Icahn Urges Apple to Buy Back More Shares
Billionaire activist investor Carl Icahn said Apple Inc's shares could double in value and urged the company's board to buy back more shares using its $133 billion cash pile.
"We believe Apple is dramatically undervalued in today's market, and the more shares repurchased now, the more each remaining shareholder will benefit ...," Icahn said in a letter to Apple's board.
Icahn, who pledged to keep his own stock out of any repurchase, said Apple stock should be trading at $203.
The company's shares were up 1 percent at $101.91 in early trading on Thursday.
Icahn said Apple was poised to take market share from Google Inc's Android platform in the premium device market and forecast the company's earnings to grow 44 percent in FY 2015.
Apple declined to comment directly on Icahn's letter. Spokeswoman Kristin Huguet said in an email: "We always appreciate hearing from our shareholders."
Apple will review its share repurchase program annually and take into account the input of all of its shareholders, Huguet said.
Icahn, who owns about 53 million Apple shares, has in the past urged Apple to return more of its cash to shareholders and pressured the company to increase its stock buyback program and raise its dividend.
"We think a tender offer is simply a good method of conducting a large repurchase in an expedited timeframe, but the exact method and the exact size is not the key issue for us," he said.
In February, Icahn backed off from his campaign urging Apple to increase buybacks after the company disclosed it had repurchased $40 billion of its shares over the past 12 months.
The investor said on Thursday his letter was not intended to criticize Apple Chief Executive Tim Cook but just urges the company to take advantage of the low valuation.
According to StarMine's Intrinsic Valuation model, Apple shares are slightly undervalued compared to their current trading levels.
The stock should be trading at $111.4, implying compounded annual earnings growth rate of 8 percent over the next 10 years, StarMine data showed.
(Reporting by Supantha Mukherjee and Anya George Tharakan in Bangalore and Svea A. Herbst in Boston; Editing by Saumyadeb Chakrabarty)