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Icahn Urges Bigger Buyback at Apple in Letter to CEO Cook

Billionaire Carl Icahn continues to hold a 4.5 percent stake in Netflix Inc., according to a regulatory filing today. Photographer: Scott Eells/Bloomberg
Billionaire Carl Icahn continues to hold a 4.5 percent stake in Netflix Inc., according to a regulatory filing today. Photographer: Scott Eells/Bloomberg

Oct. 24 (Bloomberg) -- Carl Icahn, the billionaire activist investor who has made a career of pushing companies to make changes to boost shares, published a letter to Apple Inc. Chief Executive Officer Tim Cook urging the company’s board to increase the size of a stock repurchase.

Icahn promised not to tender his shares if Apple agrees to his proposal to implement a $150 billion repurchase, he said in the open letter that he posted on his website today. The investor said he has increased his holdings in the company to 4.7 million shares worth $2.5 billion from 3.4 million shares in August, and added that he intends to buy more of the stock that he said is undervalued.

“Our criticism relates to one thing only: the size and time frame of Apple’s buyback program,” Icahn said in the letter. “It is obvious to us that it should be much bigger and immediate.”

Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment.

Icahn is lobbying for a heftier payout just months after Apple announced a plan for a total of $100 billion in dividends and buybacks. Apple’s stock has underperformed benchmark indexes this year amid investor criticism that it hasn’t delivered new breakthrough products.

The shares rose 1.3 percent to $531.91 at the close in New York trading. The stock is little changed this year, compared with a 23 percent gain in the Standard & Poor’s 500 Index.

Long Term

“To invalidate any possible criticism that I would not stand by this thesis in terms of its long term benefit to shareholders, I hereby agree to withhold my shares from the proposed $150 billion tender offer,” Icahn said in the letter. “There is nothing short term about my intentions here.”

Separately, Bill Gross, manager of the world’s largest mutual fund, said in a Twitter posting that Icahn should stop pushing Apple for additional share repurchases and do more for charitable causes.

Icahn, speaking in a CNBC interview today, said that he will continue to tackle what he views as problems in corporate governance. If Apple doesn’t implement his suggestion, he said he will consider a proxy fight if he gets enough support from other shareholders.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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