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Proxy advisory firm recommends siding with Apple against Icahn

Posted: , by Alan F.

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Proxy advisory firm recommends siding with Apple against Icahn
On February 28th, Apple stockholders will vote on a proposal by investor Carl Icahn that Apple buy back $50 billion worth of its stock. Icahn, who owns more than $4 billion of Apple shares, originally wanted Apple to buy back $150 billion of its stock before cutting his demands. ISS says that the proposal would "micromanage the company's capital allocation process."

ISS didn't let Apple off the hook, however, addressing Apple's failure to let stockholders know its long term plans for its cash hoard, which is up to $160 billion. It isn't like CEO Tim Cook has been opening the vault to jump through all of the money ala Scrooge McDuck. As Cook recently pointed out, Apple has repurchased $14 billion in stock over the last couple of weeks, taking advantage of the huge drop that the shares had after Apple sold 4 million fewer iPhones than Wall Street expected last quarter. For the last year, Apple has repurchased $40 billion of its own stock, a record for any company.

Besides ISS, smaller proxy advisory firm Egan Jones also recommended that stockholders vote against Icahn. The investor is hoping that Apple buys the shares, which would cancel them. That lowers the number of outstanding shares, marking a shift in the supply-demand balance. Those investors who borrowed Apple stock and sold it in hopes that it would fall (a transaction known as selling short) might feel pressure to return the shares they borrowed by buying them back in the market, a process known as a short squeeze. Lastly, by removing $50 billion of Apple's stock outstanding, certain metrics used by fundamental investors, such as the P/E ratio, would be affected, making the value of Apple's stock look cheaper by certain standards.

The bottom line is that Icahn wants the stock to rise so he can sell his shares at a profit. Like any merchant with a product to sell, he needs to create demand for the stock so he can have it taken off his hands.

source: MarketWatch via AppleInsider

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posted on 09 Feb 2014, 20:35 3

1. jellmoo (Posts: 1997; Member since: 31 Oct 2011)

They sold 4 billion fewer phones than expected? I know Apple sales are great, but maybe billion isn't the right word there.

posted on 09 Feb 2014, 21:49 1

2. jellmoo (Posts: 1997; Member since: 31 Oct 2011)

Annnnnnnnnnd... Stealth edit.

posted on 09 Feb 2014, 23:44

4. cnpthe3rd (Posts: 97; Member since: 01 Feb 2009)

read it again, it says "Apple sold 4 million fewer iPhones than Wall Street expected last quarter."

posted on 10 Feb 2014, 01:12

5. UglyFrank (Posts: 1930; Member since: 23 Jan 2014)

That was the stealth edit

posted on 09 Feb 2014, 23:05

3. lyndon420 (Posts: 4963; Member since: 11 Jul 2012)

Doesn't really say much for a company when investors want to dump their investment in said company. The idea is to make money on your investment. I'm sure that this should turn around for them once they reinvent themselves into a company with more vision towards the future.

posted on 10 Feb 2014, 07:11 1

7. Finalflash (Posts: 3492; Member since: 23 Jul 2013)

Well they are doing fine money and product sales wise, wall street is a different animal though. They want to constantly make money and at this moment that really isn't happening. Apple has kept their stock price propped up by buying back stock during this lull in their "innovation". Goes to show even Apple knows their current smartphone line up isn't compelling. Wall street just wants to make money for no effort of their own at all times so they will keep pushing for this kind of stuff.

posted on 10 Feb 2014, 04:15 1

6. androiphone20 (Posts: 1654; Member since: 10 Jul 2013)

vote negative and tell icahn 'iCant'

posted on 10 Feb 2014, 09:17

8. kindlefireowner (Posts: 503; Member since: 05 Dec 2011)

This article is above Fandroids heads, and left out some important facts. Apple sold 51 million iPhones for the quarter. Which is the most iPhones they ever sold in a quarter. Also, this article is about Apple sharing the $150 billion dollars in profits with their shareholders. Apple is only sharing $15 billion. So this is not an article about Apple falling off. Ichan wants some of that $150 billion dollars of profit that Apple has banked.

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