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

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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  • Report this Comment On January 29, 2014, at 12:19 PM, Drew9944 wrote:

    The market share numbers many commenters cite, such as this article are misleading. They don't tell the full story. Because they are "unit sales market number share", not "Dollar Adjusted Market Share". If the cheapest end of smartphone market is growing faster as a. that's all most lower income 3rd World people can afford, and b. 3G networks are still being rolled out in China, India, Latin America, and some 4G starting finally in China now too so lower performance smartphones are fine for 2G and 3G networks anyway, and Apple doesn't make the very low cost phones, then naturally if the Writer Lumps all ends of the market together, it appears Apple has less and less market share. But if the Market is measured on $Adjusted Market Share, then Apple's 8% in China and India, with Apple iPHONES costing 4X as much as the cheap phones, well Apple's Dollar Market Share is much Bigger and may really be 30% and growing faster.

  • Report this Comment On January 29, 2014, at 1:50 PM, imvho wrote:

    Drew,

    You make an excellent point. Apple continues to have the best infrastructure, the best quality and the most prestigious products.

    It would be silly to compare Rolex to Timex from a standpoint of market share, or BMW to Tata in terms of total units sold in India.

    I think the aspirational aspect of Apple products will result in far greater sales in China than are currently being projected.

  • Report this Comment On January 29, 2014, at 6:30 PM, haysdb wrote:

    Go ahead and second guess Carl Icahn, who is reportedly worth $20 Billion. Check back in a year or two years and let's see who was right.

  • Report this Comment On January 30, 2014, at 10:12 PM, tkell31 wrote:

    Cook is a blowhard. Never forget this is a company that was so arrogant it thought they could dictate what people would buy. Hence only recently did colors become an option and the screen size still isn't one. That thinking is dangerous. Phones and Pads have almost plateaued so unless another product line comes out the only way to go will be down.

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