Newspaper article International New York Times

Icahn Lacks Leverage to Force Apple into Buyback ; Limited Stake Hampers His Call for a $150 Billion Share Repurchase Offer

Newspaper article International New York Times

Icahn Lacks Leverage to Force Apple into Buyback ; Limited Stake Hampers His Call for a $150 Billion Share Repurchase Offer

Article excerpt

The investor sent a letter to Timothy Cook, Apple's chief executive, urging him to do something with the company's large cash reserves.

CORRECTION APPENDED

When Carl C. Icahn starts making noises about a company, executives usually listen. But his campaign for Apple to return more money to shareholders might be falling on deaf ears.

The investor sought to increase the pressure on Apple on Thursday, posting a letter he had sent to Timothy D. Cook, its chief executive, on his Web site. The letter, which Mr. Cook received on Wednesday, urged Apple to begin immediately an offer to buy back $150 billion worth of its shares at $525 a share.

The company has not yet responded to Mr. Icahn's public calls, which began in August when Mr. Icahn first disclosed he had a stake in the company. He has taken to Twitter and CNBC to agitate for Apple to do something with its large cash reserves.

With a net cash position of $130 billion, analysts say Apple could afford to return more money to shareholders. But the company has already undertaken a $100 billion share buyback and dividend program and may not feel it needs to do anything more for now.

"Just because they can, it doesn't mean that they will," said Robert Cihra, an analyst with Evercore Partners, a banking advisory firm. "I don't know whether anyone can exercise any power over Apple, given their size."

In March 2012, Apple announced for the first time since it was founded by Steve Wozniak, Steven P. Jobs and Ronald Wayne in the mid- 1970s that it would pay a dividend. It also said it would buy back stock for more than $10 billion a year until 2015. The move signaled a shift in Apple's dividend policy under the leadership of Mr. Cook.

While significant, the move did not please all shareholders.

Another billionaire hedge fund manager, David Einhorn of Greenlight Capital, sued Apple earlier this year as part of a campaign to get the company to give away more of its cash pile to investors.

Apple responded with a statement that it would "thoroughly" consider ways it could return some of its cash to investors and Mr. Einhorn's proposal to issue a preferred class of stock.

Apple announced a month later that it would quintuple its existing share repurchase plan, pledging to buy $60 billion by 2015, and would increase its dividend by 15 percent to $3.05 a share.

Mr. Icahn has been more vocal than Mr. Einhorn. Since August, Mr. Icahn made his views about Apple public, using his personal Twitter account -- with more than 106,000 followers -- to apply pressure on Mr. Cook.

There are reasons to be skeptical about Mr. Icahn's proposal. For one, it would be the biggest stock buyback in history.

Still, Apple's remaining cash pile is enormous, and some shareholders are likely to agree with Mr. Icahn's view. …

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