Billionaire Carl Icahn Sells Apple Stake, Blames China

When a billionaire, such as Carl Icahn, sells his Apple stake, the rest of the world takes notice. And that is just what happened yesterday, as Apple shares declined again, having the worst week in the market since 2003.

Icahn owned 45.8 million shares of Apple as of the end of 2015, a little less than one percent of the total shares. This sell-off is big and has given other investors the jitters about the future of Apple. On Thursday, after the announcement and interview, Apple shares fell another 6 percent.

Apple drops after Icahn sells his stake https://t.co/pVBba8xqUb pic.twitter.com/ApGZTuboIp

— Bloomberg (@business) April 28, 2016

It’s All About China, Says Icahn

During an interview on CNBC’s Power Lunch yesterday, Icahn was asked if he had concerns about Apple’s future. He told interviewer Joe Scarborough that, while he thinks Apple is still a “great company with a “great management team,” its problems with China could get worse.

“The real thing I worry about is the relationship…and I don’t know much about that relationship…if China was steady, I would probably go back into it.”

Icahn was referring to both the relationship between Apple and Chinese regulators and the economic downturn in China, which has resulted in a 26 percent sales decline of Apple products in China.

As Icahn sells his Apple stake, he continues to believe in the company, he says. And he states that, should things become more stable in China, he might easily get back in.

Response from Tim Cook

Even though Apple has had its first drop in revenue in 13 years, primarily because of sluggish iPhone sales in China, Apple chief Tim Cook is not worried. Noting that the sales slump was most pronounced in Hong Kong, but that mainland China revenue was only down 7 percent. During an earnings call from CNBC, he had this to say.

“And so as I back up from this and look at the larger picture, I think China is not weak as has been talked about…We may not have the wind at our backs that we once did, but it’s a lot more stable than what I think is the common view of it. And so we remain really optimistic on China.”

Still, when Carl Icahn sells his Apple stake, Cook’s comments may not calm nervous investors.

Geopolitical Risks

It is no secret that other major U.S. tech companies have had their issues with government regulators in China. Google, Twitter, and Facebook have all been shut out of China, and, due to domestic competition, Cisco, IBM, and Hewlett-Packard have struggled with their Chinese operations and sales. And earlier in April, China shut down iTunes Movies and iBooks, only six months after both of those services were introduced.

And, as Icahn sells his Apple stake, he stated the following.

“You worry a little bit – and maybe more than a little – about China’s attitude.”

Can the iPhone 7 Revive Things for Apple?

With 25 percent of its earnings coming from China, Apple is hoping that, when it unveils its new iPhone 7, sales will again pick up in that huge market. That may not be the case. According to Tech Radar, changes in the iPhone 7 will not be huge. While consumers may get a water-proof, as opposed to water resistant, phone, other rumored changes will be a possible higher resolution, and a slimmer device. One of these changes will probably have consumers standing in overnight lines to get theirs. Launch of the new phone is apparently scheduled for September, as have been all earlier iPhone launches.

Faint Praise

As Carl Icahn sells his Apple stake and pockets $2 billion, he continues to claim that Apple is a great company. Nervous shareholders, watching the continued decline of their investment, however, are probably not taking those words too seriously. Many, who have realized good profit from a stock that shot “sky high” over the past 12 years, many follow in his wake and “get out while the getting’ is good.”

[Photo by Henny Ray Abrams/AP Images]