“It’s hard to see how the current rate of purchases can support [Apple Inc. (AAPL)] stock for another 9 months, much less 2 years,” Kyle Spencer writes for Seeking Alpha. “That’s where Carl Icahn comes in.
“In a nutshell, Icahn’s pitch is that Apple will actually save money by borrowing at historically low interest rates to increase both the size and rate of its buyback program, as the company will no longer have to shell out dividends for those shares,” Spencer writes. “Icahn is also counting on the fact that a bull run in the stock will squeeze short sellers by forcing them to cover their positions. Finally, a price run up may very well reverse the bearish narrative and hand the consensus back to the bulls. If you believe in free lunches, it’s a win-win all around.”
Spencer writes, “On the other hand, the success of the Icahn Proposal will ultimately depend on Apple having new, exciting products in the pipeline.”
Much more in the full article here.
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Apple stock tests $500 level for first time since January – August 14, 2013
How Carl Icahn will accelerate Apple’s ascent – August 14, 2013
Billionaire Carl Icahn says Apple shares could trade at $700 with increased buyback program – August 13, 2013
Carl Icahn spells the end of an era at Apple; this is the end for the Apple that you knew and loved – August 13, 2013
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Apple stock goes vertical: The Carl Icahn effect – August 13, 2013
The buy back will also strengthen Apple’s control over vultures like icahn.
No, it won’t. A stock buy back does not magically provide Apple with more control. It simply reduces the number of shares of common stock on the market, making each remaining share represent a slightly larger piece of ownership of Apple. Assuming that Icahn retains his shares, he would actually own a larger percentage of Apple after the stock buy back.
Who said anything about magic?
Apparently, Spencer has never heard of P/E. AAPL’s now stands at 12.55. GOOG’s is at 26.30. It’s the number of years of earnings one would have to accumulate in order to earn back the share price paid. If AAPL’s earnings can’t sustain its share price, what will be GOOG’s fate?
AAPL closed at 500.00 on January 18. That is the last time this year the stock closed at 500 or above. If it’s your fault Carl, thank you, but get the hell out of the way, you don’t own enough AAPL to tell TC or the board anything.
“Spencer writes, ‘On the other hand, the success of the Icahn Proposal will ultimately depend on Apple having new, exciting products in the pipeline.’”
No! The long term stock price has absolutely nothing to do with Icahn’s proposal. It DOES have everything to do with Apple’s products and services. Icahn’s proposal is NOT supported by Apple’s products or services. The two are 100% independent. One is based upon pure greed. The other is based upon building and sustaining a company.
To go one step further on Shadowself’s excellent point, one is built on the ability of a hedge fund manager who is intent on profiting on the short-term basis of the backs of both Apple and the common share holder for self greed ($billions of dollars.) The other is built of the backs of the everyday shareholder who both is investing and living off Apple stock geared toward the long-term.
But unlike those who actually make the products with their brains and labour, Icahn receives special tax treatment for his profits due to AAPL because stock represents money used for investment. Hm…
The success of the Icahn proposal depends upon Apple politely telling Icahn ‘Don’t call us, We’ll call you.”
Sounds like spending money to save money.
At this week’s big event sale, buy now and save!
It’s just rhetoric to empty one’s pocket of hard earned cash. You can’t get at that $100+ billion cash of Apple’s, if you can’t trick them into letting go of it.
They should do a Dell and buy it all back.
1. Debt is debt is debt — no matter what the interest rate is—and once acquired, it still has to be repaid. Until it’s repaid, someone else (I.e. the lenders) have influence.
2. Icahn couldn’t care less about Apple’s future, he’s after the cash–period. He’ll pull out all the cash he can, up to and including loading Apple with all the debt necessary to put all possible cash (for instance, Icahn would push Apple to rollover capital assets into debt–mortgage buildings and take the cash as dividends) into his own pocket right now–even if doing so put Apple into a death spiral. By the way, this is how Bain Capital (Romney et al.) bilked companies in the past.
On this case Icahn can go to hell.