go private? I'm sorry but that's silly talk.
post #38 of 140
Quote:
Originally Posted by AppleInsider View Post
 
Icahn

(Photo taken in the weeks before Carl Icahn's bar mitzvah.)

post #39 of 140
Quote:
Originally Posted by SpamSandwich View Post


Give it a rest. Neither you nor any of us here know what Apple's future plans are. And I'm pretty sure Icahn has no knowledge in this matter either. I trust the board over Icahn with few exceptions (and a board that included Icahn would be a massive mistake if he has designs on such a thing).

 

Trust the Board?  Same wonderful Board that fired Steve Jobs?

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post #40 of 140
Quote:
Originally Posted by sog35 View Post

Everyone here who is against the buyback is saying the same thing:

Icahn is GREEDY so he must be wrong.

Give us GOOD reasons why not to do a buyback when Apple is at historically low valuations (14 PE) and historically low interest rates to float a bond.

Again don't just say Icahn is greedy.  Thats not a good reason.  Show me stats and figures.  Give me reasons.

My reason is that $200,000,000,000 in cash languishing in 1% CD's is losing over $15,000,000,000 in opportunity cost a year (vs 8% rate of return)
My reason is Apple will still have $150B in cash even with the buyback.  Probably closer to $180B if they float a bond.
My reason is net of dividends the interest on the bonds are costing Apple ZERO.
My reason is I believe this stock should be valued at $675-$700.  Why wait till the stock is $700 to buyback?  Current buyback runs all the way to 2015.  The time to buy shares is now when its dirt cheap.

Apple is already doing a buy back
Why is more debt favorable ?
Even if Apple buys 50% of its remaining shares, I (and the majority of individual share holders) will still own less than 0.00001%.
Less shares on the market could mean outside entities could get a larger margin of shares and place their own BoD members for election.
Short term stock price rise. Once crazy Carl gets his target price, he's gone. Apple will still be in debt.
I don't like outsiders telling Apple how to run the company.

Vote No.
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