Icahn: AAPL Needs a $150B Stock Buyback

| Apple Stock Watch

Following a dinner with Apple CEO Tim Cook Monday night, big time investor Carl Icahn went to Twitter to say that he's pushing the Mac, iPhone, and iPad maker to invest US$150 billion into its stock buyback program. Mr. Icahn currently has a stake in Apple worth more than $1 billion, and clearly is in a position to bend. Mr. Cook's ear.

In a post on Twitter Tuesday morning, Mr. Icahn said,

Had a cordial dinner with Tim last night. We pushed hard for a 150 billion buyback. We decided to continue dialogue in about three weeks.

The two have already talked about high finances and whatever else the extremely wealthy discuss. In August Mr. Icahn said he had be speaking with Mr. Cook about expanding Apple's stock buyback program and that they would be speaking again soon.

Carl Icahn wants Apple to invest even more in its stock buyback programCarl Icahn wants Apple to invest even more in its stock buyback program

Apple's current buyback program is set at $60 million and should be completed by the end of 2015. Mr. Icahn, however, thinks Apple's stock is undervalued and that the company needs to more aggressively buy back its own shares.

With Mr. Icahn's revelation that he'll be talking again with Mr. Cook in about three weeks indicates Apple's CEO is at least open to the idea of increasing the stock buyback. Waiting three weeks also gives Mr. Cook time to get through launching new iPads and OS X Mavericks -- assuming that's on his near term schedule.

Apple is currently trading at $485.33, up 8.58 (1.80%).

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Mr. Icahn clearly wants to see Apple buy back more of its stock, which makes sense because that should help drive share prices even higher. He holds over $1 billion in Apple stock, so he stands to make a tidy profit once the buyback program is complete in 2015.

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Lee Dronick

What does a buyback mean to the small stockholder such as I?


$150 million won’t buy back a lot of stock…

Lee: In principle, a stock buyback shouldn’t make any difference. There would be less outstanding stock, but obviously the company would be worth less money. So the value per share should be unchanged. Except if a stock is currently undervalued or overvalued; in that case the company would buy back shares below/above their actual value which would make the remaining shares more / less valuable.

But in reality, stock price may be based on demand and not any real value; a buyback adds demand and could make the share price go up (which is just irrational). Which is something Mr. Icahn would love.

Hope Tim Cook told him where to stick his shares.


Isn’t it also the case that Apple is borrowing money from Wall St to finance the current buyback? If Apple ‘should, God forbid’ stumble over the next few years, all that borrowing could come and haunt them?
Having said that I don’t really understand the risks involved….


+ isn’t he actually referring to an extra 50B on top the already committed 100B?


Robbo, Apple was borrowing money because they didn’t want to move profits from non-US countries to the USA for tax reasons. So the money _is_ there, just not in the right place.


Let’s see now:
Buy 2B worth of AAPL. Check.
Convince Apple to increase buy back program to 150B. Check.
Buy back program climbs to 140B and price goes up as planned. Check.
Sell 2B investment for 2.5B, thank you Apple. Check.

Sounds perfectly legit to me. No!


A buy back does nothing to make Apple more efficient, more competitive, or more profitable.  It is a dumb way to bolster the stock’s price because the effect is purely temporary.  I hope Tim put that mountebank in his place, i.e. on his ass, on the street..  Politely, of course.

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