Please use Apple's cash to buy back shares to make me richer.
Apple's $603,580,000,000 market cap – the largest ever in history – isn't big enough for Carl Icahn. The activist investor said Thursday that Apple is UNDERVALUED, and CEO Tim Cook should do more to massively increase the stock price. Icahn, who owns 53 million shares in Apple, thinks the $101 stock price is too low, and he …
It's just a matter of time before the overall worth (not just $$$) of Apple takes a legendary dive. For some reason we all see it and know it's going to happen, but don't expect it soon. So if Ichan can help Apple fly closer to the sun, so be it. Ichan is speaking gospel for short term investors, while being a harbinger of it's inevitable future.
As much as I can't stand what Steve Jobs was, you're right about him caring more about the product than the money (look at the 90's). To me, that is the ONLY thing I can credit to him. No other millionaire or billionaire will take the same stance long enough to figure things out because that requires a loss of cash. Science and arts are very close aligned, but not many will weave the 2 together successfully, not even if they're beyond rich.
"To me, that is the ONLY thing I can credit to him."
And you're so close to giving a reasonable assessment! Can't you also credit him with having the strength of mind and vision to drop out from college to launch the world's first commercially successful personal computer ? Or having guts in being prepared to cannibalise his own existing products (so conspicuously unlike Microsoft) ? Or helping to bankroll Pixar and doggedly assuring the creative team had the space they required to succeed and thereby producing another massive success story? Not building Apple back-up to being the most commercially successful company the world has seen ? Or leaving behind perhaps the strongest senior teams in the tech, who, to a man, think it an immense privilege to have worked with him and all of whome accord him immense respect?
I understand there are reasons you might consider him an arsehole (as there is for many if not most CEO's). Such characters are often complex and the most driven usually have some less social traits. And being, in younger years, smelly and being prepared to rip off your best friend aren't, of course, traits shared by all driven people. But in his defence, his friends retained immense respect for him, in spite of his flaws (and that speaks volumes), he did eventually learn about the existence of soap and Woz, who knew the man very well and was on the receiving end of his most conspicuous and documented deception, saw it as born of an arsehole single mindedness and determination to throw all into their future company and arsehole "I can do this better" assumptive attitude. Woz, despite being ripped off and very hurt, still very much considered Steve his friend and they remained friends and of course, the brutal reality is Steve could indeed do the business side so much better than Woz. And Woz not being richly rewarded for his time at Apple was, by his own assessment, his own "fault" (if it can be called that) and not Steve's. Zuckerberg who has since shown a similar single mindedness to-the-point-of-character-flaw trait is also, to all accounts, as was Jobs, hugely admired by his senior team and commands immense loyalty.
As for the worth of Apple taking a legendary dive, Apple is a company about which, people in their droves, have been saying such is just about to happen every year for year upon year. Of course the day will come when their value reduces. But how many years now is it since the register have started on about "Peak Apple"?
>>It's just a matter of time before the overall worth (not just $$$) of Apple takes a legendary dive.
So people keep saying. And it did take a big dive... but then it regained and exceeded the previous record just the other week.
If you mean "at some point in human history it will take a dive" then yes it's inevitable but that's a pretty safe bet.
Obviously you understand little about economics or the stock market to say something so stupid. Apple has around $175 billion in cash alone, and will report an operating cash flow of over $60 billion when this fiscal year closes.
Apple's P/E is at if not slightly below the overall stock market average, and lower than that of the typical tech company, so while I don't agree with Ichan that Apple is massively undervalued, it could be argued it is mildly undervalued but is certainly not overvalued.
If you want to see a company due for a fall, look at Amazon, which has a P/E ratio nearly 100x higher, or Google which has a P/E ratio double Apple's.
By all means, please short Apple stock and come back in a couple years and let us all know how that worked out for you.
Icahn's long winded letter should have simply said:
Buddy ole pal of mine, I see you have a pile of cash over there, and I'm sure you don't need it now or in the future. So how's about you hand over a 100 Beeeeelion to me and my pals. I'll keep banging on pots and pans till you do.
Hey iCahn, if Apple stock is so cheap just sell off your 66M shares of Chesapeake Energy (CHK) and use the money to buy AAPL. Shit Carl, you just took a $95M bath on Chesapeake today so why not dump the dog and up your Apple to 70+M shares. Hell, you'll even get a better dividend. Go on Carl, put your money where your mouth is. You know if it were anyone else we'd think this was a classic pump and dump scam, don't you?
Apple (if you had taken the time to do some investigation) are buying back shares thus doing what you demand. The problem is, is that Ichan and his cronies think that it shold be done faster. They want Apple to sell more bonds (and increase their long term debt) and give the money raised pretty well straight to them. They will keep on repeating this tactic ad-infinitum.
Apple has lots of $$$ offshore. They quite naturally don't want to pay the punitive US Taxes that would be levies on that money were they to bring it onshore. The Bond sale would be secured against this cash.
A few other companues are getting fed up with Ichan and his raiding parties and had actually moved their domicile and share listing away from the US.
While the 'undervalued' and 'give me more money' tactics keep on working the US Economy will suffer because of all the money taken out of it.
I fully expect this post to be downvoted to hell but IMHO it would help more than a few EL-Reg commentards to get a better understanding of Business Economics before opening their laptops and posting crap here. I'm not saying that I totally understand all the factors but I think I have a better understanding than many here.
"Apple have so much cash sitting around than they can conceivably invest or otherwise use prudently, they may as well give a lot of the cash to shareholders."
It's not quite that simple. Much (most?) of the cash is held offshore where it has not been taxed. To distribute it, they'd have to repatriate it (thus paying taxes which massively shrink their cash mountain) or take an onshore loan secured against the offshore cash, and pay interested on that.
Having cash in offshore jurisdictions works incredibly well for large corporates as just about the only thing they can't do with it is pay dividends.
>It's not quite that simple. Much (most?) of the cash is held offshore where it has not been taxed.
Not yet - but EU, US, China and others are making moves towards recovering the tax they're owed. Don't think there's any doubt now that the 2012 1.9% tax rate they paid in Eire for EU was really just a down payment - if it was retrospectively upped only to 10% they'd owe $ 4 billion plus interest.
Countries can't enforce retroactive taxation unless they can prove some sort of fraud. If they tried, they'd only insure that no large company ever does business within their borders ever again. They could change the tax rates so Apple pays more in the future, but that's irrelevant to their overall tax bill once the money is finally brought back into the US, because the US allows you to deduct taxes paid in other countries against your US tax bill.
So whether Apple pays 2% or 10% or 20% overseas is irrelevant - once Apple brings it back into the US (whether that's tomorrow or 10 years from now) they'll end up with the same total tax bill either way unless the US has another corporate tax holiday. That tax holiday was incidentally the stupidest idea of all the stupid ideas from the Bush Jr. administration, as now every company avoids bringing overseas cash back into the country now, hoping for a repeat of the tax holiday!
Guys like Icahn have become rich by investing in companies they don't understand. They follow trends and depend on hype alone to alter the value of a company. Today it was announced that the Norwegian company FunCom has made a partnership with Intel for one of their games. The stock is going wild. Up 23.5% since the announcement and based on normal Norwegian dumb ass investor trend will probably go another 10 on top of that before leveling.
First of all, the share holders have no idea what Funcom does or how their business works.
Second the investors have far less of an idea what Intel does or how their business works.
Third investors go nuts over partnerships which exist for no other purpose except for making announcements that sound positive to drive share value up.
I genuinely believe that there should be laws regulating and controlling what people are allowed to invest in. Icahn should probably be blocked altogether. He is a predator and does more harm than good.
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