Carl Icahn, head of Icahn Enterprises LP (NASDAQ:IEP), wants to change Apple Inc. (NASDAQ:AAPL) and he’s going to get his chance next Monday. According to AllThingsD Icahn will meet with Apple head Tim Cook on Monday to discuss the future of the company, and the capital distribution package.
Carl Icahn is an activist investor. That means he likes to identify companies that are undervalued because of poor management. He buys stock in those companies and gets management to change, or changes management himself. Luckily for Apple Inc. (NASDAQ:AAPL) Icahn is pretty happy with the management at Cupertino. He’s not happy about the price of the stock however.
Apple meets Carl Icahn
According to this morning’s report Carl Icahn and Tim Cook will meet to discuss the company before October is out, making the likely date of the meeting next Monday. Icahn has been talking about an upcoming dinner with Tim Cook for weeks, but it won’t be all pleasantries. Icahn wants to get its hands on Apple’s money.
Apple Inc. (NASDAQ:AAPL) is sitting on around $150 billion in cash and the company does not know what to do with the money. The smartphone maker starting paying a dividend to shareholders for the first time last year and has introduced a huge share buy back program. Icahn wants more from the company and he thinks shares will be worth much more if Apple Inc. (NASDAQ:AAPL) returns money to shareholders.
Icahn wants a much bigger buyback from Apple Inc. (NASDAQ:AAPL) and he wants the company to borrow money in order to do it. Icahn has been talking about the benefits of such a program for a long time. Back in August he told Reuters, “If Apple does this now and earnings increase at only 10 percent, the stock — even keeping the same multiple currently — should trade at $700 a share.”
Apple acting on market pressure
Apple Inc. (NASDAQ:AAPL) founder Steve Jobs was no fan of returning the company’s money to shareholders, and the changes made by Tim Cook have been targeted by those who argue the company is changing for the worse. Those arguments suggest that Apple is much more susceptible to market pressure now and it is worsening the decisions it makes.
Apple Inc. (NASDAQ:AAPL) is too big to fall before Icahn’s monetary might, but his ideas might be popular among shareholders. Everybody wants shares in the company to become more valuable and nobody wants the company to face a shareholder revolt. Carl Icahn appears to have a lot of advantage on his side.
Tim Cook is appeasing shareholders by considering the Icahn deal, and he may be forced to appease his way into paying out a large amount of money. Apple Inc. (NASDAQ:AAPL) shareholders should be happy that Icahn is taking their side against the company, but if the conflict gets violent things might get rough at Cupertino.