[NewsPoster]

(Updated with Apple response) Following up on yesterday's Twitter post, Carl Icahn has published an open letter to Apple CEO Tim Cook, urging him to ask the Board of Directors to "accelerate and increase the magnitude of share repurchases" through a tender offer. He argues that Apple shares are trading at half of their actual value, pointing to personal estimates for Apple's growth in fiscal 2016 and 2017 should value Apple at $203 today. In real-world trading, Apple stocks are currently worth over $101.50.

He calls the $133 billion in cash reserves Apple had last quarter an "excessive liquidity" which should partly go into share buybacks. "We commit to this because we believe Apple remains dramatically undervalued. And we think you and the Board agree," he adds. "If you did not, you would not continue to repurchase shares under the existing authorization. You have said before that the company likes to be 'opportunistic' when repurchasing shares and we appreciate that. With this letter we simply hope to express to you that now is a very opportunistic time to do so."

The investor's forecasts assume that Apple will keep repurchasing stock at a rate of $25 billion year, but he wants to company to adopt a "more aggressive pace" as long as he considers the stock undervalued. Icahn suggests that the iPhone will keep "significant premium market share," aided by Apple's generally high retention rates. He suggests that this should be further boosted by products like the Apple Watch and Apple Pay, and even a theoretical UltraHD TV set in 2016.

Apple has already repurchased $14 billion of its shares this year, setting a record for the biggest buyback in such a short timeframe. Any further buybacks should be particularly profitable for Icahn, who had 45 million shares in the company as of August.

Update: Apple has already responded via CNBC. "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."

[davisadm]

Carl Icahn is a self serving investor, who only cares about his bottom line, and not the company. Best example is TWA, which by the way has long since bankrupt.

[Flying Meat]

Shutup Carl!

[darkelf]

I'd rather Apple buy all Carl's shares at a premium, contingent on his going away and never buying another share again.

[jpellino]

Icahn wanted an extreme buyback program, largely because his position on AAPL pre-split was about $450 and he wants long-term results in months, not years. Cook and the board have implemented a moderated buy-back program and a graduated increase in dividends, along with the split. Which makes far more sense long term and is far less likely to cause a sell-off that could happen after a rapid repurchase drives the price up with no associated earnings value. As they have shown, keeping cash on hand allows them to be flexible in product development and strategic purchases. They will create investor wealth the old-fashioned way - solid earnings on tangible goods. That's what responsible investors signed up for. They will not last long monkey-wrenching share prices with no underlying value.

[climacs]

a lot of Apple's cash is overseas and can't be repatriated without paying a significant tax. I thought that Apple had dedicated much of its domestic cash to dividends and buybacks? Anyway, Icahn is obviously looking for the quick score and not thinking of Apple's long-term vision, like most of us shareholders are.

[shawnde]

I would argue that yes, Icahn is being greedy, but I'v always believed that Apple should go private .... it's their only Acheles Heel that's left. It's the only thing that they cannot control. They have to spend a great deal of money to do public accounting, spend a lot of their energy keeping shareholders and lunatics on Wall Street happy (just like this douche), and it's all a waste of Tim Cook's time.

Instead, Apple should stop paying dividends, and use all of that money to buy up as many shares as they can. Eventually in the next 5-7 years, there would be able to go completely private. No more manipulations of the stock; no need to answer to douchy shareholders; no one would give a crap what Business Insider has to say, and lots of forward momentum.

I think what Dell did (ironically) was rather brave, and it seems to have worked out really well for them. I think the whole public stock and Wall Street bullsh*t is just a total waste of time .... it does nothing good for Apple. I'd rather see Apple survive healthy until the end of time, than some measly profit from their shares.

[Charles Martin]

It's really hard to tell whether Dell's going private was a good idea or not -- the company is still in business, yes, and still sells a lot of stuff -- but they've lost a lot of mindshare in the consumer arena, and it's difficult to access their profitability and growth. Jury's still out on Dell, IMO.