Carl Icahn drops push for more aggressive Apple share buyback
Billionaire activist investor Carl Icahn on Monday dropped efforts push for Apple to spend the bulk of its considerable sum of cash on its own shares, citing recent stock repurchases by the company as "so close" to fulfilling his original goals.
Icahn announced the repeal of his efforts in an open letter to shareholders. The backing off comes after Apple bought some $14 billion worth of its own shares in the last few weeks, marking the largest repurchase on record for such a short period.
"We see no reason to persist with our non-binding proposal, especially when the company is already so close to fulfilling our requested repurchase target," Icahn said.
Apple Chief Executive Tim Cook was "surprised" when shares in his company dropped 8 percent immediately following its quarterly earnings results. The pullback in shares of AAPL prompted the company to pounce on the opportunity in an "aggressive" fashion.
News of Apple's $14 billion investment in itself sent shares of Apple surging last week, and even earned positive comments from Icahn, who said the company's current trading price set by investors is "ridiculous." In a post to Twitter, he offered the advice, "Keep buying Tim!"
Icahn's efforts were also hurt by proxy advisory firm Institutional Shareholder Services, which issued a note On Sunday recommending that AAPL shareholders vote against his proposal. Icahn had asked shareholders to approve a $50 billion repurchase in the company's stock. Apple has spend $40 billion on shares in the past year alone.
ISS was also the second of the three major proxy advisors to recommend against Icahn's proposal, as Egan-Jones also advised investors to vote "no" last week.
Icahn's letter is republished in its entirety below:
Icahn announced the repeal of his efforts in an open letter to shareholders. The backing off comes after Apple bought some $14 billion worth of its own shares in the last few weeks, marking the largest repurchase on record for such a short period.
"We see no reason to persist with our non-binding proposal, especially when the company is already so close to fulfilling our requested repurchase target," Icahn said.
Apple Chief Executive Tim Cook was "surprised" when shares in his company dropped 8 percent immediately following its quarterly earnings results. The pullback in shares of AAPL prompted the company to pounce on the opportunity in an "aggressive" fashion.
News of Apple's $14 billion investment in itself sent shares of Apple surging last week, and even earned positive comments from Icahn, who said the company's current trading price set by investors is "ridiculous." In a post to Twitter, he offered the advice, "Keep buying Tim!"
Icahn's efforts were also hurt by proxy advisory firm Institutional Shareholder Services, which issued a note On Sunday recommending that AAPL shareholders vote against his proposal. Icahn had asked shareholders to approve a $50 billion repurchase in the company's stock. Apple has spend $40 billion on shares in the past year alone.
ISS was also the second of the three major proxy advisors to recommend against Icahn's proposal, as Egan-Jones also advised investors to vote "no" last week.
Icahn's letter is republished in its entirety below:
CARL C. ICAHN
767 Fifth Avenue, 47th Floor
New York, New York 10153
February 10, 2014
Dear Fellow Apple Shareholders,
While we are disappointed that last night ISS recommended against our proposal, we do not altogether disagree with their assessment and recommendation in light of recent actions taken by the company to aggressively repurchase shares in the market.
In their recommendation, ISS points out, and we agree, that "on the spectrum of options for allocating capital, the board appears to have been sluggish only in returning excess cash to shareholders," and even though the company has in place "one of the largest buybacks in history" we agree with ISS that this effort seems "like bailing with a leaky bucket" when "given the scale of the company's cash reserves."
That being said, we also agree with ISS's observation, taking into account that the company recently repurchased in "two weeks alone" $14 billion worth in shares, that "for fiscal 2014, it appears on track to repurchase at least $32 billion in shares." Our proposal, as ISS points out, "thus effectively only asks the board to spend another $18 billion on repurchases in the current year."
As Tim Cook describes them, these recent actions taken by the company to repurchase shares have been both "opportunistic" and "aggressive" and we are supportive. In light of these actions, and ISS's recommendation, we see no reason to persist with our non-binding proposal, especially when the company is already so close to fulfilling our requested repurchase target.
Furthermore, in light of Tim Cook's confirmed plan to launch new products in new categories this year (in addition to an exciting product roadmap with respect to new products in existing categories), we are extremely excited about Apple's future. Additionally, we are pleased that Tim and the board have exhibited the "opportunistic" and "aggressive" approach to share repurchases that we hoped to instill with our proposal. It is our expectation that Tim and the board continue to exhibit this behavior as fiduciaries to the shareholders since they clearly seem to agree that our company continues to be extremely undervalued, and we all share a common optimism with respect to the company's bright long term future.
Sincerely yours,
Carl C. Icahn
For more information on this and other topics, follow me on Twitter at: @Carl_C_Icahn
https://twitter.com/Carl_C_Icahn
Comments
So when does he start selling his stock. Its obvious now that he's not able to push his weight around in money (and stock amounts) like he's done with other companies.
Cue CNBC studio camera 1 - Icahn PR fluff "devoid of journalism" segment in 10,9,8......
???????????? HOORAY! WE WON! ????????????
“I don’t always concede defeat, but when I do, it’s using a pathetic excuse that toes the party line and makes me look like a total idiot.”
“I don’t always concede defeat, but when I do, it’s using a pathetic excuse that toes the party line and makes me look like a total idiot.”
Don't all of your posts make you look like an idiot?
Nice, quick, up move on AAPL this morning. I snapped up some shares when AAPL dropped to around 517 premarket this morning and boom!, more than $10 up in a real short time. That's how I like to see AAPL move!
high-fives all around!
Carl's such a tool. I'm delighted to see him get embarrassed again.
One thing for sure, he doesn't seem to understand high-tech.
If Apple keeps being smart and do there buybacks on big stock price drops like they just did there is no reason to push for is motion indeed.
Carl's such a tool. I'm delighted to see him get embarrassed again.
One thing for sure, he doesn't seem to understand high-tech.
That guy is pro Apple and imo he gets it. Not sure I understand why so much hate... He did "wake up" Apple to be smarter about there cash, imo he done is job and helped investors.
I'm suspicious. What is he up to? Maybe Apple should buy back more shares after all?
Bunch of lazy ass no talent animals called investors!
I'm suspicious. What is he up to? Maybe Apple should buy back more shares after all?
imo he will hold his shares until Apple P/E is in the S&P500 average. And Apple float is so large he could dump 3 billions worth of shares over a week and it wont affect the stock price that much. There is no need to worry to much about is exit strategie.
Icahn raised twice and folded when Apple called...and they still didn't show their hand.
Nobody trusts Icahn. He may be sincere when he protests that his maneuverings are in the interest of long term AAPL stockholders but a career spent as a corporate raider, greenmailer, and hit-and-run boardroom shakedown artist has left him with zero trustworthiness. Meh, he can always seek solace in his bank account.
Does Apple Insider publish each every open letter by every Apple stock holder? Then why bother to publish his letter. Why give the guy a platform?
Broaden your scope a bit. Make fun of his greed and show how pitiful he is. Portray him like Charles Dickens did Scrooge in "A Christmas Carol." Show you know that there's more to life than the latest gadget or newest app.