Carl Icahn sent a letter to Apple CEO Tim Cook and suggested management use excess cash to buy back stock, because Icahn believes the stock is not trading high enough. CNBC’s Scott Wapner pointed out that Carl Icahn and his son Brett sent a similar letter to Tim Cook last year, and while Icahn admitted Cook didn’t give a definitive answer one way or the other, Icahn thinks he will pursue the strategy.
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at email@example.com.
Icahn, who owns 56 million shares of Apple and has not sold any of his position, even though it has appreciated 50%, thinks the stock should be trading at twice its current level. “You can’t compete with Apple, ” Icahn said. Given the fact the company stands out above the rest, Icahn believes it should be trading at a higher multiple than 8. Icahn suggests a “massive tender offer” to the tune of $100 billion, and thinks such a move could “change the whole paradigm.”
However, Toni Sacconaghi told CNBC that he doesn’t think a “massive” tender offer is likely, since Apple has historically returned cash to shareholders gradually. He says he is “not as optimistic” as Icahn that Apple is very undervalued, and thinks the high-end smartphone market might be reaching saturation.