When we first heard that Carl Icahn had decided to pick up something in the neighborhood of $1.5 billion in Apple shares (per The Wall Street Journal) it was hard not to chuckle about it. We found it even funnier earlier this morning when we read Henry Blodgett's post about his concern that Icahn was able to get a call in with Apple CEO Tim Cook and his concern that Icahn was able to spike the value of his own newly acquired shares by almost 5 percent simply by tweeting his purchase.

Hmm. Icahn is in Apple for only one reason. He sees room to boost the stock price artificially through stock buybacks via Apple cheaply borrowing money. He put a value of about $625 on each share, which would deliver a handsome ROI on his investment. Of course, all other shareholders would stand to profit from it -- no need to worry about finding investors to buy shares at $525 – so why not let Apple do it for him? Easy money, as they say. 


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Blodgett doesn't think Cook should give Icahn the time of day; surely he has more important things to do than to take a two minute call from Icahn. Well…really, when an investor of the potentially quite hazardous nature of an Icahn calls, you need to take the two minutes to listen to him tell you about financing stock buybacks. Trust us -- the two minutes won't disrupt Cook from his other activities. It is just disingenuous nonsense to say it would.

Of course, if idiotic financial analysts and large-scale investors hadn't driven the stock price down through misinformed analysis of Apple in the first place (exactly as they did with Facebook) then perhaps Icahn wouldn't be sitting looking at opportunities to buy Apple cheap and looking to get Apple to finance Icahn's ROI! You can be sure that Icahn hasn't invested in Apple because he's given strong consideration to Apple's future products and ability to innovate -- even though he did manage to pay lip service to anticipated new products -- the as yet mythical iWatch and an Apple television set!

Greenlight Capital founder David Einhorn has already gone through the same share buyback exercise with Apple, which resulted in Apple increasing its buyback authorization to $60 billion from an original plan to spend $10 billion. Apple has already spent $16 billion to repurchase shares and has an internal schedule to complete the buyback by the end of 2015. Icahn sees no need to wait; borrow the cheap money and give us our return today is the name of his game.

Now, about that Icahn tweet; it is hardly illegal to have done so, and if our Twitter age gives an Icahn the ability to manipulate stock prices, well…it is no doubt all the same uninformed little investors who were buying at $705 who jumped on it. Icahn wins either way; either the stock spikes and he has an immediately more valuable asset (as it did), or it drops and creates another buying opportunity. The smartest move would be to ignore it completely!

We'll say this about it: today you either are going to buy Apple because you believe the company will deliver on significant innovation come September 10, 2013 -- the date Apple recently set for all the new hardware announcements -- and the price will jump because of it (which is our position), or you stay away from Apple altogether. Playing with Icahn's movements here is simply dumb.

It's rare to want Icahn involved in any business but we have continued to support Icahn's role on Dell, so it isn't Icahn that is the direct issue here. It is uninformed small investors and misinformed and otherwise spooked financial analysts that make Icahn's moves relevant. We don't know at what price Icahn bought his shares; perhaps it was just as Apple recently tanked below $400. Or perhaps he was distracted by his Dell work and bought at more recent prices over $450. Either way, we're sure he's thrilled the stock jumped 4 or 5 percent on his tweet, even if it doesn't yet even remotely add up to the huge profit he anticipates making!

Matcha.tv -- Continuing the Path of Small Acquisitions

On Tuesday of this week, Apple announced its acquisition of Matcha.tv, a website that had put together technology that allows subscribers to pull together self-designed program guides for different video services -- e.g. Netflix and Hulu. It is what some of us would refer to as a "technology tuck-in." The purchase is literally a tiny one for Apple, rumored to be between $1 and $5 million, and apparently Apple has been working with Matcha.tv for some time. The company itself and its website fell out of active availability sometime in May of this year, no doubt because of Apple taking a hard look at it.

Apple continues to sell its Apple TV units and sales have grown to at least two million per year. We doubt that Matcha.tv was acquired simply for Apple TV, however. It strikes us much more along the lines of something that would be perceived as a value-add down the road for an actual Apple television set. Who knows? Perhaps Apple has such a beast up its sleeve for September 10. If so, it will have regained its ability to keep some secrets truly secret.

An Apple TV set would sell in large numbers not because Apple will have invented a truly unique television set, but because of what will be its direct fit into Apple's iOS ecosystem. It will be high end, it will be luxurious, it will have instant cachet, but specifically it will have the iOS ecosystem in hand. This, in turn, easily allows Apple iPhone or iPad users to keep their "second screens" fully and natively connected to their new Apple TV sets.

Apple continues to work behind the scenes to add to its ability to deliver video content. As much as a Matcha.tv would be of use for Apple TV as Apple rolls such content out the door, it will be much more impactful ability to have it available as an "I" service coupled to an Apple television that also extends across Apple TV, the iPhone, iPads and the iOS ecosystem.

We would count an Apple television that brings this entire ecosystem support into easy play as an innovation. This is the sort of thing that should be strongly considered by anyone looking to invest in Apple -- not Icahn's tweet. Yet the acquisition was nothing more than a tiny ho-hum event as far as investors were concerned on Tuesday.

While we do not anticipate an Apple television making an appearance on September 10th, there is plenty of other innovation we believe Apple will bring to the table in short order. Relatively large investors (though we don't mean those large enough to be considered institutional investors) and small investors should look to invest in Apple at this point in time based solely on doing the necessary research and homework to ensure they can see that there is real innovation about to hit the market from Apple -- or that there won't be.

Investing now for any other reason is simply stupid.