Icahn says bigger buybacks can drive Apple shares to $700

Tue Aug 13, 2013 7:27pm EDT
 
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By Edwin Chan and Jennifer Ablan

SAN FRANCISCO/NEW YORK (Reuters) - Activist investor Carl Icahn said he has amassed a "large position" in Apple Inc and believes the stock could be worth as much as $700 a share if Chief Executive Tim Cook pushed for a larger stock buyback.

The surprise revelation from the billionaire activist caused a stir on Wall Street and pushed Apple's stock almost 5 percent higher to close at a 7-month high of $489.57 on the Nasdaq on Tuesday.

Icahn said on Twitter that he had a "nice conversation" with Cook on Tuesday and they planned to speak again soon. Apple confirmed the conversation took place, but did not say if it influenced management's view of buybacks.

Icahn told Reuters that the iPhone, iPad and Mac computer maker has the ability to do a $150 billion buyback now by borrowing funds at 3 percent.

"If Apple does this now and earnings increase at only 10 percent, the stock - even keeping the same multiple currently - should trade at $700 a share," Icahn said in a phone interview. Apple has "huge borrowing power, little relative debt and trades at a low multiple."

Icahn, who this year launched an assault on Michael Dell's $25 billion effort to take Dell Inc private, did not say how many shares of Apple he holds.

A source familiar with the matter, who declined to be named because Icahn hasn't disclosed his holdings in Apple, said the investor's stake was worth around $1 billion, a fraction of the company's market value of more than $400 billion.

U.S. rules require investors to disclose stakes of 5 percent or larger within 10 days of hitting that threshold.   Continued...

 
Investor Carl Icahn speaks at the Wall Street Journal Deals & Deal Makers conference at the New York Stock Exchange in this June 27, 2007 file photograph. REUTERS/Chip East/Files