Activist investor Carl Icahn means trouble with a capital 'T' for Apple
At best, his presence will be a distraction for CEO Tim Cook, not exactly what the doctor ordered for Apple
Computerworld - Corporate raider and investment agitator Carl Icahn put eyes on Apple yesterday, announcing he now had a "large position" in the company and had urged CEO Tim Cook to boost a stock buyback program that has already committed $60 billion to removing shares from the market.
"We currently have a large position in Apple," Icahn tweeted Tuesday. "We believe the company to be extremely undervalued." In a follow-up tweet, Icahn added, "Had a nice conversation with Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly."
Apple's stock received the usual "Icahn lift," a pop in trading and share price that inevitably follows news that the billionaire investor has bought a major chunk of a company's shares. By the end of trading Tuesday, Apple's stock price was up 5% to $489.57 per share.
But for one analyst, Icahn's interest in Apple was a nuisance at best and trouble -- with a capital "T" -- at worst.
"This is absolute trouble," said Patrick Moorhead of Moor Insights & Strategy. "There's not one single positive thing [Apple] can take away from his interest, no matter how much you search."
Moorhead based his take on Icahn's reputation -- he's known for agitating for change -- but more importantly, on the investor's role in Michael Dell's ongoing bid to privatize the PC maker that carries his name. Moorhead, who in years past had worked at Dell rival Compaq and supplier AMD, has kept a close eye on Dell for two decades. Recently, he blasted Icahn's counter-proposal.
Icahn typically bulls into a company to demand management changes and advocate the use of cash reserves to boost the share price, including paying higher dividends or buying back shares.
The latter is apparently what Icahn is after at Apple.
In 2012, Apple said it would use $10 billion of its cash horde to fund a share buyback program that would retire shares and thus increase the value of those still remaining. In April, the Cupertino, Calif., company increased the buyback program to $60 billion, which is to be spent through 2015.
Icahn wants more money for buybacks and an acceleration of the program.
At the close of the quarter that ended June 30, Apple had nearly $147 billion in cash, securities and other investments. Most of that, however, was banked overseas. Apple has resisted calls to repatriate it to the U.S. because it would have to pay taxes on those monies.
Apple borrowed some of the money it will spend on the stock buyback program.
In an interview on Tuesday with the Wall Street Journal, Icahn suggested Apple borrow more money -- since interest rates remain low -- to fund a larger buyback.
- Apple has bigger plans than just song ID with Shazam deal
- Mac Pro shortage sets record as worst Mac production debacle
- Apple slates WWDC for June 2-6, sets up ticket lottery
- Apple patches Safari's Pwn2Own vulnerability, two-dozen other critical bugs
- Microsoft's free OneNote vaults to top of Mac App Store chart
- Apple discounts iPhone 5C 8%-9% in five markets via storage cuts
- Apple hands stock worth $12.1M to top execs in retention deal
- Hands on: Apple's Mac Pro is the fastest Mac ever
- Apple CFO to retire in September after he cashes in $53M stock award
- Apple's CarPlay to spark mobile apps war in your car
- Path Selection Infographic Path Selection Infographic
- Hyperconvergence Infographic A wide range of observers agree that data centers are now entering an era of "hyperconvergence" that will raise network traffic levels faster...
- Preparing Your Infrastructure for the Hyperconvergence Era From cloud computing and virtualization to mobility and unified communications, an array of innovative technologies is transforming today's data centers.
- How WAN Optimization Helps Enterprises Reduce Costs If you wanted to break down innovation into a tidy equation, it might go something like this: Technology + Connectivity = Productivity. Productivity...
- Cloud Knowledge Vault Learn how your organization can benefit from the scalability, flexibility, and performance that the cloud offers through the short videos and other resources...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All Smartphones White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!