Apple Inc (AAPL)- Icahn Believes That The Stock Price Will Double With Buybacks

It was on Thursday that Carl Icahn, a well-known American investor, businessman and philanthropist, wrote a 4000-word open letter to Apple Inc (NASDAQ:AAPL)’s CEO Tim Cook wherein he urged the latter to implement strategies that would propel its share value upward. According to him, the tech-giant’s shares should be placed at double its current value, meaning instead of the present high of $100, the value should be at least $203. In order to achieve that, Icahn is recommending a buyback program to Apple Management.

Apple (AAPL)

Stating Google as the only real competitor to Apple, the billionaire had the following observation to make in favor of the latter –

‘With the iPhone as the foundation, Apple’s ecosystem has come to play an important role in the daily life of Apple users, and while Apple continues to make impressive strides to improve it, the competition falls behind in what is arguably the most important race of this technological era. Analogizing Apple to a modern day Secretariat, as this race continues, the further the distance grows between Apple and Google (and Google’s hardware partners) in the premium device category.’

Carl Icahn also touched upon the Apple Inc (NASDAQ:AAPL)’s long-term aspiration of making a foray into the 4K television market and said that his expectations went way beyond just launching such a product. In fact, Steve Jobs carried a vision for such a television and following is the excerpt that describes his dream in a biography written by Walter Issacson –

“‘I’d like to create an integrated television set that is completely easy to use,’ he told me. ‘It would be seamlessly synced with all of your devices and with iCloud.’ No longer would users have to fiddle with complex remotes for DVD players and cable channels. ‘It will have the simplest user interface you could imagine. I finally cracked it.’”

There have been several reactions to Icahn’s letter, not the least of which is Apple Inc (NASDAQ:AAPL)’s reply to it, which is as follows –

“We always appreciate hearing from our shareholders. Since 2013 we’ve been aggressively executing the largest capital return program in corporate history. As we’ve said before, we will review the program annually and take into account the input from all of our shareholders.”

The company has also projected a table full of figures to explain its current strategy which it hopes will quell any rising concerns towards its policies.

Another noteworthy reaction was that of Alex Gauna, senior analyst at JMP Securities, who said on CNBC that having proved itself the company should now focus on innovation and execution for maintaining its growth potential. He also observed that the recent GT Technologies bankruptcy claim was something that Apple Inc (NASDAQ:AAPL) needed to take into account and incorporate in its operational cycle.

This article has been written by Vinita Basu.

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