Watch Out Apple, Here Comes Carl Icahn


Apple CEO Tim Cook has a new Twitter buddy -- @Carl_C_Icahn, aka Carl Icahn. The 77-year-old investor snapped up an estimated $1.5 billion stake in Apple Tuesday and didn't waste any time doing what he does best: stirring the pot. This time Icahn did it with his new favorite Web service Twitter.

"We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come," Icahn tweeted.

Four minutes later, he tweeted:

[Related: 8 Snapshots Of Carl Icahn Takeovers]

"Had a nice conversation with Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly."

Icahn is pushing Apple to buy back shares of its company. It's a move Wall Street watchers say signals a company believes its shares are undervalued and is confident good things are ahead for the company. Icahn's Apple's stake will be minimal, representing less than 1 percent of the company's shares.

The activist investor is notorious for buying stock in a company, attacking the CEO and shaking up the board of directors, and selling his stock back to the company at a profit. It's a pattern Dell CEO Michael Dell knows all too well. Icahn is currently locking horns with Dell's CEO over control of the Round Rock, Texas-based company.

Icahn's recent tech-related Wall Street shopping spree includes Apple, Dell, speech recognition firm Nuance Communications, and Netflix. In each of these cases his modus operandi has been similar, but not identical. "The one thing that does unite these purchases is Carl Icahn's interest in boosting his bank account," said Charles King, principal technology analyst of Pund-IT.

King said Icahn's investment in Apple has more to do with the promise of the company's success in the next six to 12 months than challenging Cook. Rumors are swirling that Apple will release a watch and television within that time period.

In the case of Dell, Icahn is being far more aggressive in angling to oust Michael Dell as CEO and replace the Dell board. Icahn's true intent for Dell is unknown; however, there is no shortage of speculation he'll sell pieces of the firm to another bidder at a huge profit.

Icahn has a large stake in Nuance, which he recently increased from 9 to 16 percent of the company’s shares. Nuance, the brains behind Apple's Siri voice recognition technology, recently inked a deal with Intel to embed speech recognition instructions in its upcoming Haswell microprocessors. Nuance has also signed agreements with Google to expand voice recognition in a number of its products.

The famed and feared Icahn has been laying low, relatively speaking, when it comes to antagonizing Nuance's strong willed chief executive Paul Ricci.

Technology analyst King said Icahn might be banking on debt-heavy Nuance, whose shares have been down 20 percent in the past year, getting acquired by a company like Intel or Google who would rather own the technology versus licensing it.

Last year Icahn gobbled up 5.5 million shares of the Internet video service provider Netflix, taking a 10 percent stake in the company. Icahn didn't waste any time and said he thought a cash-strapped Netflix would be worth more as part of a bigger cash-rich company such as Amazon, Microsoft or Verizon Communications. Icahn is currently pursuing shareholders' support for the sale of Netflix.

When Netflix's CEO Reed Hastings protected his company from an Icahn takeover with a so-called "poison pill," Icahn quipped that it was "an example of poor corporate governance" and "I guess they decided to go to battle."

"At the end of the day these technology companies are businesses and need to be run for profitability," King said. "Carl Icahn isn't a destructive force, rather a distraction for the companies he's focused on."

Icahn earned the title "corporate raider" for his notorious takeover of airline TWA, but he has also wrought huge upheaval at other large technology companies such as Time Warner, Yahoo and Motorola. In many cases, he's extracted huge profits from those investments.

Shares of Apple shot up 5 percent Tuesday after Icahn tweeted Cook. Apple shares continued to surge Wednesday as of press time.

PUBLISHED AUG. 14, 2013