Neil Hughes
After activist investor Carl Icahn published a letter Thursday asking Apple to increase its share buyback efforts once again, the company responded with a statement indicating it's in no rush to make any changes.
"We always appreciate hearing from our shareholders," Apple said in a statement to CNBC. "Since 2013 we've been aggressively executing the largest capital return program in corporate history. As we've said before we will review the program annually and take into account the input from all of our shareholders."
Earlier Thursday, Icahn published a letter in which he said he believes shares of Apple are "dramatically undervalued." Based on his estimates, he believes the company should currently be trading at $203 per share, or about double where it currently sits.
Given his estimated 50 percent discount, Icahn believes now would be a prudent time for Apple to spend its more than $130 billion in net cash on itself, buying shares at a discount before they trade higher.
Icahn's letter was a glowing endorsement of Apple, saying that he expects continued strong sales of the iPhone. He's also hopeful for the upcoming Apple Watch, and even predicted that the company could launch a full-fledged television set years down the road.
The praise from Icahn helped shares of Apple stay in the positive throughout trading on Thursday, even as the Dow Jones Industrial Average tumbled more than 300 points. Both it and the Nasdaq were off more than 1.7 percent in Thursday afternoon trading.
Apple first announced its dividend share and repurchase program in March of 2012, and at the time pledged to spend $45 billion on itself over three years. The company increased the program to $100 billion a year later.
Then again this April, Apple announced it would once again increase its buyback efforts, and the company also revealed it would undergo a 7-for-1 stock split that eventually came to pass in June. Based on Apple's current annual schedule, the company would likely revisit its buyback efforts once again, and take into consideration the requests of Icahn and others, following its March 2015 quarter.
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15 Comments
That's the appropriate response. There's not much more to be said.
So great to see a quick response from Apple, before some jackass(es) find a way to turn it into FUD.
Then why doesn't Icahn just buy more shares?
Then why doesn't Icahn just buy more shares?
That's what I said. That he doesn't double his investment based on his claim that the stock is currently valued at half what it's worth proves he's full of nonsense.
Then why doesn't Icahn just buy more shares?
There's risk in that. If apple buys shares, the immediate returned value (When Apple buys a billion in shares, iCahn's shares go up by at least 2-4%) and this value is folded into iCahn's current holdings, as the buyback is increasing scarcity, and increasing equity per share, which were probably bought at $60 a share, and they go up, he's seeing a massive valuation. If they Go down, he's still holding a massive profit. And if the market reacts to his 'pricing, they go up as well.
If he buys the shares, and they GO DOWN, he's losing money. If he buys at $100+ and they go up to 200, he's only up 100%, and he may have lost opportunities with that cash to triple his money or more.
In other words, he's PUMPING the stock, and looking for others to buy it, to make his worth more.