AAPL Stock: 117.81 ( -0.22 )

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Icahn increases stake in Apple ahead of 7:1 stock split

updated 01:36 am EDT, Fri May 16, 2014

Adds 2.8 million shares for total stake worth $4.4 billion

Tim Cook isn't the only person who is "bullish on Apple's future." Activist investor Carl Icahn, who last year tried unsuccessfully to get Apple to buy back more of its stock in an effort to raise its value, has invested another $1.65 billion into the company, buying 2.8 million shares at around Thursday's closing price of $588.82 per share. His total holding in the company is now more than 7.5 million shares.

As it turned out, Icahn got 90 percent of what he wanted -- Apple's Board of Directors eventually voted to increase the buyback program by an additional $30 billion to a $90 billion total, and has already spent something like two thirds of that amount repurchasing shares. Icahn had lobbied for a $100 billion buyback. In addition, Apple will split its stock 7-to-1 on June 2, lowering the price of a typical share to around $80.

Icahn's current holding is worth about $4.8 billion at today's price, though it is hard to say exactly how much his investment in the company has gone up. It has definitely gone up, however, as Icahn bought most of his shares at lower price points when Wall Street was (rather mysteriously) devaluing the company on the basis that it had failed to bring forth any hugely disruptive products since Steve Jobs' death in 2011. AAPL sunk as low as $393 in the past year, but managed to rise above the low $520-level immediately after announcing the buyback expansion, an annual dividend increase, and unexpectedly strong iPhone sales.

Even before the recent announcements, Icahn called the stock a "no brainer" buy in part due to the original buyback program and the company's ongoing growth, even without all-new flagship products. The iPhone continues to outsell all individual rivals, the iOS platform continues to gain share in some key markets (particularly North America, Japan and China), and Cook has promised that this year will see the release of new products in "new product categories," such as the alleged "iWatch" and rumored Apple TV revamp.

by MacNN Staff




  1. jpellino

    Fresh-Faced Recruit

    Joined: 10-29-99

    Duh. He's chasing anything he can as his average position is in the 400s. The uber-buyback (which would have had huge issues for all other stockholders) was never going to fly, Tim and the board did the best thing for Apple's financial abilities and the typical stockholder. Icahn can go fly a kite. This is Plan B for him, but it's Plan A for the company and shareholders overall.

  1. iphonerulez

    Dedicated MacNNer

    Joined: 11-28-08

    I hope a lot of investors start piling money into Apple pre-split. I don't expect Apple stock to reach $700 but I think $625-$650 might be possible. Apple stock doesn't seem to have any long-term momentum but I guess that can be expected considering the price of the stock. If it can hold about a $650 level until the new iPhone is released I'll be very satisfied.

  1. bbh

    Fresh-Faced Recruit

    Joined: 03-04-08

    When the split happens around the current price point, it will yield a new price of around $80-$85. I think you underestimate the potential of it moving from the $80s to $100. For the math impaired, that is "todays" $700.

    I think it can happen. So does Icahn apparently. Disparage him as you will, but he's made a LOT more astute financial calls that either you or me.

  1. jpellino

    Fresh-Faced Recruit

    Joined: 10-29-99

    "Astute" was not in evidence in this particular ploy. If he had his way, he would have forced the stock price higher through the buyback, when it got to his magic number somewhere north of $700, he would have a secret magic trigger price that would have dumped the stock. The resulting selloff would have left those who bought higher than he did (and there was a solid year of $500+ purchases in volume stats feb '12 to feb '13) scrambling / wanting. Tim and the board now have a solution that will (a) attract more shareholders with a lower price - long-run thinking, (b) returns a higher dividend - more long-run thinking, (c) stop this sort of pump-and-dump strategy and (d) keep a reasonable amount of capital in the company for strategic acquisitions - even more long-term thinking. When dealing with a guy who oversaw the demise of TWA and Blockbuster and saw only short interest in Netflix - losing a bet with his son on long-term valuation and making $800M for himself - I'll check with others.

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