Carl Icahn has published an open letter to Apple CEO Tim Cook, praising him for the company’s performance. It’s a slightly different tone than the corporate raider took last year, when he aggressively advocated for a larger buyback.
Of course, Icahn hasn’t quite changed his priorities.
His letter calls on the company to repurchase additional shares with the cash hoard on its balance sheets.
In his view, Apple is undervalued by the market, and repurchasing shares now will be easier to pull off than doing so later, when Apple’s stock will rise. (Icahn said that shares should be trading at twice what they are right now.) At the moment, Apple has a price-to-earnings ratio of around 8, compared to around 15 for the S&P 500 index as a whole.
In response, Apple said in a statement to Business Insider that its share repurchase program (which began in 2012) is the largest in history, and the company plans to continue buying shares back and will re-evaluate its position every year. In total, Apple has spent $90 billion buying back shares since its repurchase started.
That’s not all Icahn’s letter entailed. The rest of the mammoth missive was spent discussing Apple’s future, including Icahn’s projections for the company’s future. He expects the company’s total revenue to grow by 25 percent in 2015, with profits growing by 44 percent.
It also seems like Icahn has been sipping some of Gene Munster’s Kool-aid, since his firm’s projections for Apple include the launch of a “UltraHD” 4K television set sometime in 2016. Cook recently said in an interview with Charlie Rose that TV was “stuck in the 70s,” but so far, Apple has remained happy to stick by the Apple TV set-top box to provide television programming.
Icahn’s push comes at a key time for Apple. The company is just coming off the announcement of the iPhone 6 and the Apple Watch, and it’s headed for another big announcement next week. The company is slated to announce its fiscal fourth quarter earnings on October 20, and Icahn’s comments will almost certainly come up.
