Icahn's open letter to Apple stockholders includes the withdrawal of his share buyback proposal

Icahn's open letter to Apple stockholders includes the withdrawal of his share buyback proposal
Just a bit more than two weeks before Apple stockholders were set to vote on his proposal, Carl Icahn has given up. The investor, who currently owns more than $4 billion of Apple's shares, was asking holders to vote on a non-binding proposal that Apple buy back $50 billion in stock. Icahn revealed the turnaround in an open letter to Apple stockholders.

In his letter, the investor quoted proxy advisory firm ISS, and stated that with Apple on a pace to buy back $32 billion in shares this year, there was only a small $18 billion difference between both sides. Apple CEO Tim Cook recently revealed that Apple took advantage of a decline in the company's stock to buy $14 billion of shares over the last two weeks. During the last year, Apple has purchased $40 billion in stock, a record for any company. The decline in the stock came after Apple's last earnings report revealed that fewer iPhones were sold than expected by Wall Street.

Icahn is not known for staying in an investment for too long. Apple might be an exception. At the end of the open letter, the investor said, "[I]n 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."

Proxy advisory firms like ISS had recommended that Apple stockholders vote against Icahn's proposal, while Apple stockholders like Calpers (California Public Employees’ Retirement System) also objected to it. For an investor like Icahn to back off a proposal without a guarantee of a profit, he truly must be optimistic about Apple's future. Either that, or he is trying to project to other investors a confidence in the company so that the shares will rise, giving Icahn an exit strategy.

source: NYTimes


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