Apple Chief Responds (Sort of) to Icahn’s Buyback Needling
Last week billionaire activist investor Carl Icahn, fresh of his months long, high profile wrangle with Michael Dell, publicly pressed Apple (AAPL) chief Tim Cook in an open letter to initiate a buyback of $150 billion in Apple shares at the current $525 a share price, “financed with debt or a mix of debt and cash on the balance sheet.”
Last week billionaire activist investor Carl Icahn, fresh of his months-long, high-profile wrangle with Michael Dell, publicly pressed Apple (AAPL) chief Tim Cook in an open letter to initiate a buyback of $150 billion in Apple shares at the current $525 a share price, “financed with debt or a mix of debt and cash on the balance sheet.”
In a somewhat strange move, Icahn used his new website, Shareholders’ Square Table, to post the full text of his letter. “While this would certainly be unprecedented because of its size, it is actually appropriate and manageable relative to the size and financial strength of your company,” Icahn wrote. “Apple generates more than enough cash flow to service this amount of debt and has $147 billion of cash in the bank.”
In a follow up Twitter post, a vehicle he used extensively to pester Dell chief Michael Dell in their dustup, Icahn wrote that Cook would be calling him after Apple posted its Q4 2013 results.
Who knows whether Cook has picked up the phone yet to call Icahn, but, without naming names, the Apple chief appeared to direct some of his prepared earnings call remarks in the investor's direction:
”We more than doubled the size of our capital return program to a $100 billion, including the largest share repurchase authorization in history and we become one of the largest dividend payers in the world.
In fact, we returned over $36 billion to shareholders to dividend and share repurchases in the last five quarters alone. We remain firmly committed to our objective of delivering attractive returns to shareholders through both our business performance and a return of capital. We review our capital program regularly and our orders engaged in the discussion of capital allocation on an ongoing basis.
We have solicited feedback on our capital return program from shareholders in the past. We greatly appreciated their suggestions and we will actively seek their input again this year.”
Icahn, who bought $1.5 billion worth of Apple stock in August and says he has since increased his stake by 22 percent since then to 4.7 million shares, commands only 5 percent of the company but with some $2.5 billion in the game he’s bought himself a public voice in the vendor’s financial dealings, which he’s used to needle Cook to do something with Apple’s huge cash reserves.
Apple closed Q4 2013 with about $147 billion in cash, up $100 million from the prior quarter. About $35.5 billion of its cash hoard is squirreled away domestically with the remainder residing offshore.