Apple's R&D Could Trump Icahn's $150 Billion Buyback Plan

NEW YORK (TheStreet) - If Apple (AAPL) doesn't want to continue to engage billionaire activist investor Carl Icahn with his proposals for a $150 billion share buyback, the company should give investors added clarity on its research and development activity and its product pipeline.

Apple's record-breaking earnings and product launches aren't moving the firm's stagnant share price, nor are its efforts to return cash to investors by way of another record -- $100 billion in dividends and share buybacks through 2015.

The company's inability to move its share price with tangible earnings, dividends and buybacks, ironically, comes at a time when investors appear willing to bid up the shares of low-profit firms such as Amazon (AMZN), Tesla (TSLA) and Netflix (NFLX) to ever-higher prices.

Now investors like Icahn are clamoring for Apple to release its stockpile of cash and cash equivalents as a means to improve the firm's discounted market valuation.

Icahn believes that if Apple released its cash through a buyback, it would immediately add over 30% to the firm's earnings per share and could lead to a more-than doubling of the Apple's stock price in coming years.

Given Apple's uniquely solid financial footing and earnings outlook, it is hard to argue against Icahn's math and his understanding of the firm's capital structure.

To Apple customers and those who consider the firm to be among the nation's top innovators, however, a discussion about buybacks and capital structure is likely to be taken more as a rude Wall Street attack on a well-run company.

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