Carl Icahn takes a substantial stake in Apple and claims that the company is massively undervalued.
Larry Ellison appears to predict the death of Apple without Job’s guiding hand.
Who’s right? or are neither?
Icahn is an interesting chap. Above all he seems to spot value that others don’t. Even by taking his position, the stock jumps and the sheep that seem to follow his lead (is that really an investment strategy-we follow Icahn?) also take positions.
His recent history has shown Icahn to be adept at spotting hidden IP value. He is attributed as being the catalyst for Motorola’s splitting its mobile unit and this being patent attractive enough to persuade Google to acquire the cover that Motorola Mobility provided.
What little has been said about his reasons for investing in Apple so far seems to indicate the his main motivation may be Apple’s cash reserves ($147bn and rising) and the commitment made to return $100bn of this to investors by 2015. At the rate at which Apple is generating cash that may only be one third of its cash ay that point.
We have a different view of Apple. We’ve taken an IP fundamentals approach to looking at Apple and also believe that it is only just getting started and has a long way still to go.
Then Larry pops up. According to a report in Slashdot this morning, Larry predicts using sign language, the death of Apple, unable to disruptively innovate without Job’s guiding hand.
Oracle CEO Larry Ellison thinks that Apple will collapse without Steve Jobs at the helm. In a televised interview with CBS News, scheduled to air August 13, Ellison called the deceased Jobs ‘brilliant’ and compared him to iconic creators such as Thomas Edison and Pablo Picasso. When asked about Apple’s future now that Jobs is dead, Ellison didn’t hold back: ‘We already know, we saw — we conducted the experiment, it’s been done.’ Raising his hand above his head, presumably to indicate the rise of Apple’s fortunes during Jobs’ initial reign, Ellison said: ‘We saw Apple with Steve Jobs.’ Then he lowered his hand: “We saw Apple without Steve Jobs.” In other words, the period following Jobs’ ouster, when the company’s revenues declined and it launched whole portfolios of consumer products that failed. ‘We saw Apple with Steve Jobs,’ Ellison continued, raising his hand above his head again — this time, to suggest that incandescent period following Jobs’ return to the company, when it released the iPod, iPhone, iPad, and a variety of bestselling PCs. ‘And now, we’re going to see Apple without Steve Jobs,’ he finished, and his hand fell.”
Ellison is something of an enigma to me. Was I the only one that was surprised that Jobs and Ellison were such close allies, even friends, and that they shared long walks together? By reputation, Ellison seems to have the fear element cracked. One rumour is that the phrase “elevator pitch” was even invented to describe the 30 seconds between the elevator in Building 5 at Redwood Shores (Oracle’s HQ) leaving G and arriving at 5 during which any unfortunate Oracle employee would have to answer Ellison’s question of “So, what do you do for Oracle?”
Which of Carl or Larry is right? Maybe they both are (Icahn’s time perspective is what, two years, Ellison could be talking about a timeframe of 5+ years), maybe neither is?
We see great things being still possible for Apple. Unpicking their IP strategy, we think they’re very well poised to move to the next level. You know, I really should write a book about this.