Apple CEO Tim Cook may have a situation on his hands.
Billionaire hedge fund manager Carl Icahn said on CNBC today that he bought more shares in Apple after he had disclosed a $1 billion stake in the iPhone manufacturer. His disclosure, which came in a pair of Tweets in August, added about $15 billion to Apple’s market capitalization. Following the reveal of the new iPhones, Apple basically gave up those gains.
[Exclusive] Carl Icahn tells @MariaBartiromo he bought quite a bit of $AAPL shares today; thinks Apple is a no-brainer & extremely cheap.
At the time, he said he was meeting with Cook to discuss an expansion of Apple’s buyback program — something he still intends on pushing for, according to his interview with CNBC. Still, he said he has no intention of telling Cook how to run Apple. Now Icahn may be in an even stronger position to agitate for an expansion of the buybacks, given that the company’s new phones received a lukewarm reception by Wall Street and Apple still has nearly $150 billion in cash as of the last time it reported its earnings.
Following the revealing of Apple’s new iPhones on Wednesday, Apple’s stock has been hammered and given up nearly all of those gains. Analysts panned Apple’s iPhone 5C for — even as a cheaper model — being too expensive. Apple was expected to unveil a cheaper smartphone that could contend in China, but the device comes in at around $550 without a two-year contract (and it costs even more in China). That still puts it on the higher end of the smartphone market and out of reach for consumers who aren’t willing to spend much on a smartphone.
Apple’s reliance on higher-priced devices has caused it to face pressure from competitors with cheaper devices powered by Android in markets that don’t support subsidized contracts or rely on cheaper devices, such as many emerging markets. Many had expected that Apple would choose to sacrifice some margin in order to retake share from Android, and Wall Street seemed primed to forgive Apple for that.