08-19-2013, 08:01 PM
HEARD ON THE STREET
August 14, 2013, 3:38 p.m.
Apple's Next Product Can't Be the iCahn Carl Icahn's Call for Bigger Payouts Distracts From What Apple Should Be Focusing On
http://online.wsj.com/article/SB10001424...03498.html
By ROLFE WINKLER
Would Steve Jobs have taken Carl Icahn's call?
Shares of Apple AAPL +1.12% are up about 5% since Mr. Icahn tweeted Tuesday about his fund's new stake in the company and "a nice conversation" he had with Tim Cook, Mr. Jobs' successor as chief executive. Reportedly worth more than $1.5 billion, the stake is big for the activist but not for a tech giant with a market capitalization north of $450 billion.
Investors are strangely excited, though. Mr. Icahn usually tries to get companies to sell themselves, which is out of the question for Apple. As for his idea that Apple buy back shares more quickly, it looks no more likely to create long-term value for shareholders than hedge-fund manager David Einhorn's earlier idea to create a new preferred class of shares, backed by a dividend. Rather, both reflect a seemingly pathological hunger for companies paying out more cash on the part of many investors.
Granted, at $147 billion, Apple sits on too much cash. But it has already announced plans to pay out $100 billion via dividends and share buybacks by the end of 2015. And the pace is brisk already: Last quarter alone, Apple paid out nearly $19 billion. In comparison, Exxon Mobil paid out $30 billion in the whole of 2012.
Mr. Cook knows well that long-term shareholder value rests on investing in great new products, with the next slate due in September. In particular, he needs a new blockbuster as smartphones and tablets running rival Google's GOOG +1.05% Android operating system take ever more market share. Indeed, more exciting than Mr. Icahn's cash call could be Apple's forthcoming watch-like device.
http://finance.yahoo.com/blogs/the-excha...43487.html
By Aaron Pressman | The Exchange – 1 hour 32 minutes ago
Apple (AAPL) shares got a short-term boost last week from billionaire investor Carl Icahn’s tweets pressuring the company to borrow money to buy back more stock, but such a move would do little to help long-term investors.
hn, who has been involved in takeover battles and shareholder activism since the 1970s, bought about $1 billion worth of Apple shares before going public on Twitter on August 13, according to Reuters. Shares of Apple jumped 11% last week.
"Had a nice conversation with Tim Cook today,” read Icahn's tweet. “Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly.”
He also announced he had accumulated a “large position” in Apple shares, which he believed were “extremely undervalued.”
The problem with Icahn’s plan is that such financial machinations can be a distraction for a technology company that needs to focus on developing innovative new products, according to Arun Sundararajan, professor of information sciences at New York University.
“This kind of financial engineering isn't in the long-term interest of Apple's shareholders,” he says. "They're still a tremendously valuable company, but stock price boosts from financial engineering shouldn't distract from the fact that their business model doesn't look as solid and dominant as it did four years ago."
That’s also the view of University of Southern California professor Gerard Tellis, who has studied the rise and fall of once dominant companies such as Kodak, Blackberry (BBRY) and General Motors
Icahn’s Plans for Apple Unlikely to Help Long-Term Shareholders
August 14, 2013, 3:38 p.m.
Apple's Next Product Can't Be the iCahn Carl Icahn's Call for Bigger Payouts Distracts From What Apple Should Be Focusing On
http://online.wsj.com/article/SB10001424...03498.html
By ROLFE WINKLER
Would Steve Jobs have taken Carl Icahn's call?
Shares of Apple AAPL +1.12% are up about 5% since Mr. Icahn tweeted Tuesday about his fund's new stake in the company and "a nice conversation" he had with Tim Cook, Mr. Jobs' successor as chief executive. Reportedly worth more than $1.5 billion, the stake is big for the activist but not for a tech giant with a market capitalization north of $450 billion.
Investors are strangely excited, though. Mr. Icahn usually tries to get companies to sell themselves, which is out of the question for Apple. As for his idea that Apple buy back shares more quickly, it looks no more likely to create long-term value for shareholders than hedge-fund manager David Einhorn's earlier idea to create a new preferred class of shares, backed by a dividend. Rather, both reflect a seemingly pathological hunger for companies paying out more cash on the part of many investors.
Granted, at $147 billion, Apple sits on too much cash. But it has already announced plans to pay out $100 billion via dividends and share buybacks by the end of 2015. And the pace is brisk already: Last quarter alone, Apple paid out nearly $19 billion. In comparison, Exxon Mobil paid out $30 billion in the whole of 2012.
Mr. Cook knows well that long-term shareholder value rests on investing in great new products, with the next slate due in September. In particular, he needs a new blockbuster as smartphones and tablets running rival Google's GOOG +1.05% Android operating system take ever more market share. Indeed, more exciting than Mr. Icahn's cash call could be Apple's forthcoming watch-like device.
http://finance.yahoo.com/blogs/the-excha...43487.html
By Aaron Pressman | The Exchange – 1 hour 32 minutes ago
Apple (AAPL) shares got a short-term boost last week from billionaire investor Carl Icahn’s tweets pressuring the company to borrow money to buy back more stock, but such a move would do little to help long-term investors.
hn, who has been involved in takeover battles and shareholder activism since the 1970s, bought about $1 billion worth of Apple shares before going public on Twitter on August 13, according to Reuters. Shares of Apple jumped 11% last week.
"Had a nice conversation with Tim Cook today,” read Icahn's tweet. “Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly.”
He also announced he had accumulated a “large position” in Apple shares, which he believed were “extremely undervalued.”
The problem with Icahn’s plan is that such financial machinations can be a distraction for a technology company that needs to focus on developing innovative new products, according to Arun Sundararajan, professor of information sciences at New York University.
“This kind of financial engineering isn't in the long-term interest of Apple's shareholders,” he says. "They're still a tremendously valuable company, but stock price boosts from financial engineering shouldn't distract from the fact that their business model doesn't look as solid and dominant as it did four years ago."
That’s also the view of University of Southern California professor Gerard Tellis, who has studied the rise and fall of once dominant companies such as Kodak, Blackberry (BBRY) and General Motors
Icahn’s Plans for Apple Unlikely to Help Long-Term Shareholders