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Warren Buffett dismisses Carl Icahn's demands for Apple stock buyback

updated 08:09 pm EDT, Wed October 16, 2013

Investor praises Apple management

Investor Warren Buffett has dismissed fellow billionaire Carl Icahn's recent calls for Apple to expand its stock buyback. In an interview with CNBC, the Berkshire Hathaway chairman and CEO praised Apple's management and seemingly rejected Icahn's argument that the company should more than double its current buyback program to at least $150 billion.

"I think the Apple management and directors have done a pretty darned good job of running the company, and so my vote would be with them," Buffett said, as quoted by Barron's. "I do not think that companies should be run primarily to please Wall Street, and largely shareholders who are going to sell."

Apple has already promised to buy back $60 billion, however Icahn has aggressively pushed for the program to be increased because the stock is "extremely undervalued." The activist investor met with Apple CEO Tim Cook late last month to voice his argument in person, however the company has yet to budge from its current position.

Icahn earlier this year invested $1.5 billion in AAPL shares, representing a minor stake of less than one percent.




by MacNN Staff

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Comments

  1. Makosuke

    Forum Regular

    Joined: 08-06-01

    "I do not think that companies should be run primarily to please [...] shareholders who are going to sell."

    That pretty much sums up what's wrong with the entirety of Wall Street and the business of stock pushers. Why more people (long term investors included) don't point out that simple truth is beyond me.

    I mean, really, why on earth would I want to take business advice from someone who does not intend to maintain an investment in my business for more than a year or two? If anything, I'd rather take advice from the guy who's going to buy from that one, because at least he's looking farther into the future.

  1. iphonerulez

    Dedicated MacNNer

    Joined: 11-28-08

    But do the big investors actually see Apple as having a future. Apple can't seem to attract mutual fund or retirement fund investors who have a long-term outlook. Those investors are still interested in companies like Dell, Cisco and Microsoft and are turning a blind eye towards Apple. Apple keeps attracting the hedge funds and day traders and they're useless for Apple's share price stability. Maybe Apple should simply raise its dividend to exceed most of the companies that the mutual fund investors are currently sitting in.

    It's good to hear that Warren Buffett had some good words about Apple, although he has no interest in owning it himself. I prefer more dividends and less buybacks, but I'd still like to see Apple acquire some businesses that have little to do with hardware. It's a pity that although Apple makes its own hardware, it probably has to go outside to purchase someone else's server hardware. Apple should at least take the time and interest to design its own proprietary server hardware if such a thing makes sense to do. Apple could possibly build its own ARM servers using their own processors that would run rings around the ones that already exist.

    Anyway, I think Apple is doing really well. I'm only disappointed that Wall Street doesn't see Apple as a company to invest in like Google or Amazon or Priceline. It's just hard for me to understand what's so attractive about those stocks as an investment and so unattractive about Apple stock. Apple just seems fundamentally sounder than those other stocks.

  1. twolf2919

    Fresh-Faced Recruit

    Joined: 05-14-13

    @iphonerulez, I really don't understand your comments: (1) you say that Apple has trouble attracting mutual funds or retirement funds - yet simply looking at Apple's insider ownership (http://finance.yahoo.com/q/mh?s=AAPL+Major+Holders) shows that Vanguard owns almost 5% of the company - and it has plenty of mutual fund company (see same URL). (2) you want Apple to go into businesses that have little to do with hardware - why? If hardware is its expertise (along with O/S software), why should it go into areas it knows little of? (3) you suggest they build server hardware - but they once did! Not too many people bought them, so they stopped - makes sense to me.

  1. aardman

    Fresh-Faced Recruit

    Joined: 11-18-09

    We just heard the Big Kahuna of investing (Buffett) smack down the mischievous court jester (Icahn) basically calling him a corporate vampire that is best ignored by Apple's management. Ouch!

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