Icahn vs. Cook
Today Carl Icahn and his Icahn Capital LP wrote a letter urging Apple CEO Tim Cook to buyback more AAPL shares (below). Icahn is an aggressive stakeholder who has transformed many smaller companies. Apple is surely the biggest Icahn has ever attempted to crack.
We are pleased that Apple has directionally followed our advice and repurchased $80 billion of its shares (yielding the company’s shareholders an excellent return), but the company’s enormous net cash position continues to grow while the company’s shares are still dramatically undervalued. With Apple’s shares trading for just $128.77 per share versus our valuation of $240 per share, now is the time for a much larger buyback. We appreciate that the Board just increased the share repurchase authorization by $50 billion, and that it continues to prioritize share repurchases over dividends (as it should). We again simply ask you to help us convince the board of how these two underlying issues (inefficient net cash growth and share undervaluation) persist and combine to enhance the opportunity for accelerated share repurchases in greater magnitude. We also ask you to help us convince the board that this is not a choice between investing in growth and share repurchases. As our model forecasts, despite more than 30% growth in R&D annually through FY 2017 to $13.5 billion (up from $1.8 billion in FY 2010) and your updated capital return program, Apple’s net cash position (currently the largest of any company in history) will continue to build on the balance sheet.
Icahn Agitates
Icahn Announces, Apple Powers Ahead
Quotable:
“We have to make sure, at Apple, that we stay true to focus, laser focus – we know we can only do great things a few times, only on a few products.” – Apple CEO Tim Cook
“Don’t go in and tell somebody else how to run their business.” – Carl Icahn
“Companies that get confused, that think their goal is revenue or stock price or something. You have to focus on the things that lead to those.” – Apple CEO Tim Cook
“Anyone that makes me a quarter of a billion dollars, I like.” – Carl Icahn
“Apple has a culture of excellence that is, I think, so unique and so special. I’m not going to witness or permit the change of it.” – Apple CEO Tim Cook
“I’m a cynic about corporate democracy and boards.” – Carl Icahn
“I think two people with strong points of view can appreciate each other even more.” – Apple CEO Tim Cook
“You learn in this business: If you want a friend, get a dog.” – Carl Icahn
