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Carl Icahn writes open letter to Apple stockholders, takes back his proposal

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Carl Icahn was so easy to give up. Why, he didn’t even wait for Judgment Day of his proposal and took back his suggestion. An open letter was sent to other Apple stockholders. (Read below)

Icahn owns $4 billion worth of stocks so you can say he’s a significant player. He proposed for Apple to buy back $50 billion worth of stocks from its stakeholders but he’s taking his words back only after two weeks.

The decision came after the proxy advisory firm ISS said that Apple is set to buy back $32 billion shares so difference would only be $18 billion. Apple also recently bought back $14 billion the past couple of weeks. This is aside from the $40 billion last year.

Proxy advisory firm ISS discouraged the proposal of Icahn. Apparently, a lot of Apple stockholders are also against it. 

Here is Icahn’s open letter:

767 Fifth Avenue, 47th Floor
New York, New York 10153

February 10, 2014

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” $14 billion worth in shares, that “for fiscal 2014, it appears on track to repurchase at least $32 billion in shares.” Our proposal, as ISS points out, “thus effectively only asks the board to spend another $18 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 behavior 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

< Source: NYT >

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