Apple at long last gets some love from Wall Street
Shares of Apple (AAPL), which have underperformed their peers and the broader market this year, climbed today, in response to two developments -- the first being the company's much-hyped tie-up with China Mobile, and the second, a push by activist investor Carl Icahn's for the company to buy back as much as $50 billion worth of its stock.
As of mid-afternoon, the Cupertino, Calif. company traded at about $570, up about one percent, after earlier hitting a 52-week high of $575. The stock has gained about seven percent since the start of the year. Meanwhile, both Google (GOOG) and Microsoft (MSFT) have surged more than 40 percent in the same time period. Facebook (FB), for its part, climbed more than 80 percent.
According to the Wall Street Journal, China Mobile, the world's largest wireless carrier, has agreed to begin offering iPhones to its more than 700 million customers beginning December 18. Research firm Trefis estimates that China Mobile may sell a whopping 1.5 million iPhones per month, which would lead to 20 million activations, a 17 percent increase from the most recent fiscal year, the paper says.
Exactly where things stand, though, isn't clear. A China Mobile spokeswoman wouldn't confirm the Journal's story to Bloomberg News. Meanwhile, the Bloomberg piece did note that regulators had approved China Mobile's plans to start offering commercial service on the company's fourth generation (4G) wireless network, the largest of its kind in the world. China Mobile said in 2011 that Apple had agreed to build an iPhone for its customers once it switched to 4G, according to Bloomberg. A spokesperson for Apple couldn't be reached for comment.
As for Icahn, according to media reports, he less strident when it comes to Apple than he first appeared to be. As Fortune's Adam Lashinsky noted, the billionaire activist investor had wanted an immediate $150 billion buyback. Now, he is asking for $50 billion "when Apple can get around to it." Apple has said it will respond to Icahn's non-binding buyback proposal early next year.
Icahn's focus on Apple is understandable. Though the company has authorized $60 billion in buybacks and paid $13 billion in dividends, it sits on an estimated $147 billion cash horde, which Moody's estimates is 10 percent of all corporate cash. That's nearly double the size of Microsoft, its closest rival, which has $77 billion, according to the Wall Street Journal.
For decades, Icahn has made a fortune by amassing large stakes in companies, demanding changes from management and later selling his investments at a handsome profit. Though the media, Wall Street analysts and companies often scoff at his brusque manner, Icahn, has delivered results for investors.
With a fortune estimated at $20.3 billion, Icahn will fare just fine, regardless of whether his Apple plan comes to fruition.