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Icahn to press Apple CEO Tim Cook on stock buyback over dinner

Investment agitator ups the ante in campaign to convince Apple to boost stock price

August 23, 2013 12:56 PM ET

Computerworld - Carl Icahn, the billionaire activist investor, said yesterday that he and Apple CEO Tim Cook will dine together next month, when they will discuss Icahn's proposal to boost the company's stock buyback program.

"Spoke to Tim. Planning dinner in September. Tim believes in buyback and is doing one. What will be discussed is magnitude," tweeted Icahn Thursday during the hours-long outage of the NASDAQ exchange.

It was the third time in the last week-and-a-half that Icahn, known as a corporate raider and investment agitator, used Twitter to announce dealings with Apple. On Aug. 13, Icahn revealed that he had acquired "a large position" in Apple, that he believed the stock to be undervalued, and that he had spoken with Cook about an increase in the company's already-under way buyback initiative.

Thursday's tweet was classic Icahn, said Patrick Moorhead, principal analyst at Moor Insights & Strategy.

"It's all part of the Icahn playbook. Upping the ante," said Moorhead in an email.

Moorhead, who has been critical of Icahn's part in the continuing saga of Michael Dell's attempt to take his company private, had earlier said the investor's interest in Apple was nothing but trouble.

"This is absolute trouble," Moorhead said two weeks ago when Icahn disclosed he had bought Apple stock. "There's not one single positive thing [Apple] can take away from his interest, no matter how much you search."

Moorhead has said that, at best, Icahn will be a distraction to Cook and Apple.

Icahn typically buys a stake in 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 seems to be Icahn's strategy with Apple.

The Cupertino, Calif. company is in the midst of an aggressive buyback program. Last year, Apple said it would use $10 billion to fund buybacks 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, however, wants even more money spent on buybacks -- even if Apple has to borrow to do so -- and to accelerate its schedule.

Icahn had not revealed the size of his holdings. In filings with the U.S. Securities and Exchange Commission (SEC) for the quarter ending June 30, Icahn said he owned no Apple stock, meaning that his purchases began on or after July 1. He is required to disclose his holdings each quarter, so Icahn's holdings will be made public in October, after the close of the third quarter.

That Icahn tweets about Apple and his investment interest is unusual -- enough that some on the investment site SeekingAlpha have wondered why it's not considered stock manipulation -- but it is perfectly legal.

In April, the SEC ruled that companies may use social media such as Facebook and Twitter to make announcements.

A day before his first tweet about Apple, Icahn's website noted that he would use his Twitter account. "It is possible that the information that Mr. Icahn posts on Twitter (which may include information regarding companies in which we and/or Mr. Icahn have or may be contemplating an investment position) could be deemed to be material information," the site stated.

Icahn's dinner date with Cook hasn't come cheap -- estimates have pegged his stake at between $1 billion and $1.5 billion -- but then neither is Cook's time.

In May, an anonymous bidder plunked down $610,000 at an online auction to win a 30- to 60-minute meeting with Cook over coffee. Cook's offer was part a celebrity auction on CharityBuzz to raise money for the RFK Center for Justice and Human Rights, an international human rights organization based in Washington, D.C.

covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at Twitter @gkeizer, on Google+ or subscribe to Gregg's RSS feed Keizer RSS. His email address is gkeizer@computerworld.com.

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