Icahn asks Apple board to raise share buy back to $150-bn

25 Oct 2013

Billionaire investor, Carl Icahn, after his victory at Netflix is pushing Apple to shell out more cash to shareholders.

In a letter to chief executive Tim Cook yesterday, Icahn revealed his stake in the iPhone-maker at 4.7 million shares and called for an immediate tender offer from the company for the repurchase of $150 billion in stock at $525 per share, with a combination of debt and cash on hand to fund the move.

Icahn said the move would immediately raise the earnings per share by 33 per cent (by reducing the share count) and raise the share price to $1,250 within three years.

He added he would pledge not tender any of his shares in the buyback.

The billionaire also took potshots at the board for not being investment savvy.

''In my opinion, any further delay in executing the buyback we hereby propose will reflect this lack of expertise on the board,'' he writes. ''My firm's success and my expertise as an investor would be difficult for anyone to argue.''

However, even with his increased stake, Icahn's control over Apple's outstanding shares does not extend beyond more than half a per cent.

Meanwhile, according to Bill Gross manager of the world's largest mutual fund, Icahn should stop pushing Apple Inc for additional share buybacks.

Gross  said in  Twitter post today,

''Icahn should leave Apple alone and spend more time like Bill Gates.'' Gross runs the $250-billion Pimco Total Return Fund at Pacific Investment Management Co in Newport Beach, California.

In throwing his weight behind Apple's management, Gross joined Warren Buffett, who said companies should not be run primarily to please shareholders who may then sell.

While Apple co-founder Steve Jobs resisted calls for return of cash to shareholders, Cook had been more accommodating on the issue.

In February, hedge-fund manager David Einhorn called on Apple to return more cash to shareholders and later sued to get the company to increase shareholder returns, even as the move was opposed by two of the best-known advocates for shareholder rights, the California Public Employees' Retirement System and Institutional Shareholder Services.

Earlier this year, in April, the iPhonemaker raised its payout as it boosted its stock repurchase plan. At the end of June, the company had $146.6 billion in cash and investments (See: Apple announces $60-bn share buyback as profits decline).