Controversial investor Carl Icahn has made business headlines several times this week as he lectured Apple, gambled with NetFlix, and threatened eBay in his dealings. Icahn is well known for not only having an interest in many prominent companies, such as those noted, but for having extremely outspoken views about what those companies should do. It is this more colorful side of his character that made headlines several times this week.
The first Icahn “explosion” came on Monday as he made some rather pointed demands towards online auctioneer eBay. Earlier in January, Ichan acquired a nearly one percent stake in the company as part of his overall increased presence in the technology sector. Then this past Monday he nominated two allies to eBay’s board of directors and demanded that the company begin the process of separating its popular PayPal service into a distinct company.
eBay’s response was essentially to thank Mr. Icahn for his advice but they would not agree to his proposal. PayPal is the fastest growing segment of eBay currently. It is projected that it will even surpass the primary auction component of eBay’s business within three to five years. eBay CEO John Donahoe said Icahn’s proposal was not a new idea, and that the best thing for the company is to keep PayPal “in house.” This was not the last to be heard of Carl Icahn this week as in addition to threatening eBay, he went on to gamble with NetFlix and lecture Apple.
Icahn recently sold off a significant portion of his interest in online streaming service NetFlix. He made a tidy $800 million profit on the sale, but the reason he made headlines for it today was because despite the net profit on the transaction, he is losing a bet he made with his son Brett regarding the stock. The elder Icahn believed that NetFlix’s best days were behind them and the stock was going to lose value. His son disagreed, arguing that the company was still on the rise.
So far the “cost” to Carl Icahn on this wager has been nearly $200 million in lost profits, were he to still hold the full amount of NetFlix stock he owned previously. This would be in addition to $15 million he would have to pay his son personally for having lost the bet. Icahn did not seem too concerned about losing the bet. He still holds a $1 billion stake in the company.
The final bit of investment news involving Carl Icahn this week comes in regards to his increased interest in tech darling Apple. As a continued part of his plan to expand his presence in the tech sector, Icahn announced that he has increased his stake in Apple to $3 billion with the purchase of an additional $500 in Apple stock this month. He also restated his demand that Apple increase its stock buyback program. He had first made this demand back in April of 2013.
In addition to this demand however, Icahn also had more pointed criticism for Apple’s board. He wanted to see Apple show more interest in selling its own brand of televisions, specifically so-called 4K or “ultra-high definition” displays. He argued that this new standard was about to take off and that Apple could position itself as a leader in the market as consumers enter a new “TV replacement cycle.”
In each of these situations, it can be seen that Carl Icahn is an active investor. He takes a direct interest in companies that he has a stake in. He also does not hesitate to share his opinions about how a company he is invested in should be run. That is why this week Carl Icahn was busy lecturing Apple, gambling with NetFlix, and threatening eBay.
By Christopher V. Spencer