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Carl Icahn Gives Up On Apple Buyback Plan

Carl Icahn

Billioniare investor Carl Icahn says that there’s no reason to persist with his Apple buyback proposal, according to new letter.

Icahn, who is one of Apple’s biggest shareholders, has been pushing the company to unleash some of its massive cash hoard in the form of a $US50 billion stock buyback.

Over the weekend, ISS told shareholders to vote against the buyback proposal.

Icahn said this disappointed him.

Still, it doesn’t appear to be a total loss for Icahn. In his letter, he notes that Apple has already repurchased $US14 billion worth of shares in the last two weeks and that the tech giant is on track to repurchase at least $US32 billion in the fiscal year.

Here’s the full letter:

Dear Fellow Apple Shareholders,

While we are disappointed that last night ISS recommended against our proposal, we do not altogether disagree with their assessment and recommendation in light of recent actions taken by the company to aggressively repurchase shares in the market.

In their recommendation, ISS points out, and we agree, that “on the spectrum of options for allocating capital, the board appears to have been sluggish only in returning excess cash to shareholders,” and even though the company has in place “one of the largest buybacks in history” we agree with ISS that this effort seems “like bailing with a leaky bucket” when “given the scale of the company’s cash reserves.”

That being said, we also agree with ISS’s observation, taking into account that the company recently repurchased in “two weeks alone” $US14 billion worth in shares, that “for fiscal 2014, it appears on track to repurchase at least $US32 billion in shares.” Our proposal, as ISS points out, “thus effectively only asks the board to spend another $US18 billion on repurchases in the current year.”

As Tim Cook describes them, these recent actions taken by the company to repurchase shares have been both “opportunistic” and “aggressive” and we are supportive. In light of these actions, and ISS’s recommendation, 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.

Furthermore, in light of Tim Cook’s confirmed plan to launch new products in new categories this year (in addition to an exciting product roadmap with respect to new products in existing categories), we are extremely excited about Apple’s future. Additionally, we are pleased that Tim and the board have exhibited the “opportunistic” and “aggressive” approach to share repurchases that we hoped to instill with our proposal. It is our expectation that Tim and the board continue to exhibit this behaviour as fiduciaries to the shareholders since they clearly seem to agree that our company continues to be extremely undervalued, and we all share a common optimism with respect to the company’s bright long term future.

Sincerely yours,

Carl C. Icahn

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