Apple shares should be valued at $203 says Carl Icahn’s open letter to Tim Cook

An open letter on Thursday was sent by Carl Icahn an activist to Apple Inc. (NASDAQ:AAPL)’s Tim Cook. Icahn stated his views on the company’s stock value calling it “dramatically undervalued”. He offered Apple a chance to repurchase more shares of the company using a tender offer, which would let Apple Inc. (NASDAQ:AAPL) buy back at amazingly discounted rates.

Icahn’s letter was published on his website named Shareholders’ Square Table. He believes that Apple Inc. (NASDAQ:AAPL) stock’s current trading price is half of what the actual value should be. The title of this open letter is “Sale: Apple Shares at Half Price,” According to Icahn’s forecast for Apple Inc. (NASDAQ:AAPL)’s growth and net cash for 2016 and year 2017 (fiscal year), the stock’s value should be $203 at present, which should allow the company to currently buy back its shares at half the value (referring to its current trading value) of its original price (actual price stated by Icahn).

Icahn believes that Tim Cook must convince Apple Inc. (NASDAQ:AAPL)’s BOD to speed up buybacks through a tender offer. Apple’s net cash value as of its last quarter is $133 Billion, which according to Icahn is “excessive liquidity”.
Icahn further said that the purpose of writing this letter was to convince Tim Cook that now is the time to accelerate company’s buybacks.

Icahn gave a detailed account of his take on a few of the most important products of Apple Inc. (NASDAQ:AAPL). He believes that iPhone will keep on dominating the major share of the premium market and its customers will continue to come back for more. Icahn also believes in the success of Apple Pay and the company’s smartwatch, which he thinks will help kick up earnings and revenue growth for Apple Inc. (NASDAQ:AAPL). he also had some positive predictions for iPad future sales.

According to Icahn’s current forecasts Apple Inc. (NASDAQ:AAPL) will keep repurchasing its share at $25 Billion a year; however he wants the company to become more aggressive because buying shares back at current rates will help the economic structure of the company.

Icahn also made an attempt to force Apple Inc. (NASDAQ:AAPL) to buyback its shares last year by filing the shareholder’s proxy vote. He dropped the plan after Apple Inc. (NASDAQ:AAPL) repurchased share worth $14 billion within a few weeks at the start of this year – this was the largest ever buyback for such a short period of time.

Icahn has a lot at stake when it comes to Apple Inc. (NASDAQ:AAPL)’s shares; he has shares worth $45 million making him a major investor in the company.

Icahn has been quite active in the tech world; he also went against Dell’s decision to take the company private; he also holds three BOD seats at Yahoo and played a major role in Motorola’s acquisition by Google. Icahn also forced eBay for its Paypal spin off at the start of this year, which created cracks between eBay’s management and Icahn.

Share of Apple Inc. (NASDAQ:AAPL) opened today at the stock market at a price of $101.54 and jumped up by 0.81% to land at $101.60 after almost an hour into the morning session. The stock closed at a value of $100.80 on Wednesday.