The billionaire investor‘s back on the Twitter and CNBC trail today. He said in a tweet this morning that, over the last two weeks, he bought $500M in Apple’s shares, bringing his total to more than $3B. “Since tweeting about our large position in [Apple] on August 13, when the stock was $468 per share, we’ve kept buying shares of this ‘no brainer’,” he said. Shares closed yesterday at $549.07. Still, he put the company on notice that he’s about to release what he calls an “in-depth letter” as part of his campaign to pressure CEO Tim Cook and the board to increase share repurchases. “We feel [Apple's] board is doing great disservice to shareholders by not having markedly increased its buyback,” Icahn says. He filed a shareholder proposal for a vote on the issue at the company’s next annual meeting. “I’m not against the management of this company,” he told Time for a cover story that ran last month. But with $147B “they’ve just got too much money on their balance sheet.” He’ll likely expand on that mid-day when he appears on another of his favorite venues: CNBC. Apple shares are up 1.4% in late morning trading.
The activist investor isn’t limited to Twitter and CNBC to broadcast his views. Hot off his $800M windfall this week from the sale of half his Netflix shares, today he introduced a site, Shareholders’ Square Table, where he says he’ll “discuss what can be done to change our current, dysfunctional system of corporate governance” that results in CEOs and boards “that are strangling shareholders and the economy.” His first target is Apple: Icahn published a letter he sent yesterday to CEO Tim Cook repeating a plea for the company to spend $150B to repurchase shares. Over the last month Icahn boosted his Apple stake by 22% to 4.7M shares “reflecting our belief the market continues to dramatically undervalue the company.” He adds that he “could not be more supportive of you, the existing management team, the culture at Apple and the innovative spirit it engenders.” But he’s unhappy with the current pace of buy-backs. “Apple’s Board of Directors does not currently include an individual with a track record as an investment professional,” he says. “In my opinion, any further delay in executing the buyback we hereby propose will reflect this lack of expertise on the board.” If Apple follows his advice, then in three years the share price — which closed yesterday at $524.96 — could appreciate to $1,250. To show that he isn’t in this to make a quick profit, Icahn says that he would “withhold my shares from the proposed $150 Billion tender offer. There is nothing short term about my intentions here.”
Billionaire Julian Robertson, who created Tiger Management Corp, told CNBC’s Maria Bartiromo that Walter Isaacson’s 2011 biography of the Apple founder changed his view about investing in the company. “How can you create a great organization of people and be that mean a person?…He was really a pretty terrible guy.” Robertson says that Steve Jobs was a “genius,” and concedes that “if he were still there I’d still be in it.” But without him, Robertson says, the company is left with a “bad culture [and] bad principles.”
Investors continued to hammer Apple after it made clear yesterday that it will continue to try to keep profit margins high on its iPhones, and not release a budget-priced model that might help it expand into developing markets. Shares dropped 5.4% to $467.83 today following downgrades from firms including Bank of America, UBS and Credit Suisse. On top of yesterday’s price drop, it translates into a $34.8B decline in the company’s market value since Monday. While investors love the iPhone’s high profit margin, estimated at about 40%, they also wanted the company to go after new buyers overseas, especially in China and India, who might be enticed by a device that costs about $400 (not including a carrier subsidy). Instead, the 5C came with a $549 price tag in the U.S., and about $733 in China. A budget phone was “nowhere to be found” as Apple maintained its focus on “profit share over unit share,” with the 5C expected to generate margins of about 50%, says Cowen and Company’s Timothy Arcuri. Hopes for a big deal with China Mobile at an event today also came to naught: China certified the new iPhones to run on the company’s network, but so far there’s no deal. At an event today the companies played a video of yesterday’s iPhone unveiling in California. But Apple still …
Shares are up about 5.2% in after-market trading. But there’s something for bulls and bears alike in the quarterly announcement — which Wall Street is closely watching following the 42% decline in Apple’s stock price since September. The company generated net income of $9.5B in the quarter, -17.9% from the period last year, on revenues of $43.6B, +11.3%. The revenue figure beat analysts’ projections for $42.6B. Earnings per share at $10.09 also are slightly ahead of the consensus forecast of $10.07. Still, this was the first time in a decade that Apple’s year-over-year earnings have fallen. And the company’s guidance for the current quarter fell short of expectations: The company says revenues could end up as high as $35.5B, below forecasts of around $38.6B. It also projects a gross profit margin of as much as 37%, shy of projections for 38.6%. CEO Tim Cook lauded the “continued strong performance of iPhone and iPad.” Apple sold 37.4M iPhones in the March quarter (+6.6%), and 19.5M iPads (+65.3%). But Mac sales declined 1.6% to “just under” 4M, and iPods dropped 26.6% to 5.6M. Cook adds that the company is “hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline.” We’ll see if he offers more details shortly when he takes questions from Wall Street analysts.
That’s the question of the day for Apple followers as the company’s fans on Wall Street lick their wounds from last night’s disappointing earnings report. The stock fell 12.4% today to $450.50. That’s the company’s worst one-day performance in about four years, and puts Apple shares right where they were about year ago. The company’s market value of $423B is still impressive, but a far cry from late September around the time it released the iPhone 5. Back then, investors thought it was worth more than $659B. To put this into perspective, the drop in the perceived value of Apple over the last four months amounts to more than the value of Comcast, Disney, and Viacom combined.
Apple-mania will fade at some point. But not yet. The company’s stock was up 2.7% today to close at $601.10 — its highest closing price ever, and up 81.8% over the last 12 months. Much of today’s bump can be attributed to the announcement this morning that the company will spend $45B over the next three years paying dividends and repurchasing its stock. But Wall Street may send Apple shares even higher tomorrow following the company’s announcement, after the closing bell, that it sold 3M of the new iPads on their first weekend on the shelves. That’s “the strongest iPad launch yet,” says SVP of Worldwide Marketing Philip Schiller. Indeed, it’s three times more than the iPad 2 sold in its opening weekend last year. The momentum could continue next weekend as the company introduces the revamped tablet computer to 24 additional countries including Austria, Greece, Italy, Mexico, Poland, Spain, and Sweden. The only hitch for Apple? It’s making a smaller profit on the new iPad: It costs $364.35 to make the new model with 32 GB of memory and 4G connectivity that sells for $729, research firm iSuppli says. The model of the iPad 2 with the same amount of memory and 3G connectivity cost $335 to make.
Investors will be listening intently today when Apple CEO Tim Cook addresses the Goldman Sachs Technology and Internet Conference. The tech giant’s stock is on a tear — it closed Monday at $502.60, a record high and up 24.1% so far in 2012. And Wall Street is trying to figure out: Is this run up just beginning, or is it time to sell? Cook could provide some clues in the way he handles questions about investors’ extravagant expectations for Apple’s efforts to introduce new or refreshed products this year. It’s widely believed that early next month it will unveil the iPad 3, with a sharper screen and the ability to tap Verizon and AT&T’s 4G wireless networks. Now it seems Apple also is testing a tablet with a smaller, 8-inch screen to take on rivals such as Amazon’s Kindle Fire, which has a 7-inch screen, The Wall Street Journal reports today. Meanwhile bulls say that the iPhone will continue to be a big story this year with sales just beginning in China — and the widely expected release in the U.S. of a 4G-capable iPhone 5. Apple also is benefitting
Bob Iger joined the Apple board of directors on November 15 and already is showing the love for his new teammates. According to an SEC filing, the Disney chairman and CEO this week acquired 2670 shares of the tech giant at an average price of $375, putting the total cost at just above $1 million. The move is seen as a gesture of confidence in the company, which is moving on following the death of Steve Jobs, but it would have been more fun if Iger had bought $1 million worth of iPhones and passed them out randomly at Disneyland. Oh well, maybe next time.