Photo: Huffington Post
After taking an undisclosed “large position” in Apple last month, rumored to be in excess of $1B, prominent investor Carl Icahn said he thinks Apple and CEO Tim Cook should do a larger buyback. Now, following a scheduled meeting with Tim Cook in New York yesterday, Icahn says he “pushed hard for a 150 billion buyback” during a “cordial dinner”:
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.
— Carl Icahn (@Carl_C_Icahn) October 1, 2013
While Apple announced earlier this year that it would return around $100 billion to shareholders by the end of 2015 as part of its $60 billion buyback program and increased dividend, Icahn previously told Reuters he thinks Apple is capable of doing a $150 billion buyback by borrowing the money at 3 percent:
“If Apple does this now and earnings increase at only 10 percent, the stock – even keeping the same multiple currently – should trade at $700 a share,” Icahn said in a phone interview. Apple has “huge borrowing power, little relative debt and trades at a low multiple.”
As noted in his tweet above, Icahn says he will resume talks with Cook regarding the buyback in three weeks.
Update: we’ve embedded the CEO’s conversations on video to CNBC below:
Icahn: "CFO got a little bit testy"
— zerohedge (@zerohedge) October 1, 2013
Icahn will need a really big "highly confident letter" from Jefferies for an AAPL LBO
— zerohedge (@zerohedge) October 1, 2013
Icahn's chef made dinner for him and Cook … won't talk about the menu though!
— Julianne Pepitone (@julpepitone) October 1, 2013
https://twitter.com/tim/status/385077459105751041
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I have limited understanding of the stock market, but my gut feeling is that a large but back would benefit Apple (and surely Icahn). More responsibility to shareholders hinders the creative process, in my eyes. If they were made private, I think Apple would have full control of the reigns.
Apple buying back stock does not make it go private. A company goes private when a person/group of people buys all shares and de-lists it from the stock market.
Also, going private does not mean that a company (if we by company mean the CEO or board) get’s more freedom, it all depends on the owners. It could be quite the opposite.