Carl Icahn says Apple should launch $150-billion stock buyback

Carl Icahn, the billionaire activist investor who has made a career of pushing companies to make changes to boost shares, published a letter to Apple Inc. Chief Executive Tim Cook urging the company’s board to increase the size of a stock repurchase.

Icahn promised not to tender his shares if Apple agrees to his proposal to implement a $150-billion repurchase, he said in the open letter that he posted on his website Thursday. Icahn said he has increased his holdings in the company to 4.7 million shares worth $2.5 billion, from 3.4 million shares in August. He said he intends to buy more of the stock, which he contends is undervalued.

“Our criticism relates to one thing only: the size and time frame of Apple’s buyback program,” Icahn said in the letter. “It is obvious to us that it should be much bigger and immediate.”

Apple spokesman Steve Dowling declined to comment.

Icahn is lobbying for a heftier payout just months after Apple announced a plan for a total of $100 billion in dividends and buybacks. Apple’s stock has underperformed benchmark indexes this year amid investor criticism that the Cupertino, Calif., tech giant hasn’t delivered new breakthrough products.

Apple shares rose $6.95, or 1.3%, to $531.91 on Thursday. The stock is little changed this year, compared with a 23% gain in the Standard & Poor’s 500 Index.

“To invalidate any possible criticism that I would not stand by this thesis in terms of its long term benefit to shareholders, I hereby agree to withhold my shares from the proposed $150 billion tender offer,” Icahn said in the letter. “There is nothing short term about my intentions here.”

Separately, Bill Gross, manager of the world’s largest mutual fund, said in a Twitter posting that Icahn should stop pushing Apple for additional share repurchases and do more for charitable causes.

“Icahn should leave Apple alone and spend more time like Bill Gates,” said Gross, who runs the $250-billion Pimco Total Return Fund at Pacific Investment Management Co. in Newport Beach. “If Icahn’s so smart, use it to help people not yourself.”

Icahn said he will continue to tackle what he views as problems in corporate governance. If Apple doesn’t implement his suggestion, he said he will consider a proxy fight if he gets enough support from other shareholders.