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Carl Icahn's Apple stake surpasses $3 billion mark

updated 12:44 pm EST, Wed January 22, 2014

Investor continues to push for stock buyback program

Carl Icahn's investment firm has acquired another $500 million in Apple stock during the past two weeks, and now holds over $3 billion in Apple shares, according to a Twitter post by the investor. In other posts, he calls investing in Apple a "no brainer" at its current share value, and continues to push for an expanded share buyback program. Icahn claims that Apple is "doing great disservice to shareholders," and promises another letter on the topic in the near future.

Apple is already engaged in a buyback program that will cost it $60 billion by the end of 2015. Icahn wants the program to grow to by another $50 billion, and have that take effect in 2014. Apple is officially opposing the idea, but will have to contend with a proposal vote at its annual shareholders' meeting, scheduled for February 28th. While the proposal would only be advisory if enacted, it could put pressure on Apple executives.

The company would have to go deeper into debt in order to finance Icahn's buyback. Another reason for opposition may be Apple's stated philosophy about its cash reserves, which is that it wants to keep them for deals, business acquisitions, and as a fallback in tough times.

By Electronista Staff
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  1. climacs

    Mac Enthusiast

    Joined: 09-06-01

    Just look at Icahn's track record or if that's too much work, just consider that he's not in AAPL for the long haul. Of course he wants to get his hands on that $140B+ cash. As a shareholder I would like to as well, but I am in it for the long haul unlike him. That fantastic amount of money Apple is sitting on is constrained by the fact that much of it is overseas and will never be repatriated until corporate taxes are lowered. Why would Apple pay as much as 35% of it to the government if it doesn't have to? (leaving aside all questions about whether they *should* or *ought to* do so.) Of the cash available to it that is inside the US, Apple is already paying a substantial part of it out in dividends, and it did so very shrewdly by financing those dividends by selling bonds with nearly perfect timing with respect to the interest rate on those bonds. The plan is that the bonds will be paid back with future US-based income, leaving intact the tens of billions of dollars Apple has onshore. Furthermore, that huge bankroll is insurance not only a massive rainy-day fund; it also affects the calculations its competitors make with respect to future acquisitions. Although Apple - unique among large high-tech firms - is not in the habit of making large acquistions but rather smaller, more-targeted ones, the fact of having that huge bankroll means Apple can always outbid Google or Microsoft if it wishes to. Google and Microsoft know this. So let's say Google wants to buy Initech, all Apple would have to do to raise the price Google pays for Initech would be to initiate discussions with Initech or even just put into circulation a rumor that it might be interested in Initech.

    I hope Tim Cook continues to politely ignore Carl Icahn. Fortunately AAPL is so expensive that even Icahn cannot hope to buy or control enough shares to dictate to its board what they should do. He can only harangue and issue press releases and maybe have lunch with Cook to persuade him in person.

  1. prl99

    Mac Enthusiast

    Joined: 03-24-09

    Thank you for your extensive explanation. I totally agree. I finally am a shareholder and would rather see Apple not in debt, which is contrary to the way just about every other corporation operates. In my opinion, Apple shouldn't have to pay US taxes on money earned outside the US no matter how much the penny pinchers in DC want it.

  1. jdonahoe

    Junior Member

    Joined: 07-05-06

    I too am a long holder of Apple stock and I think it's a "no brainer" for Apple to ignore Icahn.

  1. TheGreatButcher

    Mac Enthusiast

    Joined: 06-11-00

    I wish Mr. Icahn would take more of an interest in FB, AMZN, and GOOG.

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