Activist Investor Carl Icahn pulls out of Apple over China concerns

by Matt Klassen on May 4, 2016

ratsThe first (and perhaps largest) rat has officially jumped from Apple’s ship, as billionaire activist investor Carl Icahn—known for laying waste to companies to turn a profit for investors—confirmed last week that he has sold his shares in Apple over concerns of growing resistance to the Apple brand in China.

“We no longer have a position with Apple,” he told CNBC on Thursday, adding that he still considered Apple to be a “great company, and CEO Tim Cook is “doing a great job.”

Reports indicate that Icahn made $2 billion from selling his shares in Apple, a sizeable sum until you realize that at one point last year he owned 53 million shares worth $6.5 billion, but who’s counting?

But despite Icahn’s continued positive appraisal of the company (made with promises of buying back in if the China situation gets worked out), you have to consider this a disturbing sign, that one of the world’s most prominent activist investors sees reason to jump ship on Apple now, at the beginning of the company’s first downturn, leading me to wonder if more rats are to follow.

There’s no question that the reason behind Icahn’s defection is the unsettled waters of the Chinese mobile market, as the country’s recent economic slowdown and the increased regulatory pressure on foreign tech companies like Apple has turned a sure-fire growth market completely on its head. While Cook noted that “we still feel good about China,” the fact that a moneyman like Icahn doesn’t leads me to believe that there might be more barriers to continued growth and more threats to once-steady revenue than Apple is letting on.

“You worry a little bit — and maybe more than a little — about China’s attitude,” Icahn said, later adding that China’s government could “come in and make it very difficult for Apple to sell there … you can do pretty much what you want there.”

As we reported here, Apple was recently forced to shut down iBooks Store and iTunes Movies services in the country, after failing to comply with demands to have company servers based within mainland China. Add that to the company’s quarterly report that indicated stagnating sales in China, and it seems the scenario was enough to motivate Icahn to jump ship early, taking what profits he could before things got worse.

While unsubstantiated, I would now think that Icahn’s actions have many other Apple investors considering the future of the Cupertino company, for while I doubt that Apple is close to closing its doors, it may be close to seeing its reign atop the world’s most valuable companies come to an end, and once the first rat scurries for the door over the prospect of losing money, it won’t be long before the rest follow.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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