Apple is being pushed for a giant $150bn (£93bn) share buyback by outspoken investor Carl Icahn, who is frustrated with the iPhone maker for doing nothing with its enormous cash reverses. The pressure comes a few days before Apple is set to discuss its fourth quarter results for 2013.
In a letter to Apple chief executive Tim Cook, Icahn said that he believes the company is woefully undervalued at present and that its share price could rise as high as $1,250.
As such, he said the firm should commence a share buyback now and moved to assuage any concerns Apple may have by saying the firm could easily afford it.
“With such an enormous valuation gap and such a massive amount of cash on the balance sheet, we find it difficult to imagine why the board would not move more aggressively to buy back stock by immediately announcing a $150bn tender offer,” he said.
"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. Apple generates more than enough cashflow to service this amount of debt and has $147bn of cash in the bank."
Icahn also revealed he has increased his position in Apple by 22 per cent since September to own $2.5bn worth of shares. He said he would remove his shareholding from any buyback to prove his focus was on Apple’s success, not a personal short-term gain.
He went on to say that Apple should heed his wisdom as his track record in the market, coupled with his belief Apple itself lacks seasoned financial experts, mean he is better placed than most to offer the suggestions.
"Apple’s Board of Directors does not currently include an individual with a track record as an investment professional," he said.
"In my opinion, any further delay in executing the buyback we hereby propose will reflect this lack of expertise on the board. My firm’s success and my expertise as an investor would be difficult for anyone to argue."
Icahn could face a tough task convincing Apple, though, as the firm has always guarded its cash closely, especially after the company almost went bankrupt following Steve Jobs' removal from its helm in 1985.
The open letter to Cook is the second time this year Icahn has generated headlines in the tech community after he fought an offer from Michael Dell for his own company, when he believed the firm was being undervalued. He eventually conceded defeat, though.
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