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.
Listen to (and share) episode 56 of our audio podcast Deadline Big Media With David Lieberman. Deadline’s executive business editor talks with host David Bloom about giant pay-TV profit margins, Netflix’s big quarter as it moves past HBO in the United States; Carl Icahn’s latest efforts to turn the heat up on Apple; and Apple’s very interesting series of new hardware and software products and what they might mean for Microsoft.
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.”
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
Here’s the release from Icahn Enterprises:
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.
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 …
The billionaire corporate raider just paid $154.7M for 4,291,066 Netflix shares, he says in an SEC filing. His decision to exercise his call options means he now directly owns 9.98% of the video streaming company — 5,541,066 shares — …
The activist investor is trying to hang a “For Sale” sign on Netflix after he bought stock and options equal to 9.98% of the company. “It would be the mother of all auctions” if Netflix put itself in play, he says. The company’s effort …
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 …
The new plan “is intended to protect Netflix and its stockholders” from a takeover effort that the board believes would not “enable all stockholders to realize the long-term value of their investment in Netflix,” the company says this morning. But it adds that the effort would not interfere with a business deal that’s approved by the board. The terms appear to be specifically designed to block corporate raider Carl Icahn, who disclosed last week that he owns stock and options equal to 9.98% of Netflix. It would essentially enable the company to flood the market with shares to dilute any additional purchases he makes. Specifically, Netflix would give those owning stock as of November 2 a collection of rights equal to the number of shares they already own. Each right would give the owner the ability to buy one one-thousandth of a share of a new series of preferred stock at an exercise price of $350 per right. These new rights would become exercisable once an individual (say, Icahn) owns at least 10%, or an institutional investor acquires 20%, of Netflix’s stock without the board’s approval. The rights will expire on November 2, 2015 if they haven’t been redeemed.
Lots of Netflix investors seem to believe that the corporate raider has enough ideas and juice to revive the video rental company, which is struggling to secure its place in the media ecosystem. Shares only retreated 3% since Wednesday, when they popped 13.8% on the startling news that Icahn bought stock and call options that could give him 9.98% of the company. That resulted in widespread speculation that the legendary crusader for shareholder value has a plan to force Netflix to take a new direction following nearly a year and a half period during which Netflix lost 74% of its market value.
Well, if he does, then it will be interesting to see what it is — and how he might prevail if he crosses swords with CEO Reed Hastings. Icahn has fewer options than people think.
Potent anti-takeover provisions in Netflix’s by-laws would make it difficult to wage a hostile effort to take over the board. The company’s staggered elections mean that only a third of the directors are replaced each year. What’s more, Netflix doesn’t allow shareholders to call a special election to pick new directors. If Icahn continues to buy stock, the company can exercise what’s known as a poison pill — a provision that gives the board the right to flood the market with up to 10M preferred shares, diluting the value of his holdings. Corporate law in Delaware, where Netflix is incorporated, also bars companies from combining with a holder of more than 15% of its stock unless the holder has had the shares for at least three years — unless the board approves the transaction.
Netflix shares skyrocketed — +20% at one point in mid-afternoon trading before closing +13.8% — after the billionaire corporate raider disclosed that he recently bought stock and call options that could give him control of 9.98% of the company. Carl Icahn says in an SEC filing that Netflix is “undervalued” and “may hold significant strategic value for a variety of significantly larger companies that are engaging in more direct competition with one another due to the evolution of the internet, mobile, and traditional industry.” Icahn also is “considering ways for [Netflix] to maximize shareholder value.” But he has “reached no conclusion” and “may in the future seek to have discussions” with the company. That’s a loud cannon shot across CEO Reed Hastings‘ bow: Icahn made his name as a so-called corporate raider, buying stock in companies that he considered undervalued and then angling either to take control or change the firm’s strategy to boost the share price.
Lionsgate Vice Chairman Michael Burns had to disappoint analysts who wanted him to open up about the big question of the day for his company: What’s going on with its reported merger talks with Summit Entertainment? “I’m not going to talk about any specific deal,” he said at the UBS Annual Global Media and Communications Conference. He noted, though, that a consolidation of independent film and TV companies is “a natural thing to happen.” He assured the group that Lionsgate is only interested in deals that add to its value, and don’t require it to either issue stock or take on additional debt. “We’re looking to delever, not lever up,” he says.
With that out of the way, he spoke candidly about the company’s plans for next year where he says “you’ll see us steady state for the first time” cranking out about a dozen movies and about three new TV shows. He’s encouraged about a plan to develop a TV series for ABC based on The Lincoln Lawyer – and Charlie Sheen’s Anger Management. ”I’ve known Charlie a long, long time,” Burns said. “Our goal is to keep Charlie working, keep him healthy — and we have a great partner in FX.” Burns says that a series it’s developing for