Reality Check: Apple (AAPL) May Be Un-Activatable
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Price: $169.89 +0.51%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.5%
EPS Growth %: -0.7%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.5%
EPS Growth %: -0.7%
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Given Apple (NASDAQ: AAPL) is surging 5.6% Tuesday on news that Carl Icahn has built a large stake, investors should be reminded that even an activist with Icahn's stature may not have much of an impact.
1. Activist David Eihorn of Greenlight Capital has been involved in the stock for years. While Einhorn can take partial credit for the company's recently increased dividend and buyback, the company snubbed Einhorn's iPrefs idea and the activism-catalyst may be fully played out.
2. Apple already has in place the market's largest stock buyback program and is doing so with borrowed money. Taking on more debt to finance an accelerated stock buyback may be out of the question for a risk-adverse board and management team.
3. No amount of shareholder activism can alter the innovative magic of a company. As Larry Ellison said earlier, innovation at Apple may have died with Steve Jobs. This remains to be seen, but again, activism cannot change this.
While Apple may be 'un-activatalbe' the stock is cheap on various metrics. If the company has success with its upcoming iPhone refresh and stems market share losses to Samsung and others, Icahn can still make boatloads of money in the stock just sitting and watching.
1. Activist David Eihorn of Greenlight Capital has been involved in the stock for years. While Einhorn can take partial credit for the company's recently increased dividend and buyback, the company snubbed Einhorn's iPrefs idea and the activism-catalyst may be fully played out.
2. Apple already has in place the market's largest stock buyback program and is doing so with borrowed money. Taking on more debt to finance an accelerated stock buyback may be out of the question for a risk-adverse board and management team.
3. No amount of shareholder activism can alter the innovative magic of a company. As Larry Ellison said earlier, innovation at Apple may have died with Steve Jobs. This remains to be seen, but again, activism cannot change this.
While Apple may be 'un-activatalbe' the stock is cheap on various metrics. If the company has success with its upcoming iPhone refresh and stems market share losses to Samsung and others, Icahn can still make boatloads of money in the stock just sitting and watching.
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Carl Icahn, Greenlight Capital, David Einhorn, Steve Jobs, Dividend, Stock Buyback, Larry EllisonSign up for StreetInsider Free!
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