Apple Inc CEO Tim Cook and billionaire investor Carl Icahn met for the first time in a cordial dinner and talked about a $150 billion share buyback. Mr Icahn disclosed in Aug. 2013 that he has a $1 billion stake in Apple Inc.
Talks between Tim Cook and Carl Icahn will resume after three weeks as the billionaire activist apparently used his convincing skills to implement changes to increase the value of shareholdings.
While Apple's CEO has announced plans of a $100 billion share buybacks and dividends, Mr Icahn wants the company to add $150 billion more for share repurchases. According to JMP Securities LLC analyst, Alex Gauna, Apple Inc, maker of the iconic iPhone, had $146.6 billion in cash and investments by the end of June. He said Apple should focus on increasing profitability to appease investors.
Since the valuation of Apple's stock has already increased, Apple Inc needs to concentrate in improving the growth of earnings. Mr Gauna, who has a market-perform rating for Apple shares, said the company should be constantly innovating and setting up mechanisms for growth. Apple shareholders may not care that much about the amount of cash it makes available for buybacks.
Apple Inc's stocks increase to 2.4 percent or at $487.96 at market close in New York. This year, Apple's price per share has decreased to only 8.3 percent with a 19 percent increase in Standard & Poor's 500 Index, according to Bloomberg.
Apple spokesperson Steve Dowling declined to comment when asked if Apple bought back $16 billion of stock on July 2013.
The dinner meeting was held in Mr Icahn's New York apartment. Mr Icahn said he pushed the additional buyback plan and "argued very hard for it."
Although Mr Icahn and Apple Inc's CEO have spoken on the phone, they have never met in person. Steve Jobs, Apple co-founder, had denied requests to return cash to shareholders but Mr Cook is open to meeting the demands of investors.
Mr Icahn thinks that Mr Cook is a good CEO of Apple Inc and predicts the company's stock price to go beyond the $625 mark if Apple will buy back shares. An unnamed source of Bloomberg said that Mr Icahn wants Apple to "borrow $150 billion at 3 percent interest rate." This will reportedly fund its purchases and prevent the company from paying more taxes.
Carl Icahn tweeted about his dinner with Apple CEO Tim Cook.
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