Icahn turns up heat on Apple, hints at proxy fight over $150B buyback

Says CEO Tim Cook 'doing a fine job,' but blasts the company's board for not taking on debt to buy back shares

Billionaire trading activist and agitator Carl Icahn yesterday turned the heat up on Apple, saying he would "test the waters" with a proxy fight if the company's board doesn't yield to his demand for an historic $150 billion stock buyback.

Icahn went on a media blitz Thursday, making the proxy fight comment on CNBC, which was preceded by an interview on Bloomberg TV and after he launched a new website, Shareholders' Square Table on which he posted a letter he'd sent to Apple CEO Tim Cook.

In those interviews and his letter, Icahn repeated his demand that Apple boost its share price by buying $150 billion worth of stock, a move he called a "no-brainer."

"We're not in this for the short term, for the quick turn," Icahn said on Bloomberg TV, of his Apple investment, which now amounts to 4.7 million shares or about half of 1% of the company. Icahn's holdings were worth approximately $2.5 billion as of the 10 a.m. ET share price. "But Apple's not a bank. Shareholders didn't buy share for Apple to be a bank."

That remark was a reference to Apple's huge horde: As of June 30, Apple held $147 billion in cash, securities and other investments.

Icahn repeatedly said he had no problem with Cook and the Apple management team. "I respect Tim Cook, I think he's doing a fine job. We have no complaints about the management there, as far as what they're doing in technology," said Icahn, who sometimes agitates for management changes at the companies he targets.

But the 77-year-old billionaire -- his current worth of $20 billion put him as the 26th-richest person on the planet, just five spots behind Google co-founders Sergey Brin and Larry Page, according to Forbes -- had nothing nice to say about Apple's board of directors.

"We're not criticizing Tim Cook, we're criticizing a board that won't do [the buyback]," Icahn said on Bloomberg TV.

In his letter to Cook, Icahn elaborated.

"It is our belief that a company's board has a responsibility to recognize opportunities to increase shareholder value, which includes allocating capital to execute large and well-timed buybacks," Icahn wrote. "Apple's Board of Directors does not currently include an individual with a track record as an investment professional. In my opinion, any further delay in executing the buyback we hereby propose will reflect this lack of expertise on the board."

Icahn has been banging the buyback drum since August, when he revealed on Twitter that he had a "large position" in the company. Since then, he has tweeted about scheduling a dinner with Cook, then after the meal that he had again pressed the chief executive on his $150 billion brainstorm.

Icahn, who typically buys a stake in a company to demand changes and advocate the use of cash reserves to boost the share price, again argued that Apple should borrow billions to fund the buyback. While Apple has a massive cash reserve, much of it stemmed from foreign sales and is banked outside the U.S. The company has resisted calls to repatriate it to the U.S. because it would have to pay taxes on those monies.

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Icahn's new website, Shareholders' Square Table, portrays his investment activism as storming the corporate castle controlled by greedy boards and CEOs. (Image: Shareholders' Square Table.)
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