Microsoft kicks off iPad buyback deal in latest effort to juice Surface sales

Microsoft will pay at least $200 for used iPads made by rival Apple, and in return issue credit that customers can use to buy one of the company's Surface tablets.

On its Microsoft Store website, Microsoft outlined the buyback deal: It will accept "gently used" iPad 2, and third- and fourth-generation iPads -- the latter two models launched in 2012 -- pay a minimum of $200 for each tablet, and issue the funds as a gift card good for purchases at the Microsoft Store.

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Customers must bring their used iPads to a Canadian or U.S. Microsoft retail outlet -- the program's not supported online -- where a sales person will evaluate the tablet and decide on the dollar amount. Microsoft has approximately 70 stores in the U.S.

Apple's 7.9-in. iPad Mini is not eligible for trade-in.

"Microsoft Store gift-card value ... is subject to Microsoft's discretion and manager approval," the website said. "All trade-ins are final. Limit 1 per customer."

Because the buyback program isn't available online, it's impossible to tell what Microsoft will pay for an iPad before going to a store. Re-commerce vendors such as Gazelle and NextWorth pay between $150 and $240 for a working 16GB Wi-Fi-only iPad, with the lower value for the 2011 iPad 2 and the upper-end for the newest fourth-generation "Retina"-equipped device.

Buyback companies pay more for iPads with more storage space or those equipped for accessing the Internet over a mobile carrier data network.

They also pay cash for the Surface RT and Surface Pro tablets made by Microsoft. NextWorth quoted $187 for a 32GB Surface RT and $338 for the entry-level 64GB Surface Pro, or 54% and 43% of the list price, respectively. Microsoft's tablets start at $349 for the Surface RT, the struggling model powered by Windows RT, a subset of the more powerful Windows 8 that can run only so-called "Metro" apps. The Surface Pro, which relies on Windows 8 and can run legacy software like the desktop version of Office 2013, starts at $799.

The Redmond, Wash. company has cut prices of both models in the last two months to account for over-optimistic inventory plans and to clear the decks before Sept. 23, when it will unveil new models for the holiday selling season.

The resulting gift cards from an iPad trade-in do not have to be used for the purchase of a Microsoft Surface, but can be redeemed for anything Microsoft sells in its stores, including third-party PCs.

The deal also offers a call for action to iPad owners who have been swayed by Microsoft's television campaign that compare various features of the Surface RT with the 9.7-in. iPad, which starts at $499 with 16GB of storage space.

Microsoft's iPad buyback program expires Oct. 27. Apple is expected to roll out new tablets this year, and if it follows last year's practice -- when it also unveiled a new iPhone in September, as it did earlier this week -- the most likely introduction date is Tuesday Oct. 22.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, or subscribe to Gregg's RSS feed . His email address is gkeizer@ix.netcom.com.

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Icahn to press Apple CEO Tim Cook on stock buyback over dinner

Computerworld - Carl Icahn, the billionaire activist investor, said yesterday that he and Apple CEO Tim Cook will dine together next month, when they will discuss Icahn's proposal to boost the company's stock buyback program.

"Spoke to Tim. Planning dinner in September. Tim believes in buyback and is doing one. What will be discussed is magnitude," tweeted Icahn Thursday during the hours-long outage of the NASDAQ exchange.

It was the third time in the last week-and-a-half that Icahn, known as a corporate raider and investment agitator, used Twitter to announce dealings with Apple. On Aug. 13, Icahn revealed that he had acquired "a large position" in Apple, that he believed the stock to be undervalued, and that he had spoken with Cook about an increase in the company's already-under way buyback initiative.

Thursday's tweet was classic Icahn, said Patrick Moorhead, principal analyst at Moor Insights & Strategy.

"It's all part of the Icahn playbook. Upping the ante," said Moorhead in an email.

Moorhead, who has been critical of Icahn's part in the continuing saga of Michael Dell's attempt to take his company private, had earlier said the investor's interest in Apple was nothing but trouble.

"This is absolute trouble," Moorhead said two weeks ago when Icahn disclosed he had bought Apple stock. "There's not one single positive thing [Apple] can take away from his interest, no matter how much you search."

Moorhead has said that, at best, Icahn will be a distraction to Cook and Apple.

Icahn typically buys a stake in a company to demand management changes and advocate the use of cash reserves to boost the share price, including paying higher dividends or buying back shares. The latter seems to be Icahn's strategy with Apple.

The Cupertino, Calif. company is in the midst of an aggressive buyback program. Last year, Apple said it would use $10 billion to fund buybacks that would retire shares and thus increase the value of those still remaining. In April, the Cupertino, Calif., company increased the buyback program to $60 billion, which is to be spent through 2015.

Icahn, however, wants even more money spent on buybacks -- even if Apple has to borrow to do so -- and to accelerate its schedule.

Icahn had not revealed the size of his holdings. In filings with the U.S. Securities and Exchange Commission (SEC) for the quarter ending June 30, Icahn said he owned no Apple stock, meaning that his purchases began on or after July 1. He is required to disclose his holdings each quarter, so Icahn's holdings will be made public in October, after the close of the third quarter.

That Icahn tweets about Apple and his investment interest is unusual -- enough that some on the investment site SeekingAlpha have wondered why it's not considered stock manipulation -- but it is perfectly legal.

In April, the SEC ruled that companies may use social media such as Facebook and Twitter to make announcements.

A day before his first tweet about Apple, Icahn's website noted that he would use his Twitter account. "It is possible that the information that Mr. Icahn posts on Twitter (which may include information regarding companies in which we and/or Mr. Icahn have or may be contemplating an investment position) could be deemed to be material information," the site stated.

Icahn's dinner date with Cook hasn't come cheap -- estimates have pegged his stake at between $1 billion and $1.5 billion -- but then neither is Cook's time.

In May, an anonymous bidder plunked down $610,000 at an online auction to win a 30- to 60-minute meeting with Cook over coffee. Cook's offer was part a celebrity auction on CharityBuzz to raise money for the RFK Center for Justice and Human Rights, an international human rights organization based in Washington, D.C.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

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