Irascible Icahn values Apple at over $1trn
Boardroom bane insists iMaker should be trading at 20 times earnings per share
Maverick investor Carl Icahn, known for his fiery clashes with US company directors, has valued Apple at over $1trn, according to a report from Reuters.
Icahn, who played a starring role as Michael Dell's wet blanket in the fight to take Dell Corp private, wrote a letter to his Twitter followers in which he declared that Apple should be trading at $216, a price significantly above the company's record high of $124.92, which it reached yesterday.
Apple's peak price came after it closed a deal with a California-based solar energy company to purchase around $850m of electric power in a bid to cut energy costs. When CEO Tim Cook announced the deal at a Goldman Sachs technology conference in San Francisco, Apple's market cap closed at $710.74bn.
Since September 2012 Apple's market capitalisation dropped from a then-peak of around $655bn, but has been in recovery since the second quarter of 2013. Warm reception for the iPhone 6 range, further driven by rampant holiday-season sales and the largest quarterly profit in corporate history, has pushed the company's share price to record levels.
But Icahn, a top-10 investor in the Cupertino-based iPhone maker, believes Apple is still undervalued. He said the company should be trading at 20 times earnings per share. When combined with net cash of $22 per share, this gives a price of $216 per share, according to Reuters' calculations.
"This is why we continue to own approximately 53m shares worth $6.5bn, and why we have not sold a single share," Icahn wrote. "Also, to the extent Apple introduces a TV in FY 2016 or FY 2017, we believe this 20X multiple is conservative."
Icahn has, in the past, pressed Apple to buy back more shares and raise its dividend. In October he predicted that Apple's then-$100 share price could double and urged the board to buy back more shares using its growing cash reserves, which reached $178bn on 27 December.