Curious Capitalist

Carl Icahn Wins by Losing in Epic Fight With Apple

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Scott Eells / Bloomberg / Getty Images

Carl Icahn is withdrawing the precatory proposal he filed on November 26 to try to get Apple to part with more of its $160 billion cash hoard. But that doesn’t mean he’s lost his war with the tech giant.

Icahn has long felt that “Apple is not a bank,” as he told me for TIME’s recent cover story on the wily investor, and that it should give back some of the cash on the balance sheet to investors. (Much of it is held in overseas bank accounts to avoid higher than average U.S. corporate taxes.) Plenty of people agree with him. Indeed, even the influential proxy advisory firm Institutional Shareholders Services, which recommended that shareholders vote against the Icahn precatory proposal, says that Apple’s recent share buybacks, while amongst the largest in history, have been a bit like “bailing with a leaky bucket” given the unprecedented trove of cash the company is sitting on.

While the withdrawal in the face of criticism from other investors may seem like a defeat for Icahn, my feeling is that he ended up exactly where he wanted to be on this one. He’s had his say on investor rights, he’s pushed the company to be somewhat more aggressive in terms of share buybacks than it might have been on its own, and he gets fairly close to where he wanted Apple to be in terms of the sheer dollar amount of buybacks without actually having to engage in a proxy war. Not bad few months’ work for the corporate raider turned “activist” investor.


When ANYONE starts talking about "investors rights", it seems to me that they have forgotten the one rule of investment:


They pony up money hoping to reap some small reward against the risk of losing the money or not receiving back as much as they invested.  Investments in businesses should never come with a "guarantee".  Businesses who put investors first, instead of the business, or even the customers, have learned the hard way the utter stupidity ofthat kind of brainlessness.  Dell, I'm looking at you.

Putting profits ahead of all else in the fear of being sued for failing to perform one's "fiduciary duty" usually results in less profit, less reward and worse performance in the long run.

Here's my message to my investors: I'll do my business MY WAY.  Screw all of you if you want to tell me how to run my business.  If you want to come along for the ride, great.  You'll get back your rewards as I get them.  If not, go buy bonds or something safe.  Life is about risk.  It's about damn time you learned that you can't EXPECT rewards for investing.  Hope, yes.  And you should be damn grateful for breaking even, let alone coming out ahead.

I've never understood the desire to go public.  Every company I've seen doing that has gone downhill in five years or less, unless they go private again.  Not necessarily in profits, but in everything else that counts to an owner when someone is running a business for themselves (customer service/satisfaction, quality, etc.).  Dell took back his company, and I applauded it.  Maybe now they can focus on innovation instead of obsessing about investors.

But don't talk to me about investor's rights.  They have none the law doesn't require.