Feeds

Carl Icahn broadcasts his $150bn Apple shakedown effort to world+dog

Memo disses Cook & Co.'s 'lack of expertise' in financial matters, extols own success

High performance access to file storage

Activist investor Carl Icahn has reiterated his recommendation to Apple CEO Tim Cook that Cupertino blow $150bn to buy back company stock, and this time he has shared his reasoning with world+dog.

"We find it difficult to imagine why the board would not move more aggressively to buy back stock by immediately announcing a $150 Billion tender offer (financed with debt or a mix of debt and cash on the balance sheet)," Icahn wrote on his newly launched website Shareholders' Square Table in an public missive titled "Our Letter to Tim Cook" (registration required).

The letter references the dinner meeting between Icahn and Cook on September 30, during which the billionaire investor proposed the $150bn buyback and said that he would "continue dialogue in about three weeks."

He's a bit late – it's been three and half weeks – but the message hasn't changed: Apple stock is undervalued and Cook & Co. should snap up a hefty chunk of shares to take advantage of that low valuation. And, of course, make Icahn and other Apple investors a thick slurry of profit.

"As we proposed at our dinner," Icahn wrote, "if the company decided to borrow the full $150 billion at a 3 per cent interest rate to commence a tender at $525 per share, the result would be an immediate 33 per cent boost to earnings per share, translating into a 33 per cent increase in the value of the shares."

That's just the immediate gain. Icahn also expressed the opinion that if the buyback is executed, in three years the share price will grow to $1,250.

He also noted that he's putting some of his money where his mouth is. When he and Cook met on September 30, his Apple holdings totaled 3,448,663 shares and the stock price was $467; Apple stock is now around $530 per share. Since that meeting, Icahn has added 1,282,076 Apple shares to his portfolio, raising the total value of the position to around $2.5bn, "and we currently intend to buy more."

There are plenty more to buy. As of Thursday morning, Apple's market capitalization was $476.9bn.

Icahn also argued that time's a-wastin'. "When we met," he wrote, "you agreed with us that the shares are undervalued. In our view, irrational undervaluation as dramatic as this is often a short term anomaly. The timing for a larger buyback is still ripe, but the opportunity will not last forever."

Icahn is not what you might call a shrinking violet. Nor is he one to spare others of his opinion on their financial acumen.

"Apple's Board of Directors does not currently include an individual with a track record as an investment professional," he wrote. "In my opinion, any further delay in executing the buyback we hereby propose will reflect this lack of expertise on the board."

Why is he so confident? Simple. "My firm's success and my expertise as an investor would be difficult for anyone to argue," he sniffed.

Just what Tim Cook needs: a toffee-nosed terrier tugging on his trouser leg. ®

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Nokia offers 'voluntary retirement' to 6,000+ Indian employees
India's 'predictability and stability' cited as mobe-maker's tax payment deadline nears
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
Adrian Mole author Sue Townsend dies at 68
RIP Blighty's best-selling author of the 1980s
Analysts: Bright future for smartphones, tablets, wearables
There's plenty of good money to be made if you stay out of the PC market
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.