CUPERTINO -- Activist investor Carl Icahn and his associates have
increased their stake in
Apple (AAPL)
to more than $3 billion and are adding pressure for an unprecedented
stock buyback -- at the same time Icahn wants
eBay (EBAY)
to spin off PayPal into a separate business.
In a series of
tweets Wednesday, Icahn again called on Apple's board to pursue a $150
billion stock buyback that some industry analysts believe would ruin
the iconic company. Later in the day, eBay announced that it had
received notice from Icahn that he has nominated two of his employees
to eBay's board of directors and proposed creating a separate PayPal
company.
"We would note that
eBay has a world-class board of directors with directors who have
significant experience in technology and financial services," eBay
said on its website. Regarding Icahn's proposal for a separate PayPal
company, eBay said its board already "has concluded that the company
and its shareholders are best served by the current strategic
direction of the company and does not believe that breaking up the
company is the best way to maximize shareholder value."
Icahn tweeted
Wednesday that he and his associates bought more than $500 million
worth of Apple shares in the past two weeks and added, "We feel $APPL
board is doing great disservice to shareholders by not having markedly
increased its buyback. In-depth letter to follow soon."
Neither Apple nor
Icahn responded to requests for comment.
Shares of Apple
initially rose more than 1 percent following Icahn's tweets before
closing at $551.51, up .44 percent. eBay closed at $54.41, up .48
percent, then soared after the close and was trading above $57, up 4.8
percent.
Icahn has a history
of shaking up shareholders and board rooms. At
Yahoo (YHOO),
he launched a hostile bid to unseat its board of directors in 2008; at
Netflix (NFLX),
he took a 10 percent stake in 2012, immediately driving up shares as
much as 22 percent, making him a cool $800 million profit when he sold
about half of his shares; and most recently at Dell, where he
challenged a buyout proposal from company founder Michael Dell and
Silver Lake Partners.
When he turned his
sights on Apple last year, Icahn publicized a letter he wrote to Apple
CEO Tim Cook urging the Cupertino company to pursue a stock buyback
program that Icahn believes would more than double the value of the
company's stock.
But Trip Chowdhry of
Global Equities Research believes a stock buyback would hurt Apple's
efforts to innovate and would signal a new era of Apple as a "loser
company."
"If Icahn is allowed
to do what he wants to do, Apple's demise is very, very near,"
Chowdhry said. "Share buybacks and dividends don't create sustainable
companies. They are just going to accelerate Apple's demise so that it
will become the new HP. That's the way Microsoft thinks, the way
Cisco (CSCO)
thinks, the way IBM thinks. If Apple becomes the next HP, that will be
a very sad day for Apple."
Gary Lutin, chairman
of The Shareholder Forum, was involved in Icahn's efforts to take over
Dell last year and declined to speculate about Icahn's motives.
"We can't really
know what he's thinking, but we do know that the stock manipulation
works," Lutin said. "The increasing popularity of activism has made it
a perfect stock manipulation process. All you have to do is make a
public statement that sounds like an activist proposal and the stock
price predictably jumps up, as Icahn's shown us again."
Contact Dan Nakaso at 408-271-3648. Follow him at Twitter.com/dannakaso.
