Carl Icahn urges Apple to speed up share buyback

Activist investor says Apple stock trading at a 50% discount

Activist investor Carl Icahn has urged Apple to speed up the pace of its stock buybacks, saying his analysis values the shares of the world’s biggest company by stock market value at $203 – roughly double their current level.

Mr Icahn, who has a $5 billion-plus stake in Apple, sent an open letter to Apple chief executive Tim Cook encouraging him to utilize some the $133 billion net cash on Apple’s balance sheet to accelerate buybacks.

“We ask you to present to the rest of the board our request for the company to make a tender offer, which would meaningfully accelerate and increase the magnitude of share repurchases,” said Mr Icahn in the letter.

“While we recognize and applaud the company’s previously increased share repurchase authorization, we ask you to consider our advice once again (to the benefit of all shareholders) and consider accelerating share repurchases again via a tender offer.”

Earlier this year, Mr Icahn pulled back from his efforts to make Apple accelerate buybacks after the company revealed it had bought back $40 billion of stock over 12 months.

But on Thursday, his impatience was once again clear.

Mr Icahn told Mr Cook that to “preemptively diffuse any cynical criticism that you may encounter with respect to our request, which might claim that we are requesting a tender offer with the intention of tendering our own shares, we hereby commit not to tender any of our shares if the company consummates any form of a tender offer at any price.”

Mr Icahn was glowing in his praise of Apple’s performance and its prospects, predicting Apple was poised to take market share from Google’s Android in the premium device market as the iPhone 6 becomes a flagship device.

“We believe this advantaged position over Google, the company’s only real competitor, justifies our forecasts for revenue and earnings per share growth of 25 per cent and 44 per cent respectively for fiscal year 2015,” said Mr Icahn.

Apple, which has a current stock market value of more than $608 billion, is due to hold a “special event” on October 16 in Cupertino, California, when it is expected to unveil new iPads and updates to its iMac line of products.