Icahn builds up stake in Apple; seeks changes
14 August 2013
Billionaire investor Carl Icahn, chairman of Icahn Enterprises Holdings, has said in a Twitter post on Tuesday that he has amassed a "large position" in Apple Inc and believes the stock could be worth as much as $700 a share if Apple chief executive Tim Cook pushes for a larger stock buyback.
The revelation by Icahn, considered an 'activist' investor, took the market by surprise, and sent Apple's stock up by almost 5 per cent higher to close at a 7-month high of $489.57 on the Nasdaq.
Icahn said on Twitter that he had a "nice conversation" with Cook on Tuesday and they planned to speak again soon.
Apple confirmed the conversation took place, but did not say if it influenced management's view of buybacks.
''We appreciate the interest and investment of all our shareholders,'' said Steve Dowling, a spokesman for Apple, in an e-mailed statement. ''Tim had a very positive conversation with Icahn today.''
Icahn told Reuters that Apple, maker of the iPhone, iPad and Mac computer, has the ability to make a $150-billion buyback now by borrowing funds at 3 per cent.
His announcement is expected to ramp up the pressure from shareholders who want changes in the way the world's most valuable technology company deals with its money.
''We currently have a large position in Apple. We believe the company to be extremely undervalued,'' Icahn wrote in the Twitter posting. He said that he discussed with Cook his view that a larger stock buyback should be done now.
''We plan to speak again shortly,'' he said.
Icahn, who has built up positions in other technology companies including Dell Inc, is making a foray into Apple after the company is working on the largest share-buyback programme in history (See: Apple announces $60-bn share buyback as profits decline)
The move poses a new challenge for Cook, who earlier was forced to respond to investors such as hedge-fund manager David Einhorn who wanted the company to return more cash to shareholders.
Apple's stock has slumped 22 per cent over the past year amid investor concerns about slowing growth and whether it can produce successful new products.
Icahn's stake in Apple is worth more than $1 billion - which is less than a quarter of a percentage point of the company's $444.8 billion market capitalisation. He accumulated the position over the last month.