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EvanBuck (99.77)

For Carl Icahn, "2 Out Of 3 Ain't Bad."

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February 10, 2014 – Comments (4) | RELATED TICKERS: AAPL , GOOGL

No, I don't have poor grammar - the title is a reference. =) News broke today that billionaire investor Carl Icahn will not push ahead with his stock buyback proposal for Apple (NASDAQ:AAPL) after proxy advisory company Institutional Shareholder Services advised investors to vote against the buyback proposal.

Back in December (http://caps.fool.com/Blogs/icahn-has-overplayed-his-hand/899133) I said Icahn was overplaying his hand with his proposal, and now it looks like Apple called his bluff. What's fascinating, however, is that Icahn is getting about two-thirds of what he wants with Apple's already planned share repurchases this year (http://www.cnbc.com/id/101403715). So, overall, Icahn wins, Apple management wins, and investors win with this news. Like CNBC though, I'm concerned the billions Apple is directing for stock repurchases are not going towards research and development or acquiring new companies/technology to compete with the likes of Google (NASDAQ:GOOG), who has been on a purchasing spree lately.

4 Comments – Post Your Own

#1) On February 10, 2014 at 9:50 PM, awallejr (79.57) wrote:

Except the billions weren't going to R&D or M&A either.  So might as well do something with the money.  Personally I prefer increaed dividends instead.

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#2) On February 11, 2014 at 9:36 AM, ElCid16 (96.90) wrote:

 I'm concerned the billions Apple is directing for stock repurchases are not going towards research and development or acquiring new companies/technology

In the past four years - combined - Apple spent about $12B in R&D.

Even if they doubled or tripled the amount of R&D spend over the next 4 years, they'd still have way too much excess cash.  There was nothing wrong with spending a few billion on buybacks.

Google (NASDAQ:GOOG), who has been on a purchasing spree lately. 

I know Google has acquired "a bunch" of companies lately, but again, nothing close to the >$100B in excess cash that Apple currently has.

It's not an "either, or" situation here.  It's not like they can spend money on buybacks or R&D or acquisitions.  They can do all of those things, and still have tons of cash on hand.  I think the fact that they haven't starting buying companies, simply because pundits on CNBC think they should buy the latest tech IPO, speaks volumes about their fiscal conservatism, and aversion to bad acquisitions.

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#3) On February 11, 2014 at 3:44 PM, Mega (99.97) wrote:

As an AAPL shareholder I would hate for them to adopt a Google like acquisition strategy. Google's Motorola acquisition and others look very suspect (although the market has not penalized them for it at all).

I'd love to get more dividends and own a higher percent of the company through buybacks. That's why I voted for the Einhorn and Icahn proposals.

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#4) On February 11, 2014 at 9:12 PM, EvanBuck (99.77) wrote:

You know what, all three of you make good valid points! =) I tend to agree. Although I don't think Apple should go snapping up companies like Google I do think they could be putting a little more money there.

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