Carl Icahn is stepping up his battle with Apple.
On Twitter, he says, “we’ll be making a precatory proposal to call for vote to increase buyback program, although not at $US150 billion level.”
CNBC reporter David Faber says Icahn wants a $US50 billion buyback.
His tweet was timed to coincide with the release of a Time magazine profile of Icahn pegged to his battle with Apple.
For the most part Icahn sounds reasonable. He doesn’t sound particularly hostile.
Even the precatory proposal is pretty tame. A precatory proposal isn’t binding, it’s just a suggestion for the management, basically.
“Tim Cook is doing a good job with the business,” says Icahn. “I think he’s good whether he does what I want or not,” but “Apple is not a bank.”
Apple has $US147 billion in cash on hand. Icahn thinks it should be returning more of that cash to shareholders.
“I’m not against the management of this company. But they’ve got too much money on their balance sheet,” Icahn tells Time.
Apple for its part says it has a $US100 billion capital return program. And on its most recent earnings call, it said that it was essentially returning all the cash it generated in the U.S. right back to shareholders. If Apple were to use the overseas cash, it would be taxed.
Icahn has been raging on about Apple for a few months now, but there’s been no change in Apple’s policy yet.
This cover story for Time is his biggest, most public attack to date.
And, here’s Apple’s CFO from the most recent earnings call via Seeking Alpha:
Turning to our cash, we ended the quarter with 146.8 billion in cash plus short term and long term marketable securities, a sequential increase of $US100 million from the June quarter.
Our domestic cash was 35.5 billion at the end of the September quarter, a sequential decline of 5.2 billion largely attributable to our share repurchase activity. $US111.3 billion or 76% of our total cash was offshore at the end of the September quarter, and cash flow from operations was $US9.9 billion.
We paid $US2.8 billion in dividends in the quarter and we executed an additional $US5 billion in repurchases up 10.4 million shares of Apple stock during the quarter. This brings us to a cumulative total of $US36 billion in payments for dividends and share repurchases over the last five quarters of which share buybacks were $US23 billion. This has resulted in cumulative retirement of almost 47 million shares and represents 5% of the total shares outstanding prior to the launch of our repurchase program. More than 44 million of these shares have been retired in the past two quarters alone.
Finally given that our capital return program must be funded from domestic cash, and as a result of our payments to date, the cash that we can net domestically and return to shareholders to stop accumulating. In fact we give return to shareholders who invested essentially all of the increase in available net cash generated since the beginning of our capital return program in 2012. Our Board of Directors has declared a dividend of $US3.05 for common share payable on November 14, 2013 to shareholders of record as in the close of this on November 11, 2013.
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