Carl Icahn is back in the news again; he’s agitating Apple to buy back shares as a way of increasing shareholder values. But why should Apple give money to people like him who are providing nothing of value to the company? All Icahn and his ilk are doing is sucking money out of corporations. Instead, that money should go towards investment in research, equipment and people to help maintain the innovation train going on at Apple. Shareholders aren’t the ones who are innovating. And it’s questionable that they really are providing capital to fund businesses.
Carl Icahn is the epitome of what’s wrong with the shareholder value mantra: it’s no longer about running companies that would provide valuable goods to customers and a source of economic good for communities.
He says he’s investing in Apple for the long-term but didn’t he just buy stock in the company last year? Is that his definition of long-term? And now he wants Apple to buy back his shares? That’s not very long-term and he is not even of the Internet generation.
He extols the innovations of Apple and says the company is well positioned for the future but its stock is undervalued. So buying back the stock will increase its value by limiting the number of shares available. That’s kind of a wimpy way of improving value and just funnels money into the hands of those who played no role in the innovations of Apple. Why should Carl and his like receive money for doing nothing but putting out their hands and shaking the company, crying out “shareholder value!”?
First, he suggested Apple going into debt to buy back shares as a way of improving the stock’s value. Now he just says, buy back the stock. So far his suggestions has nothing to do with improving the business. All of his suggestions are of the wimpy kind when you have nothing else to contribute. It’s for those cannot provide any other meaningful contributions. Buying back shares is a great way of returning money if you can find no other place to invest the money, but if you have other ideas to keep the business going and to improve it, buying back shares is a terrible form of investment.
This shareholder religion needs to change.