Carl Icahn. Photo: Mark Lennihan/AP
Wall Street titan Carl Icahn is once again using Twitter to pressure Apple into reshaping its finances, a social media campaign that foretells a new direction for the market’s biggest players.
Icahn owns a sizable chuck of Apple stock, and since August, he has used the popular Twitter social network as a way of urging the company to reduce the massive pile of cash it’s sitting on, arguing that if Apple uses its cash hoards to buy back a large chuck of stock, the company will benefit both itself and its shareholders.
Apple is exploring such a buyback, but on Wednesday, via Twitter, Icahn made another call for the company to significant increase the size of its proposed buyback. “We feel $APPL board is doing great disservice to shareholders by not having markedly increased its buyback,” he tweeted. He also announced that his stake in Apple now exceeds $3 billion.
Icahn has a reputation as an activist shareholder, and similar tactics have been a part of his playbook for years. He has used the popular press to publicly call for the breakup of Time Warner, push for a merger of Yahoo and Microsoft, and fight against Dell’s efforts to take itself private. But now, with Twitter, he has cut both the media and the financial news wires out of the equation, taking his campaigns straight to the people. Social media gives investors like Icahn a new and more direct way of pushing their agenda, and others will surely follow his lead.
“It’s a very powerful tool because it’s unfiltered. Others get your message directly and then many of them will pass it on in the echo-sphere of the internet,” James Angel, an associate professor of finance at Georgetown’s McDonough School of Business, has told us in the past. “Back in the ancient days, everything was filtered — by the print media or the television media. Even the blogosphere is a kind of filter.
“[Twitter] is not the biggest game changer in history. But it adds another communication tool that can be very useful to the likes of Mr. Icahn.”
Last August, Icahn sent Apple shares soaring when he tweeted about his “large position” in Apple. The company’s share price rose by nearly 5 percent in under two hours. But perhaps importantly, his next tweet called for an Apple buyback. “Had a nice conversation with Tim Cook today,” the tweet read. “Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly.”
Not satisfied with Apple’s plan to return about $100 billion by the end of 2015, he sent a letter to Tim Cook that he adopt a $150 billion buyback plan created by Icahn himself. Then, last month, he made a precatory proposal for a shareholder vote on a larger buy back.
A precatory proposal — or shareholder resolution — is a non-binding request for a shareholder vote on a particular stock plan. Apple has confirmed that it received the proposal and will seek shareholder input and announce any changes during the first part of the calendar year 2014, according to 9to5 Mac. But Apple won’t be obligated to offer a buy back even if shareholders vote in favor of the plan.
Icahn may not get his way. But his tweets are here to stay.
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