Is Apple about to miss a ‘golden opportunity?’

“Billionaire activist investor Carl Icahn tweeted on Tuesday morning about his dinner with Apple’s CEO Tim Cook. Carl Icahn had continued to put pressure on Tim Cook for a $150 billion buyback of Apple’s (AAPL) shares,” Junius writes for Seeking Alpha. “Although the two did not come to any agreement, they have promised to continue their discussion in the next few weeks.”

“In a CNBC interview, Carl Icahn explains that a stock buyback for Apple was a ‘no-brainer’ and it ‘makes no sense’ not to do so, given that the company trades at such low multiples,” Junius writes. “Icahn explains that the current low interest rate environment means that it is a ‘golden opportunity’ to fund such a large scale buyback, and that this opportunity is not going to stay around forever.”

Junius writes, “While Carl Icahn’s call for greater return of capital to Apple’s shareholders is not new, continued pressure from reputable activist investors, including David Einhorn, should make the merits of greater shareholder redistributions clear to Apple’s management. The ability to obtain funding for a massive stock buyback at the currently low interest rates is not likely to stay around for much longer, and these conditions have been historically extremely rare. Apple’s currently low valuation multiples further strengthens the case that the timing for such a buyback is unlikely to get much better.”

Read more in the full article here.

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Apple should not bow to Carl Icahn – October 1, 2013
Carl Icahn says firm now has $2 billion in Apple shares; another meeting with Apple in 3 weeks – October 1, 2013
Carl Icahn demands $150 billion from Apple – October 1, 2013
Will Carl Icahn pick a fight with Apple? – October 1, 2013
Tim Cook to meet with Carl Icahn on Monday in New York City – September 26, 2013
Carl Icahn scoops up Apple stock on post-iPhone event plummet – September 13, 2013
Carl Icahn buys ‘quite a bit more’ Apple shares following unveiling of iPhone 5s and iPhone 5c – September 11, 2013
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Carl Icahn to dine, discuss buybacks with Apple CEO Cook in September – August 22, 2013
Icahn to meet with Apple CEO Tim Cook in September – August 22, 2013

46 Comments

    1. Further… reputable and either Einhorn or Icahn don’t go together.

      As has been said here many, many times: These guys are only out for their short term profits. They have ZERO care about what happens to Apple after they get their money and leave.

    2. Activist doesn’t work, either. Makes me sick to compare these greedy short-sighted casino-style “investors” screwing up good companies and subverting the purpose of the market.
      The activists (real ones on real issues) I know are trying to make the world a better place for everyone, not get rich quick.

      1. That’s not happening. Interest rates are low because no one can qualify for a mortgage anyway. Plus banks don’t want to lend right now; they’re making more money on their investments than they make on lending.

      1. @ JWW. Just suppose Apple does what sickan & iencorn want, so there are no shares because Apple have bought them all.

        How does the stock increase in value if there are non to sell?

        Now the banks get jittery because they no longer have a stock value for Apple inc. so they demand instant repayment or else they will bump up the interest rate Apple has to pay because they no longer have a market value. Does this ring a bell with what happened with house prices and mortgages? Who made a killing from the credit crunch? The house buyers?? So you want Apple inc. to become a house buyer???

        YOU ASSWIPE!!!! Think before you blog!!!!

  1. I agree with Icahn. It is a “no-brainer”!

    Borrow cheap money to buy a stock whose share price is artificially depressed.

    Geezz, guys. Wake up! The market is giving us a gift. Apple can borrow money at 2-4% and buy it’s stock for under $500 a share. It should borrow all the money is can and buy ALL the shares it can possibly buy.

    Apple stock is going to $600, $700, $1,000. And it won’t be long before we hit those prices.

    BUY CHEAP! and Apple stock is cheap right now.

    Icahn is giving good advice, even though he may be a dickhead and can’t be trusted. Who cares? It’s still good advice.

    Mr. Cook, BUY APPLE, BUY APPLE, BUY APPLE! 🙂

    1. Have you even reviewed in detail the financing Apple did so far? I have. I extremely doubt you have.

      You have no idea what the downsides are.

      Go review the actual financing and long term debt Apple must incur to do a buyback like what Icahn is suggesting, and your position will change immediately — unless, of course, you don’t give a damn about Apple and only care about what profits you can reap in the short term. In that case there’s no hope for you.

      If Apple could do a massive buyback WITHOUT incurring more debt, I’d be 100% for it. Unfortunately, that’s NOT the case. Apple incurring more debt to do such a massive buyback is absolutely asinine.

      1. In my view, Apple shouldn’t expand the buyback unless they are absolutely sure that their earnings will balloon over the next couple of years.

        It might be wiser to extend the buyback after this one is complete. No need to rush things, despite the historic borrowing opportunity.

          1. Apple did not have to beg money from Microsoft. That is NOT at all how it came about. Anyone who truly believes that Apple had to grovel to Microsoft to get money from them does not know the details of the situation.

            1. Actually the details about Apple financing and also the Microsoft deal are well-known. But please feel free to inform all of us poor uninformed about the minute details of Apple financing. As well as the inside story about Apple’s deal with Microsoft. You’re simply fabulous! Aren’t you?

      2. Just curious but what exactly about Apple’s actual financing to date is a problem? I haven’t seen the details so I don’t know.

        But based on the little I’ve read on the topic, it seemed like the money that Apple is paying on interest is more than made up for by not having to pay dividends on the shares they repurchased. Is that not the case ?

        1. Honestly, the issue could be at Icahnis forcing up the price of the stock now by using these rumors. Without these rumors, Apple could already be buying a bunch of its stock back under the existing buyback plan. Icahn is just making things more expensive for Apple.

    2. Apple doesn’t benefit from its stock once it is purchased. The stock is retired as treasury stock. So it’s not like Apple gets to sell its own stock later (unless it goes through the process to issue new stock, including all of the regulations, filings, and costs).

      The best reason for Apple to buy its stock is to get rid of Wall Street, hedge funds, and investors like Icahn. Then all this nonsense about needing to give money back to the shareholders can go away. That’s about it.

      1. If you think they used their own money to buy APPL you ought to think again. None of these guys use their own money, certainly not in a time of low interest rates. Why do you think they are hounding Tim?

  2. We can only hope that they will “miss” it.

    Wall Street is short sighted – they carry about becoming even richer right now – they do not care about Apple’s future if they can cash in now, and then feed off the carcass later.

    Let Apple use their cash hoard the way that most makes sense to propel them in the future.

    … and, of course, borrow money from us to do the stock buyback (yes, I know all the reasons why instead of repatriating foreign funds).

    Rape and pillage – this is what Wall Street knows. They’ve done it to the American people, will do it again. Capitalism is good, but in its present iteration is self-destructive. If only 1 to 5% see the benefit of economic growth, it cannot be sustained. I don’t think they care at all about the future, just their wealth right now.

    They’ll end up, with (their) politician’s help, crashing the country (again), but at some point the pieces can’t be put back together again. It won’t matter if they have billions of dollars if they aren’t worth anything.

    We are in all of this together – until we figure out how to benefit everyone it cannot be sustained, it carries in it the seeds of its own destruction – greed (idea of capitalism is sound – but current “circus” allows pure money plays that add no value, and in some cases come crashing down and hurting everyone except the ones who made it happen – why aren’t the in prison again…?). Predatory economics (modern Atilla the Hun emulators) are doomed to fail. They probably don’t care, as long as it happens after they are gone (and by the way – won’t take a single penny with them to face the One who cares about how we treat one another, not whether we have riches and power)

    Sorry for ranting – I just hate seeing Wall Street trying to boss Apple around and tell them what is supposedly good for Apple’s business, but in reality is only self-interest.

  3. What you borrow, you have to pay back.

    The market wants Apple to do this so they have some more leverage over them. They really hate it that Apple have 150BB in the bank and they can’t access it. Of course they forget that most of it is overseas. The buyback puts equity back into the market that previous was in Apple’s hands.

    There are tax incentives for this so it is a legitimate approach for saving money but in no way will it impact Apple’s share price.

    1. It most definitely will affect the share price. Less shares means more ownership of the company per share. Supply going down while demand remains the same means higher prices.

      Of course, I’m assuming that demand will remain the same, which may not happen (although I don’t see why not).

      The real question is whether an increased buyback will weaken Apple in the long term. We could see shares doubling if Apple gets into payments. At that point, it might be better to issue a buyback as a defensive move to prevent the stock from cratering again.

  4. Why does this site suck so badly in Safari? If I use Chrome, the pages load almost instantly, but in Safari I get lots of blank white and a spinning beach ball. Or maybe it’s just Safari sucking?

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