In response to Icahn, Apple reiterates plans to review share buyback program annually

Posted:
in AAPL Investors edited October 2014
After activist investor Carl Icahn published a letter Thursday asking Apple to increase its share buyback efforts once again, the company responded with a statement indicating it's in no rush to make any changes.




"We always appreciate hearing from our shareholders," Apple said in a statement to CNBC. "Since 2013 we've been aggressively executing the largest capital return program in corporate history. As we've said before we will review the program annually and take into account the input from all of our shareholders."

Earlier Thursday, Icahn published a letter in which he said he believes shares of Apple are "dramatically undervalued." Based on his estimates, he believes the company should currently be trading at $203 per share, or about double where it currently sits.

Given his estimated 50 percent discount, Icahn believes now would be a prudent time for Apple to spend its more than $130 billion in net cash on itself, buying shares at a discount before they trade higher.


The New York Stock Exchange, credit Carlos Delgado via Wikipedia.


Icahn's letter was a glowing endorsement of Apple, saying that he expects continued strong sales of the iPhone. He's also hopeful for the upcoming Apple Watch, and even predicted that the company could launch a full-fledged television set years down the road.

The praise from Icahn helped shares of Apple stay in the positive throughout trading on Thursday, even as the Dow Jones Industrial Average tumbled more than 300 points. Both it and the Nasdaq were off more than 1.7 percent in Thursday afternoon trading.

Apple first announced its dividend share and repurchase program in March of 2012, and at the time pledged to spend $45 billion on itself over three years. The company increased the program to $100 billion a year later.

Then again this April, Apple announced it would once again increase its buyback efforts, and the company also revealed it would undergo a 7-for-1 stock split that eventually came to pass in June. Based on Apple's current annual schedule, the company would likely revisit its buyback efforts once again, and take into consideration the requests of Icahn and others, following its March 2015 quarter.

Comments

  • Reply 1 of 15
    That's the appropriate response. There's not much more to be said.
  • Reply 2 of 15
    So great to see a quick response from Apple, before some jackass(es) find a way to turn it into FUD.
  • Reply 3 of 15

    Then why doesn't Icahn just buy more shares? 

  • Reply 4 of 15
    SpamSandwichSpamSandwich Posts: 33,408member
    Quote:

    Originally Posted by RalphMouth View Post

     

    Then why doesn't Icahn just buy more shares? 




    That's what I said. That he doesn't double his investment based on his claim that the stock is currently valued at half what it's worth proves he's full of nonsense.

  • Reply 5 of 15
    Quote:

    Originally Posted by RalphMouth View Post

     

    Then why doesn't Icahn just buy more shares? 




    There's risk in that.  If apple buys shares, the  immediate returned value (When Apple buys a billion in shares, iCahn's shares go up by at least 2-4%) and this value is folded into iCahn's current holdings, as the buyback is increasing scarcity, and increasing equity per share, which were probably bought at $60 a share, and they go up, he's seeing a massive valuation.   If they Go down, he's still holding a massive profit.  And if the market reacts to his 'pricing, they go up as well.  

     

    If he buys the shares, and they GO DOWN, he's losing money.  If he buys at $100+ and they go up to 200, he's only up 100%, and he may have lost opportunities with that cash to triple his money or more. 

     

    In other words, he's PUMPING the stock, and looking for others to buy it, to make his worth more.

  • Reply 6 of 15
    Quote from WSJ 2011

    "Icahn first bought tiptoed into Motorola Inc. way back in the first quarter of 2007. In true Icahn fashion, he showed up in Motorola shares and promptly asked for a board seat and a big stock buyback. Back then, Motorola%u2019s big headache was collapsing demand for its Razr cell phones. (Remember the Razr? No? Exactly. The iPhone wasn%u2019t on sale yet.)

    In a statement released today, Icahn said the deal with Google %u201Cis a great outcome for ALL shareholders of Motorola Mobility.%u201D And then he took in a little personal pleasure: %u201CIn the past three years we have fought long and hard to separate Motorola Mobility from Motorola Solutions, as well as bring Sanjay Jha as co-CEO.%u201D

    And Icahn is right for his victory lap. While the Google guys made him a mint, they owe Icahn a debt of gratitude too. It%u2019s hard to imagine Google would have bought an intact Motorola. Thanks to Icahn%u2019s loud nudges for a breakup, Motorola Mobility ended up as a more manageable bite for Google."

    If Icahn can do the same (and he already started same play, no doubt), Apple will be history in three years. This response gives a little bit hope, but Wall Street is a tough enemy.
  • Reply 7 of 15
    MacProMacPro Posts: 19,251member
    margus1000 wrote: »
    Quote from WSJ 2011

    "Icahn first bought tiptoed into Motorola Inc. way back in the first quarter of 2007. In true Icahn fashion, he showed up in Motorola shares and promptly asked for a board seat and a big stock buyback. Back then, Motorola%u2019s big headache was collapsing demand for its Razr cell phones. (Remember the Razr? No? Exactly. The iPhone wasn%u2019t on sale yet.)

    In a statement released today, Icahn said the deal with Google %u201Cis a great outcome for ALL shareholders of Motorola Mobility.%u201D And then he took in a little personal pleasure: %u201CIn the past three years we have fought long and hard to separate Motorola Mobility from Motorola Solutions, as well as bring Sanjay Jha as co-CEO.%u201D

    And Icahn is right for his victory lap. While the Google guys made him a mint, they owe Icahn a debt of gratitude too. It%u2019s hard to imagine Google would have bought an intact Motorola. Thanks to Icahn%u2019s loud nudges for a breakup, Motorola Mobility ended up as a more manageable bite for Google."

    If Icahn can do the same (and he already started same play, no doubt), Apple will be history in three years. This response gives a little bit hope, but Wall Street is a tough enemy.

    Just curious, what is up with your input? Using XP on a PC?
  • Reply 8 of 15
    tallest skiltallest skil Posts: 43,399member
    Originally Posted by digitalclips View Post

    Just curious, what is up with your input? Using XP on a PC?



    Posting from appleinsider.com instead of forums.appleinsider.com, I bet.

  • Reply 9 of 15
    fracfrac Posts: 480member
    margus1000 wrote: »

    If..... ...... Apple will be history in three years.

    That kite will not fly.
  • Reply 10 of 15
    blazarblazar Posts: 270member
    I dont mind them keeping some cash hoard, makes opponents think twice... Which also keeps my stock price up.

    If its going to $200, it will do so with or without the buybacks most likely.

    I wouldnt mind if they upped my dividend i think.

    If they double their dividend within the next 7 years, my kids college tuition is in good shape :)
  • Reply 11 of 15
    Quote:

    Originally Posted by TheOtherGeoff View Post

     



    There's risk in that.  If apple buys shares, the  immediate returned value (When Apple buys a billion in shares, iCahn's shares go up by at least 2-4%) and this value is folded into iCahn's current holdings, as the buyback is increasing scarcity, and increasing equity per share, which were probably bought at $60 a share, and they go up, he's seeing a massive valuation.   If they Go down, he's still holding a massive profit.  And if the market reacts to his 'pricing, they go up as well.  

     

    If he buys the shares, and they GO DOWN, he's losing money.  If he buys at $100+ and they go up to 200, he's only up 100%, and he may have lost opportunities with that cash to triple his money or more. 

     

    In other words, he's PUMPING the stock, and looking for others to buy it, to make his worth more.


     

    What Icann is doing is stock price manipulation.

     

    Icann is only concerned about manipulating and increasing the price of the stock and has no concern about running the company.

     

    All actions he suggests in all of the companies he invests in is to increase the price of the stock; whether or not that contribute to the overall health of the company.

     

    As long as he is the minority share holder, his voice and therefore his influence can be limited.

     

    The more stock Apple owns the less Icann can buy, thus you shorten the leash on the barking dog.

  • Reply 12 of 15

    I think Apple should increase their dividend. If they want to attract a lot more investors, a dividend of 3% at least should be offered. ATT's dividend is over 5%. I'm getting 7% to 9% with several other stocks.

  • Reply 13 of 15

    Icann only cares about his own stock. Investors like me care as much or more about the company than the stock. I think increasing the dividend might be a better move, but Tim knows far better than the likes of me (or Icann).

  • Reply 14 of 15
    Apple's response was pertinent:

    'We'll do what we need to do, thanks'.

    I mistrust anyone who publicly states that the share price is over or undervalued. Share prices have no rhyme or reason. They can be very accurate and very inaccurate.

    Icahn is nothing but a parasite.
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