'Activist investor' Carl Icahn today turned his sights on eBay and Apple, proposing that eBay spins off its PayPal business and that Apple should buy back even more of its stock
As it announced its quarterly earnings, eBay said corporate raider Icahn had gained control of almost 1 per cent of the company’s stock and nominated two of his employees to eBay’s board. eBay’s stock price rose as much as 10 per cent in after-hours trading.
eBay said in a statement its board had already “explored in depth a spinoff or separation of PayPal,” but concluded “the company and its shareholders are best served by the current strategic direction of the company and does not believe that breaking up the company is the best way to maximize shareholder value.”
eBay added: “Payment is part of commerce, and as part of eBay, PayPal drives commerce innovation in payments at global scale, creating value for consumers, merchants and shareholders.”
eBay’s revenue rose 13.5 percent to $4.53 billion for the quarter ended December 31, just below some analysts’ estimates.
“We think that it all fits in with the philosophy that we have that shareholders should have a lot more to say on big picture items on companies...” said Icahn on Bloomberg Television.
“We have done a lot of work on eBay... and we believe without question it's a no-brainer that PayPal should be spun off... there's no reason they should be together at this point.
“In fact I think it would be helped by a management team that is separate...”
Earlier, Icahn heaped more pressure on Apple to return more cash to investors, claiming the technology giant is “doing great disservice to shareholders” by not buying back more stock.
The billionaire took to Twitter to criticise Apple’s board, calling for the iPhone maker to “markedly” increase its planned shares repurchase scheme, and saying he would send management an “in-depth letter” stating his case.
Mr Icahn has been calling for an increase to the buyback programme since he disclosed a stake in the company last August, initially pushing for as much as $150bn to be returned to shareholders.
The veteran corporate raider also revealed that his investment vehicle, Icahn Enterprises, had purchased a further $500m of Apple shares, taking its stake to more than $3bn. The holding is Mr Icahn’s single biggest investment, although it represents only 0.6 per cent of Apple. The 77-year-old said the firm’s stock was a “no brainer” at its current price.
Apple is planning to spend $60bn buying back shares over three years but Mr Icahn wants it to return $50bn in the next year. The iPad and Mac maker is thought to be sitting on a $150bn cash pile.
Mr Icahn’s tweets added to pressure on the Apple chief executive, Tim Cook, to increase the buyback plan. Mr Cook said in September that any changes to the programme would be announced “in the first part of the new calendar year”. An increase could come as soon as Monday when the company reports its results for the last quarter.