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Carl Icahn's Apple Letter: A Play In One Act

Uncle Carl just wants to help.

SCENE: A wedding at a strip mall banquet hall. CARL, a 79-year-old man in a tuxedo, and his nephew TIM, a 54-year-old man dressed entirely in black, are seated together at a table center stage. Family members move about joyously in the background. 

CARL: We again applaud you and the rest of management for Apple’s impressive operational performance and growth. It is truly impressive that, despite severe foreign exchange headwinds and massive growth in investment (in both R&D and SG&A), the company will still grow earnings by 40% this year, according to our forecast.

TIM: Well thanks Uncle Carl,we've worked super hard to get our share price to $130.

CARL: After reflecting upon Apple’s tremendous success, we now believe Apple shares are worth $240 today.

TIM:[Angrily buttering a roll] Wow. That's... a lot more.

CARL: Apple is poised to enter and in our view dominate two new categories...

TIM: Again with the TVs and cars?

CARL: Excluding advertising, the addressable market for television is approximately $575 billion, which is larger than the smartphone market.

TIM: But we make smartphones, we don't make TVs. I don't really want to talk about...

CARL: Also, given that people spend an average of 12% of the day watching TV (equating to 25% of their free time), we view television’s role in the living room as a strategically compelling bolt-on to the Apple ecosystem.

TIM:[Angrily chews on roll] Have you seen the watch Uncle Carl? People love the watch...

CARL: We believe Apple Watch, Apple Pay, Homekit, Healthkit, Beats Music, and further innovation in existing product lines collectively represent a tremendous opportunity that on their own justify a valuation that, at the very least, reflects a market multiple.

TIM: I appreciate that. Jony and I put it some serious time on the watch...

CARL: That being said, we share your excitement that “our best days are ahead of us” and that Apple has “no shortage of growth opportunities to pursue.”

TIM: [Sits back in chair and fiddles with wine glass] I really don't want to talk about cars, Carl.

CARL: We believe the rumors that Apple will introduce an Apple-branded car by 2020, and we believe it is no coincidence that many believe visibility on autonomous driving will gain material traction by then.

TIM:[Rolls eyes] I know you rode in Elon's new Tesla - and it was super cool, but that doesn't mean we're making a car, Uncle Carl.

CARL: As autonomous driving would release drivers’ attention from the activity of driving and navigating, and perhaps even increase the time people actually want to spend inside a car, both an automobile and the services provided therein become even more strategically compelling.

TIM:[Silently fuming] You've mentioned this a few times...

CARL: While Apple currently addresses this market with CarPlay, it seems logical that Apple would view the car itself as a the ultimate mobile device to which it could bring its peerless track record of marrying superior industrial design with software and services, along with its globally admired brand, and offer consumers an overall automobile experience that not only changes the world but also adds a robust vertical to the Apple ecosystem...

TIM:[Mumbling] Look who's saying "ecosystem" now...

CARL: ....And for Apple, the car market is more than big enough to “move the needle” significantly, even as the world’s largest company.

TIM:[Gets up from chair] I need a drink. [Walks away]

CARL: If you choose not to pursue some of the new categories we highlighted, or you find our growth forecasts too aggressive for any one new category in particular, we’ll be the first to admit that you are more knowledgeable in these areas than we are. [Smiles sadly]



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