The activist investor made his pitch in a letter to fellow shareholders today urging them to support his resolution calling on Apple to increase its share-repurchase plan. “Given that the company has $130 billion of net cash and $40 billion of expected annual earnings, and the fact that it is hard to find a better time in history to borrow money, a $50 billion share repurchase over the course of fiscal year 2014 seems more than reasonable to us,” Carl Icahn writes — calling this “one of the greatest examples of a ‘no brainer’ we have seen in five decades of successful investing.” He adds that he’s an Apple fan, and over the last two weeks bought $1B of its stock, including $500M today, for a total holding worth about $3.6B. One reason for his optimism is his hope that Apple will finally introduce a TV set that will make it easy for users to watch shows from conventional pay TV and the web, and take advantage of the growing interest in 4K, or Ultra HD, screens. “While cable companies will likely be slow to upgrade their linear TV infrastructure due to cost, video content is expected to be accessible through the internet via services like Netflix and others,” Icahn writes. “We believe ultra high definition represents a major catalyst for the next TV replacement cycle and a promising moment for Apple to introduce its first new product in this category.”
Related: Carl Icahn Takes Another Bite Of Apple
Manufacturers sold 238M TV sets globally in 2012, so “it would not surprise us if Apple could sell 25 million new Apple ultra-high definition televisions at $1,600 per unit, especially when considering both its track record of introducing best in class products and its market share in smartphones and tablets,” Icahn wrote. “At a gross margin of 37.7%, which would be consistent with that of the overall company, such a debut would add $40 billion of revenues and $15 billion to operating income annually.” In addition to offering hardware, he says that Apple should add 4K content to iTunes. Speculation about an Apple TV took off in 2011 when the company’s late CEO Steve Jobs told his biographer Walter Isaacson that he had “cracked” a way to create “an integrated television set” that would be “seamlessly synced with all of your devices and with iCloud.”
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