Apple stock closed Friday at $532.87, up 1.5% for the week. But the shares are down 4.4% on the year to date compared with the Dow, which is off by only 1.6%. So I agree with Icahn. Apple's stock is dirt cheap. Not only are the shares still down 7.5% from their 52-week high, but even when you strip out Apple's cash, these shares would still command a price tag north of $500.
First, Apple is coming off a quarter where it sold 51 million iPhones, which was a company record. But last week, the popular talking point was how Tim Cook has Apple on BlackBerry's (BBRY) fast-track toward obscurity. Products from Samsung (SSNLN) and Google (GOOG) have caught up to Apple. No one is going to dispute that. But given the strength of the iPhone 5S and rumored iPhone 6, which is due out later this summer, Apple's stock remains a sure bet to $650 and higher.
Secondly, the Street continues to discount the impact of Apple's deal with China Mobile (CHL), which was made official last December. Analysts still haven't figured out how to model for this potential growth. But it was right in front of them -- plain as day.
Last month, when China Mobile, the world's largest carrier with more than 770 million subscribers, announced its annual earnings, the company said it added roughly 1 million iPhones in February, including 1.34 million 4G users. China Mobile's chairman Xi Guohua (then) told The Wall Street Journal that "most of them are iPhone users."