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Source: San Jose Mercury News, January 22, 2014 article


Icahn steps up pressure on Apple, eBay

Posted:   01/22/2014 03:02:40 PM PST


FILE - In this Oct. 11, 2007 file photo, private equity investor Carl Icahn speaks at the World Business Forum in New York. Icahn said Wednesday, Jan. 22, 2014, he has purchased $500 million worth of Apple stock in the past couple of weeks to bring his total holdings in the company to more than $3 billion of shares. ( (AP Photo/Mark Lennihan, File))

CUPERTINO -- Activist investor Carl Icahn and his associates have increased their stake in Apple (AAPL) to more than $3 billion and are adding pressure for an unprecedented stock buyback -- at the same time Icahn wants eBay (EBAY) to spin off PayPal into a separate business.

In a series of tweets Wednesday, Icahn again called on Apple's board to pursue a $150 billion stock buyback that some industry analysts believe would ruin the iconic company. Later in the day, eBay announced that it had received notice from Icahn that he has nominated two of his employees to eBay's board of directors and proposed creating a separate PayPal company.

"We would note that eBay has a world-class board of directors with directors who have significant experience in technology and financial services," eBay said on its website. Regarding Icahn's proposal for a separate PayPal company, eBay said its board already "has concluded that the company and its shareholders are best served by the current strategic direction of the company and does not believe that breaking up the company is the best way to maximize shareholder value."

Icahn tweeted Wednesday that he and his associates bought more than $500 million worth of Apple shares in the past two weeks and added, "We feel $APPL board is doing great disservice to shareholders by not having markedly increased its buyback. In-depth letter to follow soon."

Neither Apple nor Icahn responded to requests for comment.

Shares of Apple initially rose more than 1 percent following Icahn's tweets before closing at $551.51, up .44 percent. eBay closed at $54.41, up .48 percent, then soared after the close and was trading above $57, up 4.8 percent.

Icahn has a history of shaking up shareholders and board rooms. At Yahoo (YHOO), he launched a hostile bid to unseat its board of directors in 2008; at Netflix (NFLX), he took a 10 percent stake in 2012, immediately driving up shares as much as 22 percent, making him a cool $800 million profit when he sold about half of his shares; and most recently at Dell, where he challenged a buyout proposal from company founder Michael Dell and Silver Lake Partners.

When he turned his sights on Apple last year, Icahn publicized a letter he wrote to Apple CEO Tim Cook urging the Cupertino company to pursue a stock buyback program that Icahn believes would more than double the value of the company's stock.

But Trip Chowdhry of Global Equities Research believes a stock buyback would hurt Apple's efforts to innovate and would signal a new era of Apple as a "loser company."

"If Icahn is allowed to do what he wants to do, Apple's demise is very, very near," Chowdhry said. "Share buybacks and dividends don't create sustainable companies. They are just going to accelerate Apple's demise so that it will become the new HP. That's the way Microsoft thinks, the way Cisco (CSCO) thinks, the way IBM thinks. If Apple becomes the next HP, that will be a very sad day for Apple."

Gary Lutin, chairman of The Shareholder Forum, was involved in Icahn's efforts to take over Dell last year and declined to speculate about Icahn's motives.

"We can't really know what he's thinking, but we do know that the stock manipulation works," Lutin said. "The increasing popularity of activism has made it a perfect stock manipulation process. All you have to do is make a public statement that sounds like an activist proposal and the stock price predictably jumps up, as Icahn's shown us again."

Contact Dan Nakaso at 408-271-3648. Follow him at


Copyright © 2014 San Jose Mercury News


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