Icahn Ups Apple Stake to $3.6 Billion in Buyback Campaign

Billionaire investor Carl Icahn said he increased his stake in Apple Inc. (AAPL) by another $500 million, bringing his total holdings in the iPhone maker to about $3.6 billion as he reiterated calls for a bigger stock buyback.

Icahn released a seven-page open letter to shareholders of Cupertino, California-based Apple yesterday, repeating his recommendation that the company increase its share-repurchase program. Icahn announced the additional shares in a new posting on Twitter Inc., following a series of tweets Jan. 22 stating he purchased $500 million of shares in the past two weeks.

“Given that the company has $130 billion of net cash and $40 billion of expected annual earnings, and the fact that it is hard to find a better time in history to borrow money, a $50 billion share repurchase over the course of fiscal year 2014 seems more than reasonable to us,” Icahn wrote in the letter, which was included in a filing with the U.S. Securities and Exchange Commission.

Icahn, 77, first disclosed his Apple stake in a tweet on Aug. 13, when the stock was trading at about $468. The shares have since gained 19 percent. Icahn, who became a billionaire by buying stakes in companies and then publicly pushing management and directors for changes to boost the stock, has been pressuring Apple since to return more cash to shareholders.

Photographer: Scott Eells/Bloomberg

Carl Icahn, billionaire investor and chairman of Icahn Enterprises Holdings LP. Close

Carl Icahn, billionaire investor and chairman of Icahn Enterprises Holdings LP.

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Photographer: Scott Eells/Bloomberg

Carl Icahn, billionaire investor and chairman of Icahn Enterprises Holdings LP.

Apple shares rose less than 1 percent yesterday to $556.18 at 4 p.m. in New York.

$100 Billion

Prior to Icahn’s involvement, Apple Chief Executive Officer Tim Cook announced a plan for a total of $100 billion in dividends and buybacks.

“We believe that by choosing not to increase the size of the repurchase program, the directors are actually performing a great disservice to the owners, especially smaller shareholders who may not be in a position to buy more stock themselves,” Icahn said in yesterday’s letter. “Apple’s current excess liquidity is without historical precedent and beyond reasonable comparison to its peers or otherwise.

Separately, EBay Inc. said Jan. 22 that Icahn proposed the company split off its PayPal online-payments unit and the activist investor is nominating two of his employees to join the board. The largest online marketplace reported holiday quarter sales that missed analysts’ estimates. Icahn has amassed a 0.82 percent stake in EBay stock, the company said in a statement, preempting a public announcement by the activist.

To contact the reporter on this story: Beth Jinks in New York at bjinks1@bloomberg.net

Photographer: Scott Eells/Bloomberg

A pane of glass stands shattered on the exterior of an Apple Inc. store in New York, U.S., on Wednesday, Jan. 22, 2014. Close

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Photographer: Scott Eells/Bloomberg

A pane of glass stands shattered on the exterior of an Apple Inc. store in New York, U.S., on Wednesday, Jan. 22, 2014.

To contact the editor responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net

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