CUPERTINO -- New Apple (AAPL) activist investor Carl Icahn is signaling that he's going to make a big ruckus about the company's CEO and its board, and while no one knows how much of a thorn he'll be to Tim Cook and company, it's clear he can't be ignored.
"He's an agitator," said Darren Chervitz, director of research and co-manager at Jacob Asset Management.
FILE - In this March 16, 2010 file photo, financier Carl Icahn poses for photos upon arriving for the 32nd annual New York City Police Foundation Gala in New York. (AP Photo/Henny Ray Abrams, File) (Henny Ray Abrams)
Icahn's rising prominence as an Apple investor translates into one more problem for Cook, who has heard a steady chorus of complaints that Apple has lost its innovation mojo following the death of founder Steve Jobs, watched the iPhone lose share in the global smartphone market, and seen Apple's stock plummet from its 2012 all-time high of $702.10 to a low of $390.53, before recovering to $525.79 as of Friday's market close.
For "most managers who meet Icahn," Chervitz said, "their attitude is, 'Uh, oh. What's going to happen now?'"
Apple on Monday will release its earnings, which are expected to represent its third consecutive quarter of declines.
Over the last few months, Icahn and his associates have amassed more than 4.7 million shares of the company's stock, adding up to around 0.5 percent of Apple's shares. (The biggest shareholder is investment manager BlackRock, which holds 47 million shares, or roughly 5.2 percent of the company, worth $24.7 billion as of Friday.)
Last week Icahn publicized a letter he wrote to Apple CEO Tim Cook following a September dinner meeting between the two. In the letter, Icahn urged Apple to pursue an unprecedented $150 billion stock buyback that he said will more than double the value of Apple stock to $1,250.
"He's into fast cash," said Rob Enderle of the Enderle Group. "He'll be a pain until he gets his money and goes away."
Previous Icahn targets include Yahoo (YHOO), where he launched a hostile bid to unseat its board of directors in 2008 after the company refused to accept a $44 billion buyout offer from Microsoft; Netflix (NFLX), where in 2012 he took a 10 percent stake, which immediately drove up shares as much as 22 percent, making a cool $800 million profit when he recently sold about half of his shares; and Dell, where he recently abandoned plans to challenge a buyout proposal for the company from founder Michael Dell and Silver Lake Partners.
Trip Chowdhry of Global Equities Research believes that Icahn's growing stake in Apple could lead to a management shake-up and a new board of directors.
"Carl Icahn has let the Apple management team know that they are doing a terrible job," Chowdhry said. "I would say that Carl Icahn's taking Apple back to the Apple that Steve Jobs created: No tolerance for mediocrity and zero tolerance for laziness and complacency."
Neither Apple nor Icahn responded to requests for comment.
Gary Lutin, chairman of The Shareholder Forum, was involved in Icahn's efforts to take over Dell this year and said it would be a mistake for Apple to dismiss Icahn "as merely a pest."
"Carl Icahn is a very smart guy," Lutin said. "What you're looking at is Carl Icahn shaking the trees. And as long as things fall out of the trees, he's going to make a profit. For him the end game is short-term trading."
Unlike Apple activist investor David Einhorn -- who dropped a lawsuit earlier this year urging Apple to issue free shares of a class of dividend-bearing preferred stock to benefit shareholders -- Icahn won't back down easily, Chervitz said.
"He has more love of the rumble than Einhorn," Chervitz said. "Einhorn would more graciously slip back into the background whereas Icahn will not go away easily. Clearly he has shown that if management completely ignores his proposals and ideas, then he'll push for changes at the board level. He'll go to the mat against you and he often ends up winning."
But Scott Rothbort, president of LakeView Management, believes a mellower Icahn -- at the age of 77 -- wants to take a mentoring approach with Cook and Apple's board.
"One type of activist investor is the interloper, the one that tries to shake things apart and change things, like a bull in a china shop," Rothbort said. "I don't think Carl Icahn wants to be a bull in a china shop with Apple. I think Carl Icahn is putting on his corporate mentor uniform, rather than his corporate raider uniform."
Contact Dan Nakaso at 408-271-3648. Follow him at Twitter.com/dannakaso.
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