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Carl Icahn invests another $500M in Apple, promotes increased buyback in letter to shareholders - Page 3

post #81 of 100
Quote:
Originally Posted by Flabingo View Post

And Apple management has inside information, until they buy the shares that they announced until 2015

I have no idea what this means. Apple insiders cannot buy shares based on inside information until two days after said info is made public.
Quote:
Originally Posted by Crowley View Post

That still doesn't make him wrong.  What works for the short term doesn't necessarily conflict with what works for the long term.  Icahn selling his shares when he thinks that Apple has achieved its value wouldn't cause a crash like some are suggesting.  It'd dip maybe, just like it does ever other day on the newest bad rumour, but Icahn doesn't own enough for his trades to be so influential as to cause any panic.

Nor can Icahn own enough shares to cause in increase in stock price.
post #82 of 100
Quote:
Originally Posted by TexDeafy View Post

Just out of curiosity, how much cost to buy one share? I'm interest in buying that one. I'm very n00b with invest stuff and would love to own like .000000000001% of Apple, Inc. lol 1smile.gif

The simplest and cheapest approach is to open an account with someone like Schwab.com, and put in a buy order. You can buy as few or as many as you want with cash you've transferred into the account. (I think the minimum needed to open an account is $1,000 with Schwab; others may be lower or higher)

 

They charge $9 per trade. So, in order to minimize transaction costs, it pays to buy a couple more, than less (if you were planning on buying more in the near future).

post #83 of 100
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Originally Posted by barryt View Post
 
Quote:
Originally Posted by sog35 View Post
 

I agree with everything Carl said. Everything.

 

Me too.  

 

The buyback should have been much larger in the $400s but even now the stock price is still well below intrinsic value.   They should be backing up the truck.

What do you think is the intrinsic value for AAPL? Why?

post #84 of 100
A young Carl Icahn

post #85 of 100
Quote:
Originally Posted by jungmark View Post

Nor can Icahn own enough shares to cause in increase in stock price.

 

Very true, Icahn's influence isn't in his buying and selling power itself, but in voice being one that people listen to.  If he buys then some people think it's a good buy, if he sells then people may think it's a good sell.  But the stock price isn't booming right now as he's buying, and nor will it crash when he eventually sells.

 

And he certainly doesn't have the influence to elevate the stock price far above where it should reasonably sit, then cash in and leave Apple in a shambles.  Not by a long shot, which is nevertheless the fear that some seem to have.

 

He's doing what many around here do, saying that Apple at it's current price is undervalued because Wall Street isn't recognising much future growth or sustainability in Apple.  But he has faith in Apple to continue to grow and generate cash.  

 

It's really kind of weird how so many are hating on Carl when he's coming out as very pro-Apple.

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post #86 of 100
Quote:
Originally Posted by Crowley View Post



It's really kind of weird how so many are hating on Carl when he's coming out as very pro-Apple.

Because he's not pro-Apple. He's pro-Carl with pro-$$$$ a close second.
post #87 of 100

He is pro-Apple.  He wouldn't be investing in them unless he thought they had a bright future. In this instance pro-Carl, pro-$$$$ and pro-Apple is exactly the same thing.

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post #88 of 100
Quote:
Originally Posted by delreyjones View Post

I like the plan too and I also hold shares.
 
I don't really understand the hostility on this site towards Icahn 

It's not towards Icahn, but towards to the general idiocy of the "wall st business" people who make money at the expense of the everyone else who invested in the company because they believe in the company/want to retire with more money than they initially invested. Icahn is just one of those guys who bullies the company because he holds a large amount of shares into making bad decisions to increase the share price on a short term and then dump the stock when it won't go further. (Go back to FaceBook's IPO to see the large amounts of price swings as everyone dumped their long term holdings left and right to try and get a pop from the Facebook stock.)

Apple does not play by the same market forces that every other company out there does. Apple is only concerned with making products that people want, and can sell on brand name alone. Apple could produce a television, watch and a car, and there will be people who would buy it sight unseen. But you have business people shouting that Apple should have 50 different versions of the iPhone and iPad because some competitor also has a device that is that size or one-off feature.

Everytime I hear a rumor about a larger iPhone or smaller iPad I roll my eyes. The iPad mini was probably a good option because it's the size of a book/dvd/vhs tape but thinner and about as light as a paper book. Larger iPhone? no thanks. I was kinda hoping the 5c would have kept the original 3.5" screen size.
post #89 of 100
Quote:
SOG35:

They will not pull US cash. 

They will not pay any more tax than other wise (actually less since they can deduct the interest expense)

They will fund by using US cash ($20B) and Bonds ($30B)

The cost of Bonds will be almost ZERO because they won't have to pay the dividend on the purchased shares (2.3% div) and they get a tax deduction on interest.

Bonds are at 2% for 5 years. (again did you read the letter?)

Basically Apple is borrowing money for free and will pay back with the cash flow from US operations in future years. ( I think US operations generates about $20B in cash a year so they can payoff the bond in 5 years easily)

Very well stated.  Don't understand why Apple share holders so often lament its valuation in relation to the market, and then react so vehemently to an activist's attempt to rectify that.  Apple is a great company, makes great products, and is a cash machine.  However it receives a discounted valuation in relation to the market because that cashflow is meaningless to potential investors when it is not being returned to shareholders in a meaningful way.  The days of 40% earnings growth are gone and are not going to return, even with new product categories, due to economies of scale.  This is a proposal that allows Apple to maintain its war chest, and rewards shareholders through increasing EPS and probably multiple expansion. 


Edited by lucidity - 1/26/14 at 7:24pm
post #90 of 100
He is 100% correct.

It is immoral to keep so much money idle. It translates to thousands of jobs...

If given to the shareholders by increasing the share price in they will invest it in companies able to put it to good use.

Apple could never invest in something yielding 12-15% PA with an additional capital upside.
Their own shares will yield that easily and probably double in 2 years it is as he says a no brainer.

Tim is a great leader and Carl says so repeatedly but this is a finance thing unrelated to the running of the company.

Also think how it would reward Apple staff, they deserve it.
It will make future hiring much easier.
post #91 of 100
Quote:
Originally Posted by Flabingo View Post

Apple has been spending a great deal of money in people, plant, and are building a massive building in Cupertino. Someone should be in Washington having them repatriate money if spent on people, plant and equipment. It can be done on a case to case basis. And Both Apple and the US government would be better off.
Carl's main issue is the board, he has no problem with Cook and Ives
And explain why the Chairman of the board of Apple works FULL time as CEO of a company owned by Google

Ive...Jony Ive. Not "Ives", like Burl Ives. Details matter.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #92 of 100
Originally Posted by whowhy View Post
It is immoral to keep so much money idle.

 

You’ve completely lost it.

 
It translates to thousands of jobs...

 

No, it doesn’t.

 
If given to the shareholders by increasing the share price in they will invest it in companies able to put it to good use. 

 

It’s Apple’s money. Who are you to say what use the thousands of shareholders will put it? Who are you to say that use is better than Apple’s?

 
Tim is a great leader and Carl says so repeatedly but this is a finance thing unrelated to the running of the company. 

 

Right, which is why Apple ignores it so handily.

 
Also think how it would reward Apple staff, they deserve it. 

 

Appeals to pity and even poverty, I think. Doesn’t work.

 
It will make future hiring much easier. 

 

In what possible way?

Originally posted by Relic

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Originally posted by Relic

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post #93 of 100
Quote:
Originally Posted by Tallest Skil View Post

You’ve completely lost it.

No, it doesn’t.

It’s Apple’s money. Who are you to say what use the thousands of shareholders will put it? Who are you to say that use is better than Apple’s?

Right, which is why Apple ignores it so handily.

Appeals to pity and even poverty, I think. Doesn’t work.

In what possible way?

Right on, TS. We live in the age of the entitled. It's disturbing how uninformed people have become. Businesses exist to make a profit, not as a means to hand out jobs or freebies to beggars and whiners. Good lord.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #94 of 100
What is the point in profit if it doesn't end up with the employees or the shareholders? Should Apple just keep building their money pile until they have all the money in the world?

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post #95 of 100
Originally Posted by Crowley View Post
What is the point in profit if it doesn't end up with the employees or the shareholders?

 

How does making billions of dollars in profit every quarter not inherently end up with employees (pay, plus raises, corporate expansion, new hires, etc.) and shareholders?

 
Should Apple just keep building their money pile until they have all the money in the world?

 

Sounds good to me. At least we know they’re capable of managing it without being idiots.

Originally posted by Relic

...those little naked weirdos are going to get me investigated.
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Originally posted by Relic

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post #96 of 100
Quote:
Originally Posted by Tallest Skil View Post
 

 

How does making billions of dollars in profit every quarter not inherently end up with employees (pay, plus raises, corporate expansion, new hires, etc.) and shareholders?

Err... because Apple have $150b banked and aren't showing much inclination towards using it for any of those things?

 

Most of those things are counted in company outlay anyway, so wouldn't be a normal use for profits.

 

Quote:
Originally Posted by Tallest Skil View Post
 

Sounds good to me. At least we know they’re capable of managing it without being idiots.

 

Apple employees and shareholders are idiots with their money?  Apple scraping a measly amount of interest off of securities is good cash management? 

 

Gonna need to see some kind of justification behind that buddy.

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post #97 of 100
Originally Posted by Crowley View Post
Err... because Apple have $150b banked and aren't showing much inclination towards using it for any of those things?

 

Yeah, they’re sure not building a new campus or hiring anyone else, that’s for sure.

 
Apple employees and shareholders are idiots with their money? 

 

No, Icahn excluded. I mean the global financial market as a whole. Apologies for the confusion; you’re right.

Originally posted by Relic

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Originally posted by Relic

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post #98 of 100
Quote:
Originally Posted by Tallest Skil View Post
 

building a new campus

$5b is the commonly stated figure, and there's speculation that they are $2b over budget.

 

Quote:
Originally Posted by Tallest Skil View Post
 

hiring

According to Apple they employed 5,000 more people in the USA in 2012.  I can't find any worldwide figures or figures for 2013, but since the bulk of Apple Corporate and about half of Apple retail is in the USA, let's assume that a simila rnumber was created outside the USA, so 10,000 total.  Average wage?  Well that number includes retail through to execs, but let's be generous again and assume $150k/y.  10,000 x $150k is an increased wage bill of $1.5b.  My guesses are bound to be out by a chunk, and the numbers are a year out, so let's quadruple that to be safe, to $6bn.

 

 

$7bn on campus (actually spread over a number of years, but nevermind that), and $6bn in new salaries, so $13bn in total (very generously).

 

In case you didn't notice, Apple made pretty much $13bn in this quarter alone.  So they have three more quarters of just piling on the money.

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post #99 of 100

Thanks for the rundowns. They’re neat!

 

Originally Posted by Crowley View Post

In case you didn't notice, Apple made pretty much $13bn in this quarter alone.  So they have three more quarters of just piling on the money.

 

And… so? After his return in 1996, Steve repeatedly said, for years, that he runs Apple as a startup. Runs it as though every dollar is their last. 

 

It’s the right way to work. “It’s bad for a company to have money saved away” is a statement that no one in finance should legally be allowed to make. At least, not if they want to stay working in finance. Apple isn’t evil for keeping money.

Originally posted by Relic

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Originally posted by Relic

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post #100 of 100

Arguable.  Money is the blood of an economy, so if Apple are holding it in a way that is restricting it from flowing they're a clot in the economy.  Clots are good temporary solutions if a part of your body needs healing, but that's not the case with Apple.

 

Why is it "the right way to work"?  Apple aren't benefitting a great deal from it, their money is gaining so little interest you could call it dust.  Apple are a healthy company raking in record profits year after year, they don't need to keep such a stash as security any more.  In the late 90s and early 00s under Steve Jobs it was reasonable for them to save as much as they could for a rainy day, but now it's excessive and time for a rethink.  I'd say that's been the case ever since the success of the iPhone became apparent to the wider world.  Obviously Apple are thinking some of the thoughts since there's already a buyback in place, but despite the scale of it, it actually seems quite conservative since they managed to finance it all out of short term debt to be repaid from regular cashflows - (possibly) interesting point, this quarter's numbers having "flatlined" profits may be down to interest on the debt incurred from that buyback, but are also why EPS increased.

 

Also, I think that quote might be a bit redundant.  Startups don't spend $5bn on environmentally sustainable glass campuses shaped like UFOs.  I'm not sure it was ever particularly true, Steve was a master bullshitter.

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