Carl Icahn raises stake in Apple to $3 bn
23 Jan 2014
Billionaire investor Carl Icahn has increased his stake in US technology giant Apple Inc by $500 million to $3 billion pressurizing the company to return more wealth to its shareholders.
"Having purchased $500 million more Apple shares in the last two weeks, our investment has crossed the $3 billion mark yesterday," Icahn wrote in a tweet yesterday.
With the additional investment, which the activist investor calls ''a no brainer,'' Icahn is putting more pressure on the iPhone-maker to increase sharing the company's wealth to its shareholders through share repurchases.
Apple's board of directors "is doing great disservice to shareholders by not having markedly increased its buyback," Icahn also tweeted. An "in-depth" letter will follow soon, he added.
The US billionaire is well-known for making big investments in cash-rich or underperforming companies with the intension of forcing the management to change strategies, sell the company or return money to shareholders.
Three months ago, in a letter to Apple's chief executive Tim Cook, the investor urged the company for an immediate tender offer for the repurchase of $150 billion worth of stock at $525 per share. (See: Icahn asks Apple board to raise share buyback to $150-bn)
Apple stock was being traded at $468 a share, when Icahn started his crusade to convince the company to buyback more of its stock in August. Since then, he has upped his stake in the technology giant three times and is believed to be one of Apple's top fifteen shareholders.
Icahn had said the buyback 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.
Following the news, shares in Apple rose more than 1 per cent yesterday in New York but later eased to end at $551.51, up 0.4 per cent.
The stock has fallen from its September high of $700 on concerns over profit margins and revenue growth due to stiff competition from Asian rivals such as Samsung and LG which offer cheaper alternatives to Apple's iPhone and iPad devices.
Apple, which had a cash pile of $150 billion at the end of fiscal 2013, had said that it would return $100 billion to shareholders through share repurchases and dividends through the end of 2015.
According to some industry analysts, Apple should step up efforts to focus on developing new technological areas like Google which also sits on a hoard of cash, rather than worrying about the size of buybacks and dividends.
