Carl Icahn wants more cash from Apple (Nasdaq:AAPL) and we all know Apples has it. Apple just recently started paying a dividend and perhaps is on the path to attracting dividend oriented investors.
What’s the game plan?
Tim Cook privately may agree that they have a lot of cash hanging around. Much of it has not been brought back to the USA because of that stupid tax law. But Apple has brought some back and paying the tax so it looks good in Washington DC. This may have been the deciding factor about why Carl Icahn decided to take a run at Apple. Tim Cooks big problem is that he cannot appear to be bullied by Carl Icahn. Carl Icahn has been less than gentle with some other prey. No one wants to see this at Apple.
Other companies who have attracted Carl Icahn’s have decided to come to terms and get it behind them. How much share repurchase will satisfy Carl Icahn? Will Apple even want to substantively respond to Carl Icahn’s suggestion. Apple shares are low so this is the best time to do a share repurchase. Value is created by buy low sell high.
Here are a few things Apple can do to thwart Carl Icahn and still take care of the shareholder.
- Increase the dividend rate and claim that they are returning capital to investors “Olde School” Carl Icahn has short-term objectives but a higher dividend yield in a rising interest rate environment can be argues as wealth enhancing.
- Introduce new products, get the Apple Hype Machine cranked and watch the stock soar to the heavens.
- Actually increase the share buy back some but not in the range that Carl Icahn wants.
- Let shareholders know what the true tax cost of repatriating funds on shore really is. Will the tax cost become prohibitive and make Carl Icahn look greedy, greedy, greedy.
Here are a few things Carl Icahn and supporters need to thing about.
- If the market crashes this fall should Apple be spending treasure to drive up prices that will not move upwards. Let the stock drop and then rebuy.
- Carl Icahn is 77 years olde (DOB Feb 16, 1936) I know he’s a doctor by training and looks fit but the original factory parts are near the end of their useful life. Death or severely debilitating medical condition is a high probability if you’re a life insurance actuary. This is not insurable.
- What if Apple just says no? What you gonna do? Sell the stock in perhaps one of the greatest entry point opportunities of the stock history. This is Apple. Investor opinion will not conclude management needs a shake up or something else. Carl Icahn simply wants to wet his beak and maybe Apple just doesn’t need to do anything just because its Carl Icahn.
- Strategic counter moves by Apple such as a major acquisition or two which reduces cash and makes his suggestions seem foolish.
Apple has enough cash to buy a huge aircraft carrier. Rename it Carl Icahn and then just sink it. Just for fun. And maybe they should.
Tim Cook needs to stride out of this with reputation more than intact. Enough Wall Street Bankers are more than capable of giving him a tutorial in financial cash management.
George Gutowski writes from a Caveat Emptor Perspective. Follow him on Twitter @financialskepti . He is pretty sure some aircraft carriers are for sale.
Carl Icahn on the now very famous Twitter feed follows only 5 individuals all of whom are respected Business Journalists. They are
Nathan Vardi Forbes Reporter @nathanvardi
Steven Bertoni Forbes Associate Editor @StevenBertoni
DAVID FABER CNBC @davidfaber
Trish Regan Anchor & Editor at Large BloombergTV @trish_regan
Scott Wapner CNBC @ScottWapnerCNBC
Communication is nuanced process. These five scribes are all reputable and work for reputable news organizations. Carl Icahn has close to 53K of followers. In aggregate these five have 86K in followers. The Forbes guys are really low. Print vs television maybe? So the relative followers on Twitter has nothing to do with it. So watch and listen and see if these guys are just newshounds or can they be played in some fashion.
George Gutowski writes from a caveat emptor perspective. He can be followed on Twitter @financialskepti To the best of his knowledge Carl Icahn does not follow him on Twitter. But if you want you can follow Carl_C_Icahn. I’m sure every Barracuda class action lawyer is.
Chesapeake Energy (Photo credit: Wikipedia)
Chesapeake (NYSE:CHK) will attempt to hold something called an annual meeting on June 8, 2012. Normally annual meetings are very close to Kabuki theater. Chesapeake would love to experience a Kabuki theater moment. Kabuki theater is highly predictable and without surprises, or so I’m told. Carl Icahn has walked onto the stage with an activist agenda wanting to replace four directors. CHK is responded they want to find a chairman first. Not sure who would want the job to be very frank about it. Snakes everywhere and declining energy prices.
The entire situation has been dysfunctional so expect the dysfunctional. Here are a few possible problems that may arise.
- Board may adjourn claiming extraordinary situation.
- Activists may seek to postpone the meeting until only God knows when.
- Enough directors resign seeking to flee continued personal responsibility.
- Courts may rule annual meeting should be adjourned.
- Annual meeting may actually be held and no one will be happy with outcomes.
In any event Friday June 8, 2012. Bring your heavy artillery.
George Gutowski writes from a caveat emptor perspective.
Image via Wikipedia
Dynegy (NYSE:DYN) reported Q3 results just several days after starting chapter 11. Usually investors read results closely. But in this case the chapter 11 process will trump fundamentals and common sense. But then again investors have already been slaughtered.
Dynegy is a highly complex company. It’s difficult to understand and lots of moving changing parts. Even when it comes out of chapter 11 lots of more straight forward ways to play energy ideas.
This post was written from a caveat emptor perspective.
Image via CrunchBase
Research in Motion (Nasdaq:RIMM) is offering free apps to individual users. They are also offering free tech support to enterprises customers. Apologies are so manic-depressive. The real trick is to not have a repeat problem. Enterprise customers who use the tech support will hopefully shut up internally about the Blackberry problems.
Blackberry needs to win back their approval and support. If your internal IT people keep referring to Blackberry as that sh*t product you will eventually switch.
Not much communication on what the costs are moving forward or what the costs are looking backward. Too much stone walling. The Carl Icahn attention chills senior officers so you hunker down and say as little as possible.
Disclosure: George Gutowski writes from a caveat emptor perspective. I hath not positions in stocks mentioned in this post. I hath not plans to initiate new positions within the next 72 hours.
Image via CrunchBase
Research in Motion (Nasdaq:RIMM) continued service problems have hit the third day. Customers are clearly upset and the brand has less value. At the same time Carl Icahn and maybe Jaguar Financial are attempting to secure proxy power to straighten out management and supposedly create more wealth.
Vic Alboni does not know how to fix this problem. The service outage is a nuts and bolts operating issue. The question becomes why is the network so unstable. Selling this or rebranding that will not solve this mess. As the problem goes on for the third day it clearly is serious and not just one lose connection somewhere.
If as and when James Balsillie and Michael Lazaridis fix the problem they will be able to spin the issue in their favour, arguing that the Vic Alboni’s and Carl Icahn’s would not know what to do and therefore should not be listened to.
Disclosure : George Gutowski writes from a caveat emptor perspective. Readers should always have a caveat lector perspective. I hold not any positions in stocks mentioned in this post. I hath no plans to initiate new positions within the next 72 hours.
The market is rife with take over rumours. Will Research in Motion (Nasdaq:RIMM) be taken over by someone? Now we have Carl Icahn curled up in the corner waiting and watching. Can he talk out of both sides of his mouth a the same time. First message RIMM needs to pick it up. Yadda yadda. Next message to those considering a take over. What are you kidding? Do you know what this is all worth? You have to pay more. Carl Icahn will throw a monkey wrench into the works. San he be sued for preventing shareholder wealth from being maximized.
Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.