Icahn turns up heat in $3B investment in Apple

Icahn turns up heat in $3B investment in Apple

Summary: Icahn's rhetoric regarding Apple has shifted from having "undervalued" stock to "doing great disservice to shareholders."

TOPICS: Tech Industry, Apple, CXO

If the Dell debacle of 2013 taught anyone anything, it was that Carl Icahn does not shy away from voicing his opinions publicly, giving real meaning to the expressing "putting his money where his mouth is."

We've also learned since then that the American business magnate is a big fan of airing those opinions on Twitter.

Icahn made a splash last year when he took to the micro-blogging platform to reveal a substantial investment in Apple, which at the time he described as "undervalued."

The sentiments have shifted considerably since then, as demonstrated through a new series of Tweets posted by Icahn on Wednesday.

Take a look:

Icahn proved to be a thorn in the side of Michael Dell, leading the charge against the PC company's founder and CEO who wanted to take his business private.

It's too soon to tell if Icahn will become the same type of adversary to Apple CEO Tim Cook, although the groundwork is being established.

Shortly after the Apple investment was made, Icahn took to Twitter to shed light on some of the business-related topics of a dinner with Cook -- notably $150 billion buyback plan he touted as a "no brainer."

He followed that up in a candid interview with Bloomberg TV later in October, arguing that anyone who was not onboard with his buyback proposal must "have not bothered to read the balance sheet or maybe does not know how to read a balance sheet."

Nevertheless, as of 12:30PM EST, Apple shares were up by more than six percent since market open.

Topics: Tech Industry, Apple, CXO

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  • No High-Flying Financier Here, But

    Maybe it wasn't such a good use of his money? We all make mistakes. He can afford his.
  • In my view, this is predatory investment

    where you buy just enough shares to get a voice, and then use that voice to hollow the company out, and provide the predator with quick ROI, when the company is forced to cash out a stockpile of cash earned when the predator wasn't even an investor yet. That's just my opinion, anyway.

    Too bad companies can't vet their shareholders and ensure they are getting on board because they believe in the company, not because they want to raid a company's savings.

    I mean, have I ever even heard Icahn express an opinion about ARM chip design, new product categories, iPad engineering, or new content categories for iTunes? No. Like I said, in my opinion, I don't seem to be able to perceive any motive other than a cash out.
    • Agreed

      He's only interested in what he can get for his investment, not what is good for the companies he invests in.
    • predatory or manipulative

      Very public statements and pressure on the board in an attempt to drive up the stock. Seems to be an abusive use of influence to manipulate the stock price. Why does the SEC allow this and why isn't he behind bars and banned from engaging in finance fraud.
      • Because he's not doing anything illegal.

        When you've got US$3 BILLION of "skin in the game" it's totally within your rights to call on management to make certain actions. Of course it's totally within the rights of management to ignore those calls. At least until someone's got enough Proxies to change the Board.

        I think a lot of the other Apple (and eBay) investors recognize Ichan for what he is, and are more than comfortable to "dance with the girl that brung ya." Yeah, Ichan's taken some dogs and turned them around, but Apple and eBay are doing things right. Don't fix what ain't broke.

        That being said, that US$ 150 billion sloshing around on Apple's books will only continue to be an attractive target to corporate raiders like Carl.
    • II agree. Though vetting their shareholders (like anything),

      could have a downside. Imagine getting share holders that want to just "play it safe" thus have kept Apple from investing billions into research and development of the iPhone?

      But Icahn has always struck me as the "I don't care about the people after I made my money. who's fault is it that they're in that position?" attitude.

      I'm sure a few people at Apple were apprehensive when Icahn announced his investment, as Apple really didn't need his 3 billion investment.
      • Apple didn't get his $3 billion.

        It's a common misunderstanding of the stock market: People think when you buy stock, the company gets to money. In most cases, that's not true.

        When you buy shares of stock, you're buying them from someone else who happens to be selling. Unless you've bought into the IPO, or are buying repurchased shares that the company is selling (which defeats the purpose of the repurchase), the company you're investing in gets $0.00.
        • I do know that,

          as I do buy and sell stock from time to time.

          The last sentence just didn't come off as intended, nothing more. It was intended to read more to the point that that they did not need Icahn holding so much stock, Apple's doing just fine without his input.
          • Sorry.

            You'd be surprised at how many people really don't understand the stock market.

            A lot of people think the company gets the money. A lot of people think that a company with a $10 stock is underpriced compared to one at $20. What would they think of Berkshire Hathaway A shares, which closed today at $172,895?
        • which is why I don't like Apple buyback

          I don't understand the benefit for AAPL to buy back shares and wasting the cash.
          If it's just give the share price a boost then it's very bad.
          • Stock buybacks don't benefit Apple, or any other company.

            However, they DO benefit large stockholders, which often includes senior executives and some board members. It's not hard to line your pockets while maintaining an appearance of "fiduciary responsibility." So a lot of times, less entrepreneurial executives take the chance to profit, personally, from their company's success, regardless of whether it's truly in the best of interest of the company, and by extension it's investors. It's good to see Cook, Oppenheimer, and Levinson resist this.
          • IBMs been on a repurchasing binge...

            and the stock has risen. Earnings per share is up (fewer shares). Earnings are down (less profit).

            A repurchasing plan is a way to hide bad results.
        • No, but...

          ..a high stock price means that it's easier for Apple to raise capital by selling new stock.
          John L. Ries
  • I don't even like Apple very much

    ...but I don't wish Icahn on anyone. Makes you wish there was somebody who could just tell him to stop and go home (and have the power to make him do it).
    • Power

      He did the same thing to Dell. Wanted some 'quick' cash for himself not what would benefit Dell by going private.
      • A possible solution

        If you are a major shareholder and on the board then the law should state that you are no longer allowed to trade you shares or even advise on share trading. This will ensure that decisions based on the best LONG TERM interests of the company are being made and not just decisions that temporarily prop up the share price so board members can then cut and run.
        • I have three more

          1. No one person or institution could hold, control, or vote more than a small percentage of the stock (like 1%) without the consent of the other shareholders.

          2. Corporate stock could not be used as collateral for a loan.

          3. A corporation could not be held responsible for debts incurred for the purpose of buying its stock (effectively banning leveraged buyouts).

          The first two could be corporate bylaws, the third could only be a statute. The combination of the three would, I think, take away nearly all the power of corporate raiders.
          John L. Ries
      • I think he also...

        ...wanted to make the price of going private as high as possible, since increased numbers of privately held large corporations are directly contrary to the interests of raiders like Icahn.
        John L. Ries
    • Rich for richness sake

      He doesn't create, he doesn't invent, he doesn't innovate - he is the reason why there are bubbles and busts in markets. Instead of dreaming up new products, people like this dream of how to raid companies and make money. The world won't miss him when he's gone.
    • There is, it's called a Proxy.

      Enough shares in the hands of people who aren't obsessed with getting paid today, regardless of the effect on the future of the company, easily neutralize guys like Ichan.