Apple Inc. (AAPL): Icahn’s Buyback Is “A Big Mistake,” Says Jim Cramer

Carl IcahnImage source: CNBC Video Screenshot

Apple Inc. (NASDAQ:AAPL) shares haven’t really been affected by all the positive news reported about the company lately. As a result, Jim Cramer (via The Street) has concluded that investors just hate the company for no reason. In fact, he says Apple shares are still doing the opposite of what the markets are doing, only in reverse. Instead of Apple shares rising and the markets falling or remaining flat, the situation is reverse.

So what can the company do to fix this? He says Carl Icahn’s share buyback proposal is wrong and that instead, a big acquisition is in order.

News hasn’t budged Apple shares one bit

Cramer points to three bits of news he thinks should have sparked upward movement in Apple Inc. (NASDAQ:AAPL). He references a rumor that the company is working on two new iPhones with larger screens and / or flexible screens. He notes that these features are “well-liked” in Samsung’s phones, so why wouldn’t it be good for Apple to do it too?

He also points to a report from Piper Jaffray about Apple’s new patent which could help it take big steps into the living room and a third report which indicates that the company is taking a commanding position in the Japanese mobile market.

What could Apple do to “get the stock going?”

Since none of these bits of good news are doing the trick, Cramer suggests Apple Inc. (NASDAQ:AAPL) could make a key acquisition “to get the stock going,” although he admits the company probably doesn’t want to hear that phrase. He suggests Apple bid $35 billion for Twitter Inc (NYSE:TWTR) or try to buy Netflix, Inc. (NASDAQ:NFLX) for $30 billion.

So why would an acquisition make a difference? He says currently Apple is drowning in “financial engineering” and that investors would finally stop hating the company if it bought a super-growth company like either of the two he has mentioned.

Jim Cramer about Carl Icahn

Like many others, Cramer also disagrees with Carl Icahn’s share buyback proposal. He says he likes the way Icahn has pushed other managements into returning cash to shareholders, but he thinks returning cash through the share buyback plan Icahn is pushing for “is a big mistake.” He says it won’t affect Apple Inc. (NASDAQ:AAPL) over the long term, although he notes that “sitting on cash” won’t do much for the company either.

Cramer says he likes Apple, but “unless it stops talking to Icahn and starts talking to bankers about an acquisition that gives it ‘social,’ the stock will be dead in the water until estimates come down so far that it can blow them away.”

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at [email protected]

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