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

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  • Reply 81 of 120
    That is not quite the same as Jeff BEZOS WHO SPENT 8 years on Wall Street, and wrote is business plan during his drive to Seattle. Name one member of the executive team or board of Directors who has ever been accused of being an entrepreneur. The last one was named Jobs.
  • Reply 82 of 120
    What about the Chairman of the Board, who is CEO of a company now owned by Google. Does that bother you?
    I think s doing a super job, but needs help from the board
  • Reply 83 of 120
    Carl Icahn buys stock in companies that he thinks are undervalued. Is that a crime?
    Are the stockholders worse off because of his position? I think not.
  • Reply 84 of 120
    Quote:
    Originally Posted by Flabingo View Post



    That is not quite the same as Jeff BEZOS WHO SPENT 8 years on Wall Street, and wrote is business plan during his drive to Seattle. Name one member of the executive team or board of Directors who has ever been accused of being an entrepreneur. The last one was named Jobs.

     

    Steve Jobs is a great entrepreneur, visionary, salesperson, negotiator, etc, but he's not a finance guy.  Other than reinvesting in your business (of which there's a limit), Jobs wasn't very good at capital allocation.  He asked Buffett for advise but didn't take the advise. Read this interesting article:

    http://www.cnbc.com/id/46540227

     

    Having said that, it all depends on how you think Apple's stock will perform.  If you think it's going to go up (ie undervalued), buy your own stock (ie buybacks) and keep it away from the stock market (ie retire them) if you think your own stock is going to go down, then continue keeping your 150 billion in the money market earning 1% per year (which is below inflation so you're actually losing purchasing power)

  • Reply 85 of 120
    You said it all in a few words BRAVO
  • Reply 86 of 120
    Originally Posted by Flabingo View Post

    When Jobs died Apple was left without any entrepreneur, in management or on the board.

     

    And you know this how?

     

    It was only 18 months ago that Apple stock was higher than Google, now it is half. What happened?




    Google bubble. Nothing to Apple.

     

    The same management is at both places.


     

    Not in the slightest.

     
    DOES it bother anybody that the chairman of the board of Apple, Arthur Levinson is the CEO of Calico, which was recently purchased by GOOGLE?

     

    Yep. He’ll be asked to step down (and out) within the year.

  • Reply 87 of 120
    jungmarkjungmark Posts: 6,926member
    Oh btw, Warren Buffett says to ignore crazy Carl.
  • Reply 88 of 120
    Originally Posted by jungmark View Post

    Oh btw, Warren Buffett says to ignore crazy Carl.

     

    Ooh, source?

     

    EDIT: Ah, found it. http://bgr.com/2013/10/16/warren-buffett-apple-advice/

  • Reply 89 of 120
    MarvinMarvin Posts: 15,271moderator
    bravadu wrote: »
    it all depends on how you think Apple's stock will perform.  If you think it's going to go up (ie undervalued), buy your own stock (ie buybacks) and keep it away from the stock market (ie retire them) if you think your own stock is going to go down, then continue keeping your 150 billion in the money market earning 1% per year (which is below inflation so you're actually losing purchasing power)

    Say that Apple took another $50b of shares out of circulation, how do they see a return that beats keeping the $50b unless they sell the shares again at a higher price? What event takes place that gives them that $50b of purchasing power back again?

    The 1.03% they mention in their 10k this year is their interest rate (not far behind 1.2% inflation), however their investments seem to have dropped in value although they only become a loss if they sell them. Their income from operations was $37b and the change in value of their securities including taxes was a loss of $970m taking their total income to $36b for 2013. Their income for 2012 was $41b. If their safe investments lose them nearly $1b, it's probably in the shareholders' best interests that they don't invest in anything more risky than they already do.
  • Reply 90 of 120
    Which year?
  • Reply 91 of 120

    I think Buffett was referring to Icahn's very aggressive $150B buyback suggestion and not the recent more-reasonable $50B one.  

     

    Icahn has already massively toned down his "suggestion" and made it a non-binding resolution on top of that.  So it's far from the ugly fights that he does with other companies.  He's been very respectful with Apple.

     

    The $50B one is very manageable and thus not very risky.  It ups Apple's current $100B capital return program by 50% to $150B.

  • Reply 92 of 120
    Quote:
    Originally Posted by Marvin View Post





    Say that Apple took another $50b of shares out of circulation, how do they see a return that beats keeping the $50b unless they sell the shares again at a higher price? What event takes place that gives them that $50b of purchasing power back again?

    Apple dividend is currently giving a $3.05 dividend per quarter or $12.20 a year or a 2.18% yield.  If Apple buys back 10 million shares or $5.6B current market value, they immediately save themselves $122 million a year in dividend payments.  That is already more than what they're earning for their "investments"

     

    That $5.6B in my example disappears from Apple's bank account in the form of cash.  It also disappears from Apple's market capitalization, so on paper, that might sounds bad, but there's now fewer shares outstanding and that's a good thing.  However, Apple's business fundamentals remain the same and each remaining investor now has a bigger claim to Apple's business, so this move has created value for Apple's remaining investors who didn't sell out.

     

    The reverse of buybacks is that Apple can issue 100 million new shares and deposit the proceeds of the share sale into their bank account.  Repeat one thousand times for one gazillion dollars.

  • Reply 93 of 120

    If they (Apple) don't retire the shares, they could resell them back onto the open market at a latter day I guess.  It will be better for the remaining investors if they retired those shares.  

     

    But to retire or not to retire, heck anything is better than sitting on that pile of cash that is losing purchasing power (inflation is greater than interest earned)

  • Reply 94 of 120
    asciiascii Posts: 5,936member

    If you are a strategic competitor of Apple's (or anyone really) you might start by making a list of all their possible actions. With a pile of money that big they can do virtually anything which makes it hard to plan against them.

  • Reply 95 of 120

    Name me three things that Apple might do with $150B that it can't with "only" $100B.

  • Reply 96 of 120
    asciiascii Posts: 5,936member
    Quote:

    Originally Posted by Bravadu View Post

     

    Name me three things that Apple might do with $150B that it can't with "only" $100B.


    Something you can do with $150b than you can't do with $100b, is make a $50b strategic acquisition and still have $100bn of unpredictability.

  • Reply 97 of 120

    Like?  Give me some names that wouldn't have significant anti-trust issues (decrease smartphone/computer competition).  Apple has proven very disciplined with their money - they make more than MS or Google, but don't spend several billion on crap like Skype and Motorola.  They really don't need to hold that much cash on hand.

     

    Besides, Apple can fairly-easily raise billions from the debt market. It could raise $50B and still have a pretty low leverage ratio.  I don't think it would need to, though.

  • Reply 98 of 120
    asciiascii Posts: 5,936member
    Quote:

    Originally Posted by Bravadu View Post

     

    Like?  Give me some names that wouldn't have significant anti-trust issues (decrease smartphone/computer competition).  Apple has proven very disciplined with their money - they make more than MS or Google, but don't spend several billion on crap like Skype and Motorola.  They really don't need to hold that much cash on hand.

     

    Besides, Apple can fairly-easily raise billions from the debt market. It could raise $50B and still have a pretty low leverage ratio.  I don't think it would need to, though.


    The best way to predict what companies Apple might buy, is to look at what they have bought in the past (such as Authentec, Israeli chip/ssd firms, the recent Twitter stats firm) and assume they will do more of the same. They don't seem to acquire complete products and rebrand them like Microsoft, they seem to already have some idea of what they want to build and then go out and acquire the technologies.

     

    The amount of money you need to hoard to become unpredictable depends on what you estimate the computing power of your opponent to be. If you think they can predict 8 moves ahead, you need enough money to do "virtually anything" 9 or more times, and you yourself need to think 9 moves ahead. In Silicon Valley your opponents will have a lot of computing power so you will need a lot of money.

  • Reply 99 of 120

    Yeah, what can you buy with $500B that you can't with $400B?  These hypotheticals either need to be specific or stop altogether.  Cash is a drag on Apple's metrics and performance.

     

    Apple isn't buying a carrier because this will alienate and turn the other carriers into enemies.  Right now carriers are one of Apple's most-important customers.  Like China Mobile.  

     

    Apple isn't buying Disney either because it will have a harder time getting new content from Disney's competitors.  Sames goes for developers like Zynga, EA or Gameloft.  Content is what makes your ecosystem good.  Buying a large content provider is bad because it turns partners into competitors, and that's just bad.

     

    Apple also shouldn't get Corning, Broadcom, Sharp or Qualcomm (suppliers).  Antitrust concerns aside, those companies need to license a lot of intellectual property from other companies to produce parts.  If Apple bought them, they would have to pay massively more for IPs. Those companies are better off staying independent.

     

    Apple could buy Foxconn I guess, but that's opening up a can of worms and a potential PR nightmare.

     

    I think holding $50B in cash is more than enough.  Buy Sony and Broadcom for $35B combined?  You can, but I would recommend against it.   Apple should either buy companies that make its products better or make future products possible.  Fortunately those companies are cheap and usually costing no more than a week of Apple's profits as Apple adds about $50B a year to their bank account.  Apple can also comfortably raise another $50B from the debt markets if needed.  Apple doesn't have a cash shortage problem.

  • Reply 100 of 120
    bwikbwik Posts: 565member

    A terrible plan that leaves open the possibility that if Apple's sales and profits fall like Zubaz, its shareholders could end up with zero.  

     

    I am an Apple fan and it has gone downhill before.

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