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back to article Apple cash stash dash results in Icahn v CalPERS bitchfight

Activist investor Carl Icahn has gone to war with the pensioners of California over his bid to get his grubby mitts on Apple's mammoth money pot. The moneyman wants Apple to launch a $50bn share buyback, which would give shareholders a profitable but brief payday. But the California Public Employees' Retirement System (CalPERS …

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Are these numbers correct?

It has $1.6bn invested in the fruity firm compared to Icahn's $3.6bn and would like to see a more long term approach.

We don't think Carl Icahn, who's a relatively small investor

If these numbers are correct, he's alone a bigger investor then CalPERS. What do they make of their own investment, I wonder. Pocket-change?

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Re: Are these numbers correct?

"Pocket-change?" ... for her maybe. I don't understand that part of her statement either. So if he's wrong, how is she right? Or, who's padding her pockets to make such a claim? I'm not stating he's doing the right thing, don't get me wrong there, but she seems to be playing both sides.

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Re: Are these numbers correct?

Its not Icahn's money any more than its CalPERS. One is a reputable pension fund fronting for thousands of pensioners, the second is a Carpet Bagging front man for a lot of shallow and short term 'investors'.

FWIW I suspect she meant Icahn is small potatoes compared to the combined might of institutional investors such as CalPERS.

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Anonymous Coward

Re: Are these numbers correct?

While Icahn may be a larger investor than CalPERS, he is still a relatively small investor (he owns less than 1%), and as such he should not be able to steer the board of Apple in the manner he's apparently doing (and rather effectively at that).

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Re: Are these numbers correct?

He's effectively steering the board of Apple because he's basically right. However unpleasant and noisy he is.

If the pension funds would do their fucking job, and hold company boards properly to account on behalf of their investors, then we wouldn't need these activist shareholders.

I guess it's because the pension execs don't want to rock the boat. As they're hoping to be on the same gravy-train perhaps? But anyway, they've done a piss-poor job of overseeing the renumeration committees - and in fact the boards in general. They've allowed too many CEOs to also be chairmen, so they can control the board, instead of the other way round.

Apple have no business holding on to over $100 billion! They don't do big acquisitions, so they only need enough for a fat reserve, plus Tim Cook's cleverly used supply-chain slush-fund. $30bn at most, should be enough. Holding on to any more is just willy-waving, and rather suggests that the board have forgotten it's the shareholders' money (and in fact company) - not theirs.

Sorry about the rant. ...And breathe...

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Re: Are these numbers correct? @Gordon

And finally, an investor who seems to be thinking at least mid-term if not long term about the good of the company.

Icahn doesn't give a hoot if Apple* is still there in 6 months, as long as he can get his lump sum and exit in 3 months.

* Replace Apple with Dell or any other company he currently feels like bullying into giving him a payout.

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Re: One is a reputable pension fund fronting for thousands of pensioners

Nope. They just another socialist front from California posing as a reputable organization.

I don't like Ichan, but his closing statement is absolutely true. IF state run pension organizations were truly more interested in doing well long term for their investors they'd be pushing for the sorts of legislative reforms that would result in companies distributing their profits to the shareholders in a timely manner and preferably in the form of dividends instead of buy out sprees. But their socialist agendas are more important to them than the future well being of their pensioners.

And frankly, if you make the sorts of reforms that ought to be made, Ichan would actually be less able to run the sorts of corporate raids for which he is famous.

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PJI
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Re: One is a reputable pension fund fronting for thousands of pensioners

"another socialist front"

Don't you just love the assumption that socialism in all forms is bad and capitalism is good? The former is to do with "people", like proper democracy. The latter is more akin to robber barons: the most rapacious and advantaged get richer while persuading the rest that this is God's way.

Actually, shareholding could, if exercised properly, be a non state form of socialism, excepting its abusive and corrupting distortion by institutional buyers and manipulators.

Anyway, I doubt any institution in California would qualify as socialist in the rest of the world and a pension fund is required to think long term as pensioners are now, soon and beyond the scope of your imagination or knowledge.

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To me it reads a bit like "Hi there, I'm Mr. Icahn, and I see you have a pot of money. I would like to transfer your pot of money into my pockets please. Oh, look, there's another company with a pot of money! Hi there, I'm Mr. Icahn, and I see you have a pot of money. I would like to transfer your pot of money into my pockets please."

Amazing that folks can make a living doing that.

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Is this little more than aggressive begging?

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Bingo!

"Is this little more than aggressive begging?"

You've finally nailed a handle to his business model!

"Icahn, The annoying Billion Dollar Beggar."

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Anonymous Coward

Pejoratives

People in glass houses and all that surely?

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It's a shame that Carl Icahn is more interested in making a quick buck than improving corporate governance in this country.

The pejoratives are a good fit for Carl... I could think of a few more without too much work.

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The annoying thing is...

... that he did have a point before the $100bn return was announced, as Apple was hoarding shareholder's cash and there was no good reason not to return it. The cash is not Apple's, or Snr Jobs' or Tim Cook's - it's owned by the shareholders and if the management can't demonstrate how they are going to make shareholders a return on the cash they should give it back.

Yes the man is a tool, and a corporate raider, but corporate governance at the moment sucks monkey balls - far too many CEOs and boards treat companies as their property and put their needs above those of the owners.

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Stop

Re: The annoying thing is...

The problems are twofold.

Firstly much of the cash is off shore. If a Apple were to return it all to investors then they'd have to pay 35% tax on any foreign earnings before they could pay out.

Secondly they are actually using a lot of that cash. Apart from acquisitions they are pre-paying for components in order to get better deals, helping manufacturing partners increase production capacity by loaning them the funds for construction etc. Nowhere near the headline amount is in actual cash.

Much of the amount they are "returning" to investors is in the form of stock buy back. If they can do this while the stock is undervalued (and Apple management must be punching the air every time the market decides to mark them down) then the value of all the other investors stock goes up while the cost of dividends goes down.

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Re: The annoying thing is...

They don't actually have to bring the cash back. They are financing their current stock buyback with the bonds they sold a bit ago allowing them to defer if not eliminate the need for pulling in the off shore cash as they will likely be able to pay off the bonds with future profits. All of which surely makes for some interesting tax accounting considering how creative these guys are at it.

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Re: The annoying thing is...

I've always wondered...

I, as a non-US entity, can buy shares in Apple

Could Apple use their non-American cash piles to buy their own NASDAQ traded shares from their non-USA operating entities and then cancel them that way, or do they have to be bought in the USA?

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Re: The annoying thing is...

Share buybacks are not considered an expense, so wherever they buy their own shares they don't affect their tax bill. Buying their own shares, wherever purchased, counts as repatriation of the funds and causes the tax bill on those funds to be due just as if they'd transferred them from offshore to Apple HQ's bank account.

The tax attorneys at Apple, Microsoft, Google, IBM, Cisco, GE, Exxon and so forth are very good at their jobs, and there isn't anything us peons could think of is both legal and hasn't already been thought of/done.

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Re: The annoying thing is...

And what exactly has CalPERS done about fixing your very, very correct first point? Frankly they're in a better position to fix that than Ichan is.

You second point is incorrect. They may be using some of it, but not even half of it.

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Re: The annoying thing is...

Read their Q1 earnings report some time. Cash and cash equivalents are listed at $14bn, that's more than half of their cash? They've got more than $100bn in the long term investment column.

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FAIL

Corporate Governance?!?

Carl Ichan is to corporate governance what a fish is to a bicycle. This is nothing but a play to make his fat ass more than a little fatter, and when the rest of the world won't enable him, he throws a petulant hissy-fit.

Carl. How about you sit yourself down and grab a steaming bowl of STFU. If you don't like how Apple is governing its corporateness, sell the fucking stock, and go raid some other company whose board is even dumber than you.

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Unhappy

News for nerds.

Tabloid style headlines give me a headache.

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Facepalm

Ha! " who's a relatively small investor with a very short-term agenda"

They are being polite. He's a carpet bagger and asset stripper. Buying some shares ALREADY issued and trying to get quick profit by the company who issued them originally (but not to him) buying the shares back is surely the exact reverse of Investment?

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JDX
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a relatively small investor

I bet that really peed him off. Zing!

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Icahn and corporate governance?

When has he ever done anything in the interest of a company or the people who work at them?

Every time I've ever seen him do anything, it seems his only interest is to make a quick kill no matter the consequence. I hate the occupy Wall Street bullshit view about 1%ers, but Icahn is hellbent of giving them grounds. He's a predator, a very very successful one, but a predator all the same.

Hopefully he'll drive interest in the share, make his quick kill and sell out. But honestly, I can't imagine how his methods aren't illegal under insider trading. He invests in shares, the hypes the shit out of the share by making people want to rush and get in on the kill and then makes his kill at a peak. This is no huge deal except he invests large enough amounts and has so much impact that he is personally timing when the share will rise.

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Re: Icahn and corporate governance?

I don't care for Ichan either, but what he's doing is legal, and in this instance actually good for the economy.

When Apple sits on $100 billion of money in offshore accounts, that wealth is removed from productive activity. Ichan's raid puts that money back into productive work. If Apple had the money working productively for stockholders, Ichan would never have been able to launch his bid in the first place. And the bottom line is, even with Ichan running his bid, if the majority of the stockholders agree with the corporate types claiming the money needs to be kept out of their hands, he loses. So if you and they have the better argument, there's no problem, just a lot of sound and fury selling ads around a theater stage.

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Investor class

This is what passes for "investment" in the US today. Blow up the safe, grab the cash and let others repair the damage.

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Anonymous Coward

Icahn can get stuffed

As a long term stockholder in Apple (bought in 1997 and some more in 1998) I resent his meddling in my pension plan. I will be at their AGM on the 28 th in person to try to vote him down. He is a modern day 'carpet-bagger' and needs to be taken down a peg or three.

Apple is already returning a big wad of cash to people like my by two methods.

1) Paying a dividend

2) Running a stock purchase (buy-back) thus reducing the number of shares that can be traded and increasing/maintaining their value.

One thing is sure as eggs are eggs and that is whatever happens, he'll simply move onto another target. What if Google is in his sights as his next target?

Personally, I'd like him to try this on with Oracle. Larry vs Carl would be an ego match worth watching but Google would be a far easier target (IMHO). Think about this Apple haters before you down vote this post.

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Mushroom

Re: Icahn can get stuffed

I'd love to see Larry Vs Carl too and see him get what he deserves. I suspect this wont happen for the same reason (IIRC) Carl didn't come sniffing around Apple until Jobs died. I think he realised Steve Jobs would have demonstrated his characteristic lack of patience and would have quickly and summarily told him to STFU and Fuck off.

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