Icahn Sinks His Teeth Into Apple's Stock Buyback Plan

Activist investor Carl Icahn has increased his stake in Apple and is pushing the company to replace its own stock buyback plan with a much more ambitious proposal. In a letter to Apple CEO Tim Cook, Icahn said that, given the size of Apple's cash holdings, its stock buyback should be $150 billion instead of the planned $60 billion.

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DAVID GREENE, HOST:

The billionaire Carl Icahn has been called a corporate raider and an activist investor. Now he's trying to tell Apple what to do.

NPR's Dan Bobkoff explains.

DAN BOBKOFF, BYLINE: Carl Icahn launched a new website this week. It features a large cartoon of shareholders scaling the walls of a corporate castle. For now, that castle is Apple. Since the summer, Icahn has been buying more and more of the company's shares, saying they're undervalued. He now owns about two and a half billion dollars worth. And he's using that leverage to try to pressure the company to do what he wants.

Icahn says Apple should borrow a huge amount of money, up to $150 billion, and use it to buy back its own shares as a way of boosting the value of the remaining shares. Apple has nearly that much money in cash, but much of it is kept overseas to avoid U.S. taxes, which is why Icahn says Apple should borrow.

Icahn told CNBC Apple should share its wealth.

CARL ICAHN: If they wanted to buy a bank, they could have bought a bank. So you don't keep $150 billion around.

BOBKOFF: Tech analyst Colin Gillis, of BGC Financial, agrees that Apple should either spend its cash on new products or return it to shareholders. But he says Icahn's idea would saddle Apple with debt that could end up biting the company long term, if its success wanes.

COLIN GILLIS: If you think that the fortunes of technology can't change quickly on a whim, take a look at Blackberry.

BOBKOFF: Gillis says Apple will ultimately survive and thrive on its products, not financial engineering.

Dan Bobkoff, NPR News, New York.

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