Billionaire activist investor Carl Icahn said Apple Inc's shares
could double in value and urged the company's board to buy back more shares
using its $133 billion cash pile. Icahn, who pledged to keep his own stock out
of any repurchase, said Apple stock should be trading at $203.
In an interview Thursday on CNBC, Icahn urged Apple to buy
back as much as $100 billion in stock and said he hoped other investors would
also press for a buyback. In June the company split its stock seven for one and
in April it raised its share repurchase authorization to $90 billion from the
$60 billion announced a year earlier.
Apple shares rose less than 1 percent in early trading to
$101.49 but slipped to $100.84 later as the broader market sold off. The stock
has gained 25 percent since January.
Owning 53 million shares, Icahn ranks as one of the iPhone
maker's top 10 investors and has long urged the company to buy back more shares
and raise its dividend.
In his letter he said he expects the Apple Watch, the
company's first new product category since the iPad in 2010, to boost the
company's growth. He added that television represents a large opportunity for
the company.
Icahn, 78, is one of the world's most vocal and influential
investors and he has successfully pushed for change at auto rental company
Hertz and e-commerce company eBay. He has taken pains to keep his comments
about Apple civil and praised Chief Executive Officer Tim Cook in his letter.
Although Icahn has run his fair share of proxy contests and
sat on many boards, he told CNBC he has no plans to try to replace board
members at Apple. He also said he would never run a proxy contest and will
always be Apple's "buddy."
Apple has long signaled it will not be pressured into making
hasty decisions. On Thursday, spokeswoman Kristin Huguet declined to comment
directly on Icahn's letter but said "We always appreciate hearing from our
shareholders."
Apple is poised to take market share from Google Inc's Android
platform in the premium device market and Icahn forecast the company's earnings
would grow 44 percent in fiscal year 2015. According to StarMine's Intrinsic
Valuation model, Apple stock should be trading at $111.4. That implies a
compounded annual earnings growth rate of 8 percent over the next 10 years,
StarMine data showed.
Icahn, who has been tweeting his opinions about investment
strategy, earlier this week said he planned to publicize investment ideas on
Facebook and other social media sites in addition to Twitter. That does not sit
well some investors.
Influential hedge fund manager Leon Cooperman, who owns
Apple shares, suggested on CNBC that private discussions might be more
appropriate. But Icahn said investors can push for change more effectively in
public instead of just whispering into a chief executive's ear.
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