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You are here: MacNN Forums > News > Mac News > Icahn upbeat about AAPL, Chinese stability still concerning

Icahn upbeat about AAPL, Chinese stability still concerning
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Jun 9, 2016, 04:35 PM
Activist investor Carl Icahn still believes Apple has potential and is worth investing in, but China continues to hold him back. In an interview discussing his sale of all Apple stock in April, among other topics, Icahn continued to praise Apple and its leadership, believing CEO Tim Cook is "doing a good job," but the company's prospects in China is preventing him from reinvesting in the iPhone producer in the near future.

Speaking to CNBC's Squawk Box, Icahn admitted "We made several billion dollars on [Apple stock]," indicating it was a good company to invest in, but China is still a problem. "I would get back in if I felt more secure about China. I don't think anybody can tell you that China is not going to have a problem, even though it might be a very small one." Icahn also suggested the high debt levels in China were a problem, and could adversely impact the country's economy in the future.

Icahn's belief in Apple seemingly hasn't changed since the stock dump, at the time declaring Apple a "great company" and praising Cook for "doing a great job." Sold just after the investor results, Icahn's shares generated a profit of $2 billion over three years. At the time, Icahn also suggested he would reinvest in Apple once again, once the Chinese market stabilized.

Despite Icahn's wariness of China, it hasn't stopped Apple from continuing to push into the country, with a $1 billion investment into ride-hailing service Didi Chuxing last month. Cook has also spoken to Chinese government officials about the company to try and smooth out some issues, such as the closure of iTunes Movies and iBooks stores in the market. Even though growth of iPhone sales in China has apparently slowed down, Apple is still benefiting from other areas, with Apple Pay continuing to grow in the major market.
( Last edited by NewsPoster; Jun 9, 2016 at 04:47 PM. )
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Jun 9, 2016, 05:25 PM
He needs to shut up. He's not buying so it doesn't matter what he says. He may be right and Apple doesn't seem to be giving any share gains back to shareholders, so a big money guy like him is only going to give when he can get back more. For that he can pick any tech stock out of a hat and get back more than what Apple is giving. Tim Cook is making sure Apple stays a big question mark to investors and they're all going to stay away from the stock. There are a lot of other companies invested in China but they're not being trashed the same way Apple is being trashed. It's as though Apple is going to be the biggest loser of all companies. What's really amusing was a few years ago Wall Street doubted Apple would even do well selling iPhones in China. Now it's like, Apple is totally doomed without China.

The world is only so big and only so many iPhones can be sold, so I suppose Wall Street believes Apple doesn't stand a chance of survival from only repeat sales. Apple had better find some other product to sell to the masses for growth and I don't think that's going to happen within the next few years, if ever. As a long-term Apple shareholder I guess I'm totally screwed if I have to rely on Tim Cook's skills as an aggressive CEO.
Charles Martin
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Jun 9, 2016, 08:18 PM
I'm not sure what (most of) your comment actually means. Apple has regularly raised dividends, but the stock is hovering around $100 because Wall Street wants to see "the next big thing" every year, and that's never going to happen. But its disingenuous to claim that Apple doesn't give shareholders increasing amounts of money -- they simply do.

If I interpret the middle section correctly, you're trying to say that Apple's penchant for secrecy hurts it because Wall Street doesn't understand it. Fair enough, that may be true -- but largely Apple doesn't give a toss about Wall Street (and Icahn), because it focuses on consumers (the right perspective IMO). People like to be surprised and delighted, and that's what Apple does that no other company can really manage (at least not as routinely -- Tesla makes a good run of it lately though).

As for "Apple is being trashed in China" -- have you been? It is the second largest (and fastest-growing) source of revenue for Apple. All countries (hello, USA) have economic ups and downs, and so does China, but this is an enormously lucrative market for Apple and will probably be its top or second-place market for a couple of decades to come. Apple is not -- and should not be -- about making investors happy. It should be about making customers happy. Investors can invest in that philosophy, or not -- but that is where the long-term success is to be found, rather than being subject to the whims of cynical day-traders as too many US companies are.
Charles Martin
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