Carl Icahn’s push for more Apple buybacks falls flat

No more buybacks for Icahn?

Try as he might, investor Carl Icahn’s call for Apple to return $50 billion to shareholders through buybacks is not looking good. According to Reuters, proxy advisory firm ISS has recommended against continuing the buyback program. ISS also subtly, but clearly called out Icahn for attempting to “micromanage Apple’s capital allocation process.”

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Icahn this morning responded to ISS’ recommendation, and said he does “not altogether disagree with their assessment.” That’s a big shift for the billionaire investor. Icahn has essentially given up on continuing the program.

Interestingly, Icahn named Tim Cook‘s “plan to launch new products in new categories this year” as a reason to be excited about Apple going forward. Surely, Icahn has not forgotten Tim Cook’s history of uttering this phrase repeatedly.

You can read Icahn’s letter to shareholders in its entirety below:

Dear Fellow Apple Shareholders,

While we are disappointed that last night ISS recommended against our proposal, we do not altogether disagree with their assessment and recommendation in light of recent actions taken by the company to aggressively repurchase shares in the market.

In their recommendation, ISS points out, and we agree, that “on the spectrum of options for allocating capital, the board appears to have been sluggish only in returning excess cash to shareholders,” and even though the company has in place “one of the largest buybacks in history” we agree with ISS that this effort seems “like bailing with a leaky bucket” when “given the scale of the company’s cash reserves.”

That being said, we also agree with ISS’s observation, taking into account that the company recently repurchased in “two weeks alone” $14 billion worth in shares, that “for fiscal 2014, it appears on track to repurchase at least $32 billion in shares.” Our proposal, as ISS points out, “thus effectively only asks the board to spend another $18 billion on repurchases in the current year.”

As Tim Cook describes them, these recent actions taken by the company to repurchase shares have been both “opportunistic” and “aggressive” and we are supportive. In light of these actions, and ISS’s recommendation, we see no reason to persist with our non-binding proposal, especially when the company is already so close to fulfilling our requested repurchase target.

Furthermore, in light of Tim Cook’s confirmed plan to launch new products in new categories this year (in addition to an exciting product roadmap with respect to new products in existing categories), we are extremely excited about Apple’s future. Additionally, we are pleased that Tim and the board have exhibited the “opportunistic” and “aggressive” approach to share repurchases that we hoped to instill with our proposal. It is our expectation that Tim and the board continue to exhibit this behavior as fiduciaries to the shareholders since they clearly seem to agree that our company continues to be extremely undervalued, and we all share a common optimism with respect to the company’s bright long term future.

Sincerely yours,

Carl C. Icahn