More On Icahn And Time Warner

Carl Icahn didn’t own enough Time Warner shares to put him in the top 20 shareholders at the end of 2Q05 but the 120 million shares he now controls combined with his reputation and plans to acquire enough for a five-percent stake put him at the top of the troublemaker list. In CEO Dick Parsons’ favor, he still has the support of most major shareholders although with complaints about a $5 billion buyback being too small and the static stock price, he could be running out of runway. So far, Icahn’s interest hasn’t done much to budge the stock; it closed Monday at $18.50, up 26 cents.
The Street: It was Parsons who contacted Icahn to set up a meeting this week. Larry Haverty, associate portfolio manager of Gabelli Global Multimedia, told the site that the kind of leverage TW might have to assume for a larger buyback — Icahn wants $20 billion — is great when interest rates are going down but higher rates call for a more conservative debt to cash flow ratio.

Bloomberg: Analysts say the stock would be worth $27 a share in a split-up but at least seven investors said they are happy with Parson’s leadership.

WSJ: (sub. req.)The Journal says the Parsons-Icahn meeting is set for Wednesday. Morris Mark, president of Mark Asset Management, which owns $15 million of Time Warner stock, told the Journal: “I think he and Mr Parsons aren’t that far apart conceptually. … I happen to think what Mr Icahn is talking about makes a lot of sense.”

USA Today: “Icahn and his allies ‘don’t own a huge amount of Time Warner stock compared to what’s outstanding,’ says Vogel Capital Management’s Harold Vogel. ‘And this isn’t a classic Carl Icahn story, where you’re dealing with sluggish management, an unknown stock and a situation where asset sales won’t result in tax problems. Parsons has gone in the right direction.'”

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