Is Carl Icahn Early or Late on Apple, Inc.?

Icahn buys into Apple, Inc., but Tim Cook's promise for innovation isn't to be trusted.

Jan 29, 2014 at 11:00AM

Shares of Apple (NASDAQ:AAPL) took a beating after posting softer-than-expected iPhone sales, but Carl Icahn sensed an opportunity. 

Despite adding to his growing position in the consumer tech giant just a few days earlier when he snapped up $500 million of the stock at a higher price point, Icahn was convinced that Mr. Market is the one that got it wrong. He dug deep into his pockets, making another big purchase. 

He's rich. He's right too often to ignore. However, Icahn isn't the type to quietly make an investment. He made a statement to CNBC after the tweet went out, calling out the shareholders bailing on Apple.

"Over the years I've made a great deal of money buying on these dips of companies I think are no brainers, especially when I think the reason for the dip is completely misinterpreted," he told CNBC's Scott Wapner. 

What's there to misinterpret? Apple's iPhone and iPad revenue climbed just 6% and 7%, respectively, during the holiday quarter, losing year-over-year market share in its two leading categories despite a flurry of new products hitting retail. Industry tracker Strategy Analytics reported this week that smartphone shipments soared 34% during the holiday quarter, well above the 7% increase in iPhone units sold. 

Icahn isn't swayed. 

"I believe there was a major positive in Apple's message when Tim Cook stated that within the year new products in new categories will finally be introduced," Icahn said, pointing out that the last time that Apple entered into a new category it turned out to be the iPad.

The problem is that Cook is always pointing to the future. 

"Our teams are hard at work on some amazing new hardware, software, and services that we can't wait to introduce this fall and throughout 2014," he said nine months ago. Those fall introductions didn't exactly move the needle as we can see by Apple posting flat net income during the seasonally significant holiday quarter and surrendering market share. 

"We remain very confident in our new product pipeline," he said six months before that.

"Across the year you're going to see a lot more of the kind of innovation that only Apple can deliver," Cook said another six months earlier. 

Well? No one is saying that Apple should rush its smartwatch, smart television, or smart home launches but it's just hard to take Cook's boasts about great products on the horizon seriously. If that's why Icahn is excited about the opportunity to buy into Apple yesterday at what turned out to be an 8% discount, it may not be the no-brainer call that he thinks he's making.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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