The bulldog investor has had plenty to say lately about the online auction site’s management. And he continued to vent in a post on his Shareholders’ Square Table site today. But while he was at it, Carl Icahn landed a broadside against Lionsgate, the mini-major that thwarted Icahn’s takeover attempt awhile back. Icahn cites the SEC failure-to-disclose charges against Lionsgate that resulted in a $7.5M settlement deal this month. “In headline grabbing news,” Icahn wrote, “the SEC charged the film and television distribution company Lions Gate Entertainment Corp. (please indulge me if I refer to this affair as ‘Liar Gate’) with failing to fully and accurately disclose to investors key information relating to management’s participation in a set of extraordinary corporate transactions that put over 16 million newly issued company shares in the hands of a management-friendly director at a price of $6.20 per share (the price of those shares was $33.26 per share at market close on March 12, 2013 (the day before announcement of the SEC’s order), creating a total spread of almost $440 million that could have inured to the benefit of all Lions Gate shareholders had such transactions not occurred.
Regulators said that Lionsgate failed in 2010 to properly disclose that a financing move it said would reduce debt was actually designed to help thwart activist investor Carl Icahn‘s takeover attempt. The company agreed to pay a $7.5M penalty which it says in a filing it already accounted for in Q3 as a charge to general and administrative expenses. The SEC took issue with the press release that Lionsgate sent out on July 20, 2010 that characterized a $99.7M debt to equity swap as “a key part of the Company’s previously announced plan to reduce its total debt” — without noting that by issuing new shares it would also dilute Icahn’s stock holdings to 33.5% from 37.9%. “Lionsgate withheld material information just as its shareholders were faced with a critical decision about the future of the company,” says SEC Division of Enforcement Director Andrew Ceresney. “Full and fair disclosure is crucial in tender offers given that shareholders rely heavily on corporate insiders to make informed decisions, especially in the midst of tender offer battles.”
The SEC’s order notes that Lionsgate “had never announced a plan to reduce total debt prior to issuing the press release.” What’s more, “It would have made no economic sense” for the owner of the debt to swap for stock since it “would have been considerably less expensive for the Note Holder to buy stock in the market.” Still, the company arranged an “extraordinary three-part set of … Read More »
The activist investor declared victory today as he abandoned his campaign for a shareholder resolution that appeared headed for defeat. His proposal calling for a larger stock buyback – he put $50B as a good target for 2014 — isn’t necessary following “recent actions taken by the company to aggressively repurchase shares in the market,” he writes in an open letter to fellow Apple investors. The company recently bought $14B of stock in just two weeks, influential proxy advisory firm Institutional Shareholder Services observed in a new report urging Apple stockholders to oppose Icahn’s resolution at the company’s February 28 annual meeting. ISS noted that Apple’s on track to buy $32B of its stock this year which means Icahn “only asks the board to spend another $18 billion on repurchases in the current year.” New York City Comptroller Scott Stringer also said that he planned to vote the city-owned shares against the resolution.The billionaire says that while he’s “disappointed” with ISS’ recommendation, “we do not altogether disagree.” As a result, he says, “we see no reason to persist with our non-binding proposal, especially when the company is already so close to fulfilling our requested repurchase target.” Icahn praises Apple chief Tim Cook’s efforts to boost the stock price and says that the CEO and the company board appear to agree that Apple’s “extremely undervalued, … Read More »
In this week’s podcast, Deadline’s executive editor David Lieberman and host David Bloom talk about pay-TV services from Amazon and Verizon; a chat with the CEO of MLB Advanced Media, which is also providing the backbone for the online subscription operations of WWE and Sony; the doubtful bears wondering how long Netflix can sustain this last quarter’s massive numbers; whether SiriusXM should cut Howard Stern’s $80 million annual paycheck; and why Carl Icahn thinks Apple needs to roll out a 4K TV, and fast. Oh, and they check in on Charter Communications’ latest maneuvers in its campaign to buy Time Warner Cable.
The activist investor made his pitch in a letter to fellow shareholders today urging them to support his resolution calling on Apple to increase its share-repurchase plan. “Given that the company has $130 billion of net cash and $40 billion of expected annual earnings, and the fact that it is hard to find a better time in history to borrow money, a $50 billion share repurchase over the course of fiscal year 2014 seems more than reasonable to us,” Carl Icahn writes — calling this “one of the greatest examples of a ‘no brainer’ we have seen in five decades of successful investing.” He adds that he’s an Apple fan, and over the last two weeks bought $1B of its stock, including $500M today, for a total holding worth about $3.6B. One reason for his optimism is his hope that Apple will finally introduce a TV set that will make it easy for users to watch shows from conventional pay TV and the web, and take advantage of the growing interest in 4K, or Ultra HD, screens. “While cable companies will likely be slow to upgrade their linear TV infrastructure due to cost, video content is expected to be accessible through the internet via services like Netflix and others,” Icahn writes. “We believe ultra high definition represents a major catalyst for the next TV replacement cycle and a promising moment for Apple to introduce its first new product in this category.”
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 disclosed his effort in a tweet — apparently coordinated with a release from Time magazine promoting its new cover story about him where he discusses his proposal. “I’m not against the management of this company,” he told Time. But with $147B “they’ve just got too much money on their balance sheet.” He adds that CEO Tim Cook “is doing a good job with the business. I think he’s good whether he does what I want or not.” But “Apple is not a bank.” Apple told Time that ”As part of our regular review process, we are once again actively seeking our shareholders’ input on our program, and as we said in October, the management team and our board are engaged in an ongoing discussion about it which is thoughtful and deliberate.” Icahn launched his campaign for an Apple buy-back in August. Today’s news did not immediately affect Apple’s trading price, down less than 1% ahead of the close.
The price is down 4% to $16.26 in mid-day trading after the gamemaker reported the deal to pay the activist investor $16.93 a share for his 12.02M shares — bringing the total number of Take-Two Interactive shares outstanding down to 81M. CEO Strauss Zelnick says that the agreement “reflects our confidence in the Company’s outlook for record results” in the current fiscal year, and leaves Take-Two with enough cash “to pursue a variety of investment opportunities, including repurchasing our Company’s stock.” But some may wonder whether Carl Icahn‘s exiting because he senses that things have peaked for the company behind titles including Grand Theft Auto, Borderlands, and Duke Nukem. Shares are up 31% over the last 12 months but have slipped about 14% since late August. Cowen and Co analyst Doug Creutz downgraded Take-Two to “market perform” last week saying that every major title the company has shipped in recent years “has been delayed at least once, sometimes for multiple years.” It also faces “a significantly uphill battle next year against a crowded industry release slate” which includes Titanfall, Destiny, Call Of Duty, Halo, and Assassin’s Creed. Read More »
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.” Read More »
Talk about profit taking. The billionaire investor just made about $800M after selling nearly 3M Netflix shares that Icahn Enterprises says was done “in view of the 457% increase in the price of those shares since the original investment at approximately $58 per share.” Netflix hit an all time high of $389.16 early today after it unveiled stronger than expected Q3 results. But it closed at $322.52, -9.2% — with much of the decline likely due to Icahn’s sales. He still has nearly 2.7M shares, equal to about 4.5% of the company votes. He bought his holdings about a year ago, and briefly tangled with CEO Reed Hastings after Netflix adopted a poison pill – a takeover defense designed to prevent Icahn from engineering an unwanted sale. Today Icahn thanked Hastings and Chief Content Officer Ted Sarandos “for a job well done.” He added that “last but not least, I wish to thank Kevin Spacey” who starred in Netflix’ series House Of Cards. Icahn says that as “a hardened veteran of seven bear markets” he knows that “when you are lucky and/or smart enough” to make such a big profit “it is time to take some chips off the table.” But his son, Brett, and another fund manager at Icahn Enterprises, David Schechter, elected to tie some of their compensation to the performance of Netflix shares. They call the $7.99 a month streaming service “one of the great consumer bargains of our time” and say that it “could ultimately raise prices to $9.99 per month over the course of the next five years.” They also are confident that Netflix can enlist as many as 90M domestic subscribers. Between that and growth opportunities overseas “we believe Netflix’s valuation is still relatively low.” Carl Icahn said in a July interview on CNBC that he wanted to sell his shares “100 points ago, and my son threatened to leave” the company. Netflix is down 2.2% in post-market trading following the Icahn announcement
The stock is up 2.5% in mid-day trading after the billionaire corporate activist turned to Twitter and CNBC to discuss his dinner last night with Apple CEO Tim Cook. Carl Icahn said in a tweet this morning that he had “a cordial dinner with Tim” and “pushed hard” for the stock buyback. “We decided to continue dialogue in about three weeks.” He now controls nearly $2B in Apple stock, and considers a share repurchase “a no-brainer,” he told CNBC. “I can’t promise you the stock will go up and I can’t promise you they will do the buyback. But I can promise you that I’m not going away until they hear a lot more from me concerning this.” The price is right, he says: Apple shares are down 25.9% over the last 12 months as investors questioned whether it can come up with another blockbuster product to rival the iPhone and iPad. In addition, Apple has a lot of cash — although much of it is parked in other countries with unusually low tax rates. Even so, Icahn says Apple can take advantage of today’s low interest rates and borrow money to buy stock. Read More »
Billionaire investor Carl Icahn again took to Twitter to chat up Apple — just more than a week after he tweeted he has “a large position” in the computer giant, believes it to be “extremely undervalued” and spoke with CEO Tim Cook about it all. Today, he tweeted: “Spoke to Tim. Planning dinner in September. Tim believes in buyback and is doing one. What will be discussed is magnitude.” Icahn last week had told Reuters that Apple should repurchase $150 billion worth of its shares after borrowing the funds at an interest rate of 3%, saying the stock should trade at $700 if earnings increase as little as 10% and his advice was followed. Last week’s tweet helped boost Apple stock — down 23.4% over the last 12 months — by 5%; today Apple is mostly flat and is trading at $502.73 a share, up about 13 points since Icahn confirmed his stake rumored to be worth about $1 billion. In March, Apple announced plans to buy $100B of its shares by the end of 2015, calling it the largest share buyback of any company in history. At the time, it raised its dividend 15% to $3.05 a share. Of course famed corporate raider Icahn has played less nice with media-centric companies before including Blockbuster Video and more famously Lionsgate.
UPDATE, 2:57 PM: Apple should repurchase $150B worth of its shares after borrowing the funds at an interest rate of 3%, Carl Icahn tells Reuters. ”If Apple does this now and earnings increase at only 10%, the stock — even keeping the same multiple currently — should trade at $700 a share,” he says. The stock closed today at $489.57, +4.8%. adding about $20B to the company’s market value.
PREVIOUS, 11:43 AM: Company shares are up 4.3% this afternoon after the billionaire investor tweeted that he has “a large position” in Apple, believes it to be “extremely undervalued” and spoke today with CEO Tim Cook. In what he describes as a “nice conversation,” Icahn says he “discussed my opinion that a larger buyback should be done now. We plan to speak again shortly.” Apple shares are down 23.4% over the last 12 months as investors fear that competitors including Google will continue to take market share from the iPhone and iPad — and that the iconic consumer electronics company won’t have another blockbuster product to pick up the slack. This morning Oracle’s Larry Ellison said in an interview that Apple isn’t likely to regain its former glory following the death of Steve Jobs. Apple’s expected to unveil an updated iPhone on September 10.
The corporate raider, who owns 9.9% of the company’s stock and has lobbied for Netflix to sell itself, has been “supportive,” Chief Creative Officer Ted Sarandos says. “It’s been very positive”, although they haven’t spoken specifically about Netflix’s deal yesterday with Disney. But the exec told the UBS Global Media and Communications Conference that this is no time for Netflix to sell itself. “The growth we’re seeing in the U.S. and the growth we’re seeing in international, we’re just in the beginning. …It’s an amazing cycle of innovation.” Indeed, he asks: “Would there have been HBO Go without Netflix? No way.” Sarandos says that competition is growing but “we never thought we’d run away with the whole sector.” And he says that “there aren’t many direct competitors.” For example, Amazon Prime offers discounts on e-commerce shipping, and Hulu Plus has ads. Netflix recently beefed up its anti-takeover protections to keep Icahn at bay.
Netflix has maintained its dominance of online viewing, defying predictions that competitors would snatch market share, Bloomberg reports. Netflix captured 33% prime-time Web viewing based on Internet traffic in September, beating Amazon.com, Hulu and Time Warner Inc.’s HBO Go by a multiple of at least 18, according to Sandvine Inc.’s Global Internet Phenomena Report. A year ago Netflix’s share was 32.7% and it share of peak Internet viewing traffic has climbed from 20.6% in the second half of 2010. Amazon’s market share amounted to 1.75% in September, while Hulu garnered 1.38% and HBO Go had 0.52%, according to the study. Billionaire investor Carl Icahn said last week he has taken a stake of almost 10% in Netflix and views the stock as undervalued. Netflix rose 1.7% to $77.68 at the close today in New York. The stock gained 12% in 2012 but is down 74% from a July 2011 closing high of $298.73. Netflix also adopted a poison pill takeover defense against Icahn. Sandvine said Netflix should maintain at least a 10-fold lead over competitors through 2014. Google’s YouTube is the No. 2 site with 14.8% of peak downstream traffic. Apple’s iTunes is No. 5 with 3.92%, up from 3.05% a year earlier. On mobile devices, however, YouTube remains the biggest user of bandwidth.
Netflix’s new poison pill has riled the legendary corporate raider, who recently bought stock and options equal to 9.98% of the company. Adopting an anti-takeover defense like this without a shareholder vote “is an example of poor corporate governance,” Icahn says in an SEC filing. He’s particularly upset with its “remarkably low and discriminatory 10% threshold.” Icahn calls Netflix “one of the few companies that continues to ignore the fact that the shareholders have strongly expressed their wishes through a majority vote” to get rid of another anti-takeover defense: its staggered board. Only about a third of the directors are re-elected each year, making it difficult for shareholders to quickly change management. “As one of the company’s largest shareholders we are concerned about the poor corporate governance at Netflix that these and other actions reflect,” Icahn says. Netflix shares are virtually unchanged in mid-day trading.