Carl Icahn has lived up to his promise for an interesting open letter to Apple Inc. (NASDAQ: AAPL) CEO Tim Cook. This is more like a novelette or whitepaper than it is a letter. To prove a point, the MS Word count puts the number of Words as 4,178 after the “Dear Tim” and before the “Sincerely” in the conclusion. And that word count does not even count the more than 400 words in the “Remaining Key Assumptions” and financial projections out through 2017.

24/7 Wall St. was able to get the crux down to less than 500 words.

For starters, Icahn indicates that he holds approximately 53 million shares. While applauding recent efforts, Icahn thinks that Apple is a $203 stock — just about double the current valuation. Icahn also sees revenue growing 25% and earnings per share growing at 44% for fiscal 2015.

Another key issue is that Icahn says Apple is moving ahead of Google Inc. (NASDAQ: GOOG) as the company’s only real competitor. Icahn also forecasts that Apple shares currently trade at a P/E ratio of only eight times the Icahn 2015 earnings forecast versus about 15 for the S&P 500. On top of that, Icahn is calling for 30% growth in 2016 and 2017 based on new and existing products.

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Icahn said:

We see Apple’s P/E of just 8x our FY 2015 forecast as both irrational and transient in nature, especially since many actively managed mutual funds remain underweight Apple in their portfolios. Our forecasted growth for FY 2016 and FY 2017 more than adequately justifies using a P/E multiple of 19x our FY 2015 forecast, which along with net cash values Apple at $203 per share today… these factors combine to reflect a massive undervaluation of Apple in today’s market, which we believe will not last for long. Therefore, given the persistently excessive liquidity of $133 billion net cash on Apple’s balance sheet, we ask you to present to the rest of the Board our request for the company to make a tender offer, which would meaningfully accelerate and increase the magnitude of share repurchases. We thank you for being receptive to us the last time we requested an increase in share repurchases, and we thank you in advance now for any influence you may choose to have communicating to the rest of the Board the degree to which a tender offer would have a positive impact on an EPS basis for all shareholders.

Icahn even said that to avoid any conflicts or accusations, Icahn committed not to tender any of his 53 million shares if the company consummates any form of a tender offer at any price ‘”because we believe Apple remains dramatically undervalued. And we think you and the Board agree.”

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Furthermore, Icahn went on with projections about the iPhone, the Apple Watch, a future TV, iPad and Mac, Apple Pay and finally, a move to generate more from iTunes and software and services.

ICAHN’S FULL LETTER

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