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Activist investor Carl Icahn means trouble with a capital 'T' for Apple

Gregg Keizer | Aug. 15, 2013
At best, his presence will be a distraction for CEO Tim Cook, not exactly what the doctor ordered for Apple.

Icahn did not reveal his Apple holdings, but the Wall Street Journal pegged the investor's stake at over $1.5 billion, or about a third of 1% of the company's market capitalization. Other estimates have been closer to $1 billion.

At the very least, Icahn will be an ongoing distraction for Apple, particularly its CEO.

"This makes Tim Cook's job a lot harder," said Moorhead. "Not only does he have to bring Apple back to the expectations level [of years past] but now he has to deal with Icahn. And that's a full-time job."

Moor doubted Icahn would go away any time soon, not with the size of his investment. "One billion will get your noticed," Moorhead said. "It carries weight."

Icahn's tactics are usually to rally other dissatisfied investors to his side, creating a large enough group to call for changes in management and corporate practices.

"This will be particularly difficult for Apple," said Moorhead of Icahn's interest. "The tack that Apple has taken is to only announce products when they want to." Icahn and others, in other words, may pressure Apple to change its notoriously-secretive nature, perhaps even push it to talk more freely about upcoming hardware or services with the hope that such news would temporarily boost the stock price.

"Icahn can get his claws much deeper inside Apple than inside Dell, because there's so much more to work with at Apple," said Moorhead. "There are more ways to make money with Apple than with Dell."

But others were sanguine about Icahn's new focus on Apple.

Steve Milunovich of USB, for example, was not nearly as gloomy as Moorhead. "There doesn't appear to be much to agitate for [at Apple] aside from a larger buyback, unless Icahn thinks Cook isn't doing a good job," Milunovich tweeted yesterday.

And Icahn can't do much about Apple's core business, which is creating and selling new products. "We think it is all about new products from here," said Milunovich in the same Monday tweet, echoing other analysts who have said the same about Apple's road back into investors' good graces.

Still, the fact that Cook took Icahn's call yesterday illustrated how different Apple is now -- how different its smartphone and tablet market positions are than just 18 months ago, said Moorhead.

Things would have gone differently if co-founder and former CEO Steve Jobs was still at the helm, Moorhead suggested. "Jobs would have had a very civil conversation, but if Icahn started to get aggressive, I think [Jobs] would have told him neither him or his company can be bullied," he said.


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