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Carl Icahn States His Case for Change at Illumina on “Close to the Edge”
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Carl Icahn States His Case for Change at Illumina on “Close to the Edge”
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ALEX PHILIPPIDIS: You're on a special episode of GEN's Close to the Edge, with guest Carl Icahn, the activist investor who's made news in recent weeks with a proxy contest to change the direction of Illumina's board and, thus, its management by planning to nominate three allies to the board of Illumina. Carl, thanks for taking the time, first off. And with us, also, are two of Carl's three nominees-- Jesse Lin, General Counsel of Icahn enterprises, and Andrew Teno, a portfolio manager at Icahn Capital.
ALEX PHILIPPIDIS: Thanks, Jesse and Andrew as well. First off, Carl, how did you come to get interested in biotech and life science companies enough to invest in many of them over the years?
CARL ICAHN: Well, I know something about everything. I guess, a little something enough to be dangerous. And so, in biotech-- you know, I actually went to medical school for a few years, so I know something about it. And we've had some good luck with it. We were involved, obviously, in Forest Labs, which worked out very well. And ImClone, we were in it. I had gotten out before the crash, so to speak, then I got back in when the thing went way down.
CARL ICAHN: And it was a good company, and we took it over, then we actually controlled it for a while and sold it to Eli Lilly. So we've done well with it. In this case, though, it's a disturbing case because it's actually-- it makes a travesty of a few things. It makes a travesty of corporate governance, in a way, because the guys who run it-- and we've said this.
CARL ICAHN: And that's the trouble with corporate governance today, in many cases, there is no accountability. And as you know, because I know your magazine wrote an editorial-- not an editorial, a Q&A on it before. And so, you do know the situation there. And I frankly never saw one this bad, and I've been a critic of a lot of boards and a lot of corporation, but I never saw one where these guys went in-- If you follow it, I'll just make it real quick.
CARL ICAHN: If you follow it. The way to end it, this guy, de Souza really does not have knowledge. He doesn't have great knowledge of gene sequencing, which is really what Illumina does. Illumina makes the technology to do the gene sequencing, and he doesn't have much knowledge in it. But somehow, he got to be. He's a great-- I think he's a great politician, and he moved up the ladder there for a few years.
CARL ICAHN: And if you look at his history, it's very tarnished. And he was able to handpick his board. He was able to get to the top and be the CEO. And it didn't do a good job and has robbed the revenue of this great company. It's a great company because it really is ahead of the pack and still is. And gene sequencing, the stock went up worth billions and billions of dollars.
CARL ICAHN: The stock was 520 at one time. Now, it's down to 230. And it went even lower before we came along. He went in. And subsequent to his being there, but right before he was there, they had a company. Illumina had a company called Grail. And to analogize this, if you look at the gold rush in 1849, a lot of people who ran out to get the gold.
CARL ICAHN: They ran out to California. They went to get the gold, and a few of them hit. But for the most part, they lost their money. The guys that made the money and kept it were the guys that made the shovels and made the jeans and sold it to the miners at huge prices. So a Illumina, to think of, is the guys that made the shovels. They make the shovels, but very, very sophisticated shovel, and nobody else could make the shovel as well as they could make it.
CARL ICAHN: And [INAUDIBLE] was more of the miner, the guys that go for the gold. Grail was a miner. So Illumina developed that company. So in a sense, Grail would be one of their customers, but they went out and developed a customer that they figured they would just go out and go for the guys that are going for the gold, which is the software companies that could take it-- very simplistically, take and interpret the gene sequence.
CARL ICAHN: So the gene sequence comes in, and they can interpret it. Illumina does the gene sequence. So what they did was they had it before Francis got their first services. They decided they would sell what they developed in its nascent stages. They thought that they had the best software. It would be a great company. And they sold it to a few billionaires and others.
CARL ICAHN: They sold it, maybe, for-- I forgot the number. Andrew will get into it a little bit. It's about a billion-- 1 billion, 2, to guys like Bezos, Gates, and all these guys. And nothing wrong with those guys. I'm friends with Bill Gates. I mean, it's not that-- they did anything wrong here, but here's what happened.
CARL ICAHN: But not that we know of anything. They went out, and deSouza is there. They sold it for a billion or two. Anybody who read about Grail subsequently to that, the next few years, saw they weren't quite making it. There's a lot of argument about this because it's a very, very esoteric thing. And they weren't quite getting to the goals. In fact, the FDA never approved their products.
CARL ICAHN: And therefore, you could get rebates if you use them. I'm talking about Grail now. Lo and behold-- and Francis is not doing well. Francis deSouza is not doing well. There was a lot of overlap and a lot of interplay between some of the people at Grail and some of the people at Illumina, and Andrew will go into that a little bit. What happens is-- what happened was, the guys at Grail that weren't doing well, so to speak, the billionaire group, we think weren't doing well.
CARL ICAHN: And if you read any articles about this from scientists, they would say, there's a lot of questions about this company. They went out, and the company was trying to go public. And I don't think they were doing it successfully. They went out, these guys, and decided in their great wisdom to buy Grail. And they paid $8 billion for it, which is an absurdity. And from a business point of view, absurdity.
CARL ICAHN: But by this time, we believe they had handpicked the boys, and this guy, Francis deSouza, was able to-- we don't know why the board did it and allowed it. We just think it was negligence on the part of the board, as well as, obviously, deSouza.
ALEX PHILIPPIDIS: So was it the Grail? Was the problem with the acquisition the very strategy or just the tactics that Illumina employed to try to gain approvals, that posed the problem in which you would account for the stock going down.
CARL ICAHN: Well, no. Here's what happened. I'll just finish the story quickly, and then you can ask questions. So what happened was, they go in. They announced they're making this deal for $8 billion, right? And they've got to get board approval, right? And so, the amazing thing that happened here, Alex, is-- which really puts the icing on the cake or even more than the icing, which makes this the nail in the coffin, which makes this case.
CARL ICAHN: In any other world, these. guy wouldn't not only lose their jobs, but would be sued for sure. If it were the army, they'd be court martialed, maybe firing squad for what they did. Because what they did was, they went in, and they not only paid-- they made a deal to buy it for 8 billion. A long cause before they closed on August 21 in '20 and '21. Before they closed, the EU comes in and says, you better not close.
CARL ICAHN: We don't want you to close because we think it's antitrust. The reason it's antitrust is that if you're the great technology guys that make the shovel, so to speak, now, if you start buying your own customers up, nobody else is going to pay money and go in and try to do the software needed to use this gene sequencing, which is a great thing. Because if you look at the future of diagnostics, this is going to be the way it's going to go.
CARL ICAHN: And they said, do not close. We're telling you, do not close over what we're telling you. Because we're going to come in and sue you. We're going to fine you for or $500 million. We're not going to let you take the company over, but we're going to insist that if you buy it and close, you're going to have to pay the expenses for Grail, which were huge. So Grail was losing money.
CARL ICAHN: So you're going to have to, then, go in and spend another $800 million. And you've got to remember that you're not talking to Microsoft here. You're talking to Illumina that doesn't have much cash. Illumina has its own CapEx to do. And while it was doing pretty well, it wasn't doing as well as it was and didn't have the kind of money to survive in this, possibly.
CARL ICAHN: So anyone in their right mind, after reading about Grail and their problems-- I said it was a big mistake to buy it for 8 billion or anywhere close to it, but it's insane, not just the mistake, and insanity to go ahead and close over the EU telling you this. And the FTC was against it also, which you just heard about. And the FTC still coming after them. We confront the company with that.
CARL ICAHN: And they say, come on. Did you do it or the board? Did you do an investigation? Did you look into the relationships? There's all kinds of overlapping relationships here. Did you do any of that? And basically, the interesting thing is, in this proxy fight, which is unusual, we ask these questions. We say, did you board look at this?
CARL ICAHN: And there's a whole litany of things that the board should be doing or should have done. They don't answer it. They don't even fight with this. They just say, we think, Icahn, these guys don't have the experience. We do. Vote for us. So they're not even bringing that into play, and that's why we're here.
CARL ICAHN: I go look for companies that I think are very undervalued for certain reasons. And the reason this company, I think, is undervalued is because it's gone down from 530 to 200. It went to 200 when we started buying it. I think. I forgot exactly. That there is something here, as we said at the beginning of the whole thing, to paraphrase Shakespeare, is something rotten in the state of Illumina.
CARL ICAHN: And that's why we're here. We're saying, it was just insane to do this deal. And you're really not only-- you're not only putting Illumina in jeopardy. It's not only an existential question for Illumina that you've done. You're hurting Grail also, as a CEO of Grail said. You're hurting two companies. You're hurting a great nation industry.
CARL ICAHN: But worse than that, what you've done is illegal, we think. And that's basically the whole story. Now, you go ask the questions.
ALEX PHILIPPIDIS: Sure. You've called for Illumina's board to fire Francis deSouza and replace him with Jay Flatley or someone else on his level, your words. Have you discussed this with Jay, and is he indeed agreed to come back?
CARL ICAHN: Well, look, unlike these guys who violated-- the first time they violated, when you talk settlement, you agree, you can't talk about what was said. And my discussions with Flatley-- I've had a couple of with him-- is we're not going to discuss them. So I can't really go into that. I have talked to Flatley. Suffice it to say, I believe you could get somebody very capable to run Illumina very quickly.
CARL ICAHN: But I can't-- I'm not going to tell you what Flatley said.
ALEX PHILIPPIDIS: And what basis would you look at him as a permanent CEO or a temporary until somebody else comes along?
CARL ICAHN: You've got to understand something. Even if I win this proxy fight, you know, I win the three seats, I still don't control this board. So you're asking me questions that you would ask somebody in control. I'm not in control of the company, but I do say that we need three people to try to influence a board that has been handpicked by deSouza. So it's very difficult for us, even with three seats, to accomplish much at the beginning, but we've been in companies like this, where the boards were pretty much under the thumb of the CEO, and we got them to change.
CARL ICAHN: You get a couple of board members here, and they had to change. And we think we could do a lot with the three seats. However, we're not going to be able to go in and immediately and say, we call on the board to do it. But the board doesn't seem-- the board is there. They're in a state of lockdown. You can't talk to the board.
CARL ICAHN: They're told not to talk to us, so that's where we are with them.
ALEX PHILIPPIDIS: So as you said, even your three people wouldn't be a majority. How can they generate the disruption to business as usual that you said Illumina sorely needed.
CARL ICAHN: I don't like the word disruption.
ALEX PHILIPPIDIS: What would you call it then?
CARL ICAHN: [INAUDIBLE] accomplish what we want to accomplish. The answer to that is, it happens. And it's the story of us for 30 years, where we took over all these companies. Like, eBay took three years to get them to do the obvious of spinning off PayPal. I mean, use an example of a thing that went up eight times after that. Reynolds Tobacco spinning off the Nabisco.
CARL ICAHN: I mean, we're saying they should spin off. They should spin off analogous somewhat to spin off to the shareholders Grail and do it with the right software. Because there are people that would like to buy Grail and like to put money into it. And those are people or companies that have the capital to support Grail, which could be a great company, but a gamble.
CARL ICAHN: And that's what we would like to do now. You need people, especially on this board. You can't do it one or two. You need, at least, three. Now that I know the situation, I would have tried to get more people on the board. It wouldn't get a majority, but you would get enough to influence. So I think we would do be able to influence the company.
CARL ICAHN: But this thing, in some ways, it's almost frightening because there's more to it than meets the eye. And I mean, you have deSouza, who-- I mean, just a little work we've done on his background is really pretty questionable. He's never really accomplished a damn thing in his company before. And he obfuscates.
CARL ICAHN: He just doesn't tell the truth. For instance, it is I don't like to do personal stuff, but I want to make that clear when you do this. So in all our proxy fights, we never really dug into the backgrounds of people. We haven't made a person. We just say, you're running the company badly. You should do this, this, or this, or you run the company badly.
CARL ICAHN: You should leave.
ALEX PHILIPPIDIS: What makes this different?
CARL ICAHN: And this is different because you got-- here, we don't think there's any knowledge. But we honestly say, not trustworthy. I don't have to say it, which is very rare. If you go back and look at his divorce, for instance, the judge basically almost called him a liar. I forgot the words. He just said, you're not to be believed. It really went against him. I mean, in other words, he hid from his wife money that he was supposed to having, some Bitcoin or something like that.
CARL ICAHN: And so, he's been in a couple of situations, where his veracity is very questionable. And his compatriot is also Johnson, who was also Microsoft, and so there's interplay there. In other words, there's been questions of his veracity. But the real issue is, why did they do it, which is hard to understand.
CARL ICAHN: Why did they-- I mean, it's almost impossible to believe that, if you take a company, and you own 51% of it, you would never ever, ever do this deal because you would take it-- first of all, it was crazy to for 8 billion. Crazy. But, OK. You could argue, all right, this is judgment, something like that.
CARL ICAHN: But why would a board allow him to go in and do this in the face of the EU coming down on them and telling them-- it's not like they didn't know-- telling them, you close this deal, we're going to find you. We're going to kill you. OK, now, you go in against the government agencies. You've got all the power in the world. So my question is, what the hell is going on? And frankly, it's one of the more interesting things.
CARL ICAHN: They believe, I think, that they're going to win this proxy fight, hands down, because this is what they were told, that the index funds will go with them. The index funds generally go with the incumbent. This is what they're told. And I'm not saying it's right because I've seen index funds to go against guys like this, but they're saying that's why they're going to sell.
CARL ICAHN: In this country, that's one of our problems. You're going to see it manifests itself in this economy. I think, now, you're going to need productivity. And a lot of our companies are well run, but a lot of them are terribly run. And you're going to see that because there really is very little accountability, in general, in the country. But in particular, in this one, I believe the index funds, hopefully, are going to realize this and say, hey, come on.
CARL ICAHN: Why did you do this? Why aren't you answering these questions? So that's how I believe. We believe the board. The board went out. They're supposed to be doing a business judgment, and it's a blue ribbon board that Francis puts together. He likes to hobnob and go at Davos. Go here.
CARL ICAHN: Go there. Meet all these big deal guys. And I think he's put a few-- he's put a lot of them on the board. So they were on the board. But what happened was, with all the indemnification the board has and with all the insurance they have, this board realized, they must have realized how crazy this was.
CARL ICAHN: So they're supposed to use their business judgment, their duty of loyalty, their duty of care. They didn't use it. What they said was or what it said was, we need more insurance. So we're going to do, which is insane. I'm just imagining I was a fly on the wall, listening. If we're going to do this, which is almost an insane deal, we want more insurance.
CARL ICAHN: So they gave them a lot more insurance to protect them. However, if they really were completely lax to do a business judgment, and so if that is found, that insurers may not cover them. But the board doesn't seem to care. So in other words, it's a very, very interesting and strange situation. I've never seen one as bad as this, and I've been around a long time.
ALEX PHILIPPIDIS: Now, Jay Flatley spoken out about the Grail deal. He's alleged that the deal value would have been just $2 billion, had Illumina waited a year. How much did that sell you on Jay as being the solution again for Illumina's current challenges?
CARL ICAHN: I think that's all about Jay. Because I would say-- so we say Jay would be good. We've got more calls on this than most deals we've ever been in, and most of the people that have been in the company for a long time say Jay was very good. And so, all these people and shareholders are saying that. And if you look at his record, he did build up the company. So that's one of the reasons we would be behind Jay.
ALEX PHILIPPIDIS: When you talk about someone else at that level, if it's not Jay, who else might be a good CEO to bring in to Illumina?
CARL ICAHN: I'm not to go into this interview to speculate like that. I mean, I can't do that.
ALEX PHILIPPIDIS: How much does your argument against Francis deSouza based mainly on the Grail acquisition and how much on other actions he's taken as CEO?
CARL ICAHN: Well, I'd like you to talk to Andrew, who is really the point man on it, and he'll go into some of those details more than I can. So let him tell you.
ANDREW TENO: So it's probably fair to say that had they not closed the Grail acquisition over regulators, it probably wouldn't be involved. So that's number one. Now, that's not the only mistake, though. If you look at the last M&A deal they tried to do, they tried to buy PacBio. That was blocked. So clearly, in terms of strategy or anything inorganic growth, they've been a complete failure.
ANDREW TENO: Now, organically, the business has also slowed. So if you look at revenue growth this year, maybe it gets a high single digits. It used to be north of 20. Margins used to be 31%. Now, they're 22%. If you look at the management team, there's really been an exodus of talent. We have a slide in our most recent presentation, where we show everyone who was there, everyone was part of the management team when he became CEO.
ANDREW TENO: And the only person that's left is the general counsel. So all those people have left. We've heard that the, I'd say, culture at the top is not great. And more or less, Francis encourages anyone who is a threat, and he tries to find a way to get them out of.
ALEX PHILIPPIDIS: How does a Illumina address the talent exodus that you've cited, should you and your colleagues win appointment to Illumina's board?
ANDREW TENO: If you have a new CEO, that changes quickly. And if it doesn't, then things get worse and worse.
ALEX PHILIPPIDIS: And more broadly, how much does the company's mission and vision change, should you and colleagues prevail and join the board?
ANDREW TENO: So we think what's interesting about the Grail deal and to answer that question, which is, by buying Grail, Illumina is competing against its customers. And if you compete against your customers, you are essentially encouraging them, you're giving them a nudge to use Illumina's core sequencing competitors. You're helping out the competitors and hurting your own long-term growth rate, right?
ANDREW TENO: Hurting the core sequencing growth rate. So we would think Illumina should do is stop competing against your customers. Instead, go back to the days where you're trying to come out with new sequencing platforms as quickly as you can. You're trying to lower the cost as quickly as you can to really encourage that elasticity and encourage more and more people to use gene sequencing more and more novel ideas.
ANDREW TENO: So our real push is to get back to the core.
ALEX PHILIPPIDIS: Illumina would argue that they're doing that by rolling out NovaSeqX now. Why challenge Illumina before any numbers come out to see whether NovaSeqX delivers on what's the company's promise of restoring its growth in sales and earnings and where is that analysis amiss.
ANDREW TENO: So Francis did not-- we don't think Francis' background is in genetics. We don't think he's an expert in genetics. He didn't design the NovaSeqX. He's not selling the NovaSeqX. He's not working with the customers day-to-day on the NovaSeqX. We think that the NovaSeqX rollout would do better without Francis.
ALEX PHILIPPIDIS: And this is NovaSeqX coming out at a time when Illumina is facing competitors introducing newer sequencing systems to market over the past year. We've seen Singular Genomics, MGI out of China, PacBio and its long read focus, Oxford Nanopore, Element Biosciences, which says they, too, can deliver a $200 read on a human genome about the same price as Illumina is claiming with NovaSeqX. How well-positioned is Illumina to withstand that competition and remain a dominant player in sequencing and genomics?
CARL ICAHN: Let me come in for a second. That's exactly the point you're making, that Illumina should be hoarding all the cash it has, building a war chest to fight off the competitors coming in, all the ones you just mentioned, if they understood-- that's why we think that Francis has is just messing the business. He not only made a ridiculous deal, paid 8 billion, an insane deal if he's going to pay that and go and fight the regulator.
CARL ICAHN: But even perhaps worse is, he's squandering money that he needs to defend to stay in the position of being number one. You hit it. There's a lot of competition coming on. What the hell is he doing? NovaSeqX, yeah, it could be very good. Maybe it isn't. The jury's out on it.
CARL ICAHN: We think it, hopefully, will be. But he needs money to build it. He needs money for capital. This business is not stagnant. You're not making widgets here. You're making something that's moving like crazy. So it really is artificial intelligence, for instance, is going to be part of this business coming up.
CARL ICAHN: Because artificial intelligence is going to be able to do some of the stuff that is unthinkable now with the gene sequencing. So that is something that Illumina should be focusing on, how do you put that together with what they got, instead of squandering this money. And why the hell did he pay it? To me, you don't have to be Sherlock Holmes to say, well, what the hell?
CARL ICAHN: There's a lot of interfacing here between Grail and Illumina. In fact, Andrew, you can speak to this about the guy that was running Grail. He used to run Illumina, went over the Grail, help to get this deal done, and then sold all the stock immediately. All right, so you could go into it a little better. We could get the details on it.
CARL ICAHN: So there was something-- this thing is not going to go away in a proxy fight. And this is unusual for me to say. Because most of the times, we go to a company-- in fact, a lot of times, we don't go into the details. It's a personal thing. We don't say, you did something that we think could very well be illegal. We don't say that.
CARL ICAHN: We go in and say, hey, you're running your company badly. You miss at this point. You shouldn't have done that. You miss this. Why aren't you doing this? We get on the board very friendly. We get friendly with board members. We put them on other board, some of them. So it's not that we take this attitude.
CARL ICAHN: But in this attitude, it's so blatant that it enrages you that it's been done. We were called in by-- we're like Ray Donovan in a way. I mean, these crises come, and they call us. So they called us, and this one we looked at, and said, yeah, this is terrible. But once we dug in, if I knew what I knew now, I wouldn't even put three people up and look for control, which I probably wouldn't get.
CARL ICAHN: So maybe talking against myself. This is a lot of work here. And this is not going to go away. This is going to be in court. I believe, it's going to be in courts, and it will survive summary judgment motions. And it will get discovery somewhere. And if you get discovery, I really think you don't have to be Sherlock Holmes to figure something was going on.
ALEX PHILIPPIDIS: Illumina has sought to buy Grail for more than two years now, including the last year in which its market cap decline, which you've brought out. Why did you wait until last month to begin challenging the current board and management?
CARL ICAHN: I have to admit it to you, I really didn't know much-- I didn't know much about the company, too, a couple of months ago. When it was brought to us, we're in so many companies. I mean, a lot of companies, a lot of deals. Like I say, frankly, we did not know much about it. It was brought to us by a top analyst and said, you ought to be looking at this one. My God, look what's happening here.
CARL ICAHN: And so, then we looked at it. But I didn't believe that it would be so flavored. When you meet even Johnson, you realize, they don't have knowledge. And then, this guy comes on like a nice guy and all, but there's so many things that he's obfuscated, that he's basically lied about. I mean, he's even put something out now that, oh, I don't understand why they say it's a handpicked board or something like that because I didn't nominate any of them.
CARL ICAHN: Well, of course, he didn't nominate them. He got his other board members to nominate, so he put Johnson on it. He worked for Johnson. So he said, well, I didn't put him on. Well, who the hell put him on? Who brought Johnson to be the chairman? Hey, he did, obviously.
ANDREW TENO: You can't avoid-- I mean, if you look at deSouza and John Thompson, since 2006, right? So John Thompson bought deSouza's business in 2006. DeSouza stayed on at Symantec. He left Symantec to come to Illumina within a year of being announced to CEO. Then, John Thompson shows up on the board. I mean, it's not a coincidence. They clearly knew each other.
ANDREW TENO: And then, you can-- and afterwards, Francis is picking the people he wants to be on the board and pushing them through his committee. So it's the same with the insurance. We put out something, saying how could the board-- the board must have known there were real issues, significant risks, if they were going to buy an extra insurance policy.
ANDREW TENO: That is unusual. That's highly unusual for a company that's $70 or $80 billion in size, buying an $8 billion company to all of a sudden buy extra insurance then disclose it three months later. And so, the way they describe everything is just very questionable.
ALEX PHILIPPIDIS: So your argument that the relationships have compromised Illumina's ability to make money. Is there anything necessarily illegal in that, or is that just a matter of fiduciary.
ANDREW TENO: If you hired your friend of 20 years, you've known someone for 20 years, do you think they treat them a little differently than you treat someone that you don't know? I think the answer is absolutely. That's why they have the separation of powers.
ALEX PHILIPPIDIS: One of Carl's arguments on Illumina has been the loss of about $50 billion in market cap since the deal was announced. First, market cap actually rose in the first year since the deal was announced then went way down. How do you account for the first year going up?
CARL ICAHN: I think and looking into it and talking to different people that bought it, that nobody believed they were crazy enough to close the deal, right? And everybody was hoping, people that bought it didn't believe they close it because they believed that the EU had already said things about the fact that they were going to challenge the FTC. So they said, OK, this is just a mistake. It's stupid.
CARL ICAHN: The company's still a very good company. It's going to do great. They're never going to close this deal and whatever. And then, when it started to go down and started a precipitous fall was when they closed over the yield. So if you look at the trend, it went up until they announced that they were going to close over the yield. And I think they always planned to do it, and they never disclosed that they planned to do it.
CARL ICAHN: But they had planned to do it, months before, that they were going to do it, no matter what. They had a deal that they were going to close, and they kept it for shareholders. As they kept the insurance, they set it all up and gave the actual insurance. They never told the shelves for months after that.
ANDREW TENO: And there are some other data points, too, right? So when the deal was leaked, until when the deal was formally announced, the stock went down 23%. When they closed the deal over the explicit prohibition from regulators, the stock went down 8%. And just look at the-- I don't know what you wrote that day, but I think someone else wrote, Illumina Closes Grail Acquisition. Regulators be Damned.
ANDREW TENO: And plenty of people who were saying that there was a shocking move, questionable move, hard to imagine that someone would close over known regulatory prohibitions.
CARL ICAHN: And if you dig in-- if you dig in, you look at the position of Illumina. They've been, I believe, losing cash and losing liquidity for the last two years. Even if you were a company like Apple, or Microsoft, or some with billions, and billions, and billions of dollars, OK, that's not the consideration. Inf fact, you don't have enough money to withstand storm ahead of the hurricane ahead.
CARL ICAHN: But you don't have that luxury in Illumina. And so, it's an extremely questionable deal. And it might be a watershed event, both in the annals of corporate governance and the annals of a biotech, where you really see some of these deals being done. And here, even more importantly, in this new very dynamic industry.
CARL ICAHN: And I think it's certainly a watershed event for Illumina. So there's a lot of things here that are on line. I don't think they're going away, partially because where they are. But more importantly, I think it's too flagrant to go away, even when we give so much latitude the boards today and to the system today.
ALEX PHILIPPIDIS: How is it that $50 billion loss in market cap that you've brought up would have happened in any case because of the broader market decline we've seen in the last year and a half? Is that all Grail?
CARL ICAHN: You should address that because the comps show that they have gone down somewhat, but not nothing like.
ANDREW TENO: Yeah, I'll just give you the real numbers. So if you look at Illumina, so I would look at it in two different ways, right? So first, let's just address the $50 billion. So $50 billion is strictly the share price the day before the deal closed and then the day before we announced times a share count. That get you $50 billion. And if you look at Illumina, and you look at peers companies, like a Thermo or Danaher, so those companies are down 12%, whereas Illumina was down 62%.
ANDREW TENO: Now, you could say, it might not be the perfect comp set. Maybe you should look at other health care leaders, look at companies like--
ALEX PHILIPPIDIS: Danaher is a lot more diverse than health care. Danaher is a lot more diverse than health care.
ANDREW TENO: They have a broader life sciences, but maybe Thermo is your best company. And Thermo is actually-- I think it's actually up a little bit over that time period. So the outperformance would be worse. But whether you look at other companies with large market shares in health care that are growing with big modes, giant margins and should be growing for double digits companies, like Intuitive Surgical or IDEXX.
ANDREW TENO: If you look at that peer set, that peer set was down 26% versus Illumina at 62. So no matter how you cut it, Illumina has significantly underperformed. Now, Illumina will say, if you look at just the pure plain genetics companies, all of which are small, which lose money on a scale, 1/10 the size or smaller, the performance is more similar. But there's no reason that those companies should trade similarly.
ANDREW TENO: Companies that burn money today, that people are scared of whether they're going to exist or not, that should not be Illumina's concept. Illumina only created that because they've made the terrible decision to Grail.
ALEX PHILIPPIDIS: Now, should Illumina finally walk off from buying Grail, if they're forced to by the European Commission, what should that do for them in terms of M&A? Actually, Carl mentioned the effort Illumina had to try to buy PacBio. That ran into FTC opposition. Illumina left that deal. What, if any, role should M&A play in Illumina's future once it get past Grail.
ANDREW TENO: It shouldn't. I mean, Francis should not be buying companies.
CARL ICAHN: I'll state in a couple of ways. Illumina is a great company, got great technology, and is still ahead in gene sequencing. The future of that-- and I'm certainly no expert, but I know more than the average layman about this stuff-- the future is, in this technology and being the number one gene sequencer in the world, they can't do that by spending 800 million bucks to keep Grail alive, which the EU is making them do.
CARL ICAHN: It's the dumbest thing I've ever seen. So by definition-- I mean, I've never seen one where there is no argument for what they did. It just-- it's stupid. Because they don't have the money to do it, even if it was a smart deal. So the only thing, maybe, they're thinking about, which is legal completely is, they want to get that they want to get Grail out of the picture completely because they're afraid Grail will start using a competitor rather than them.
CARL ICAHN: That is their only excuse. Actually, that excuse, even though it's illegal, is better than the excuse that they were getting favors from the guys that they pulled out of the fire, so to speak. I'll put it-- try to be euphemistic about what I'm saying. And so, that is where they should be going. They're great company with a terrible management team, and they lost a lot of their good people.
CARL ICAHN: And I've talked to good people in the industry would never go work for them. So you got a terrible situation. And I hope that the index funds are going to come in and support us. Because in a situation like this, where it's a big company like this, the index funds are really important in this situation. And these guys, I think, believe-- this is what I'm told, that they believe that the index funds will go with them.
CARL ICAHN: They got nothing to worry about.
ALEX PHILIPPIDIS: What feedback are you getting from the fund? Say, if any funds come on board onto you and your allies?
CARL ICAHN: We can't talk about that. By the way, the big guys don't tell you anyway, generally.
ALEX PHILIPPIDIS: In and in your presentation a couple of days ago, you'd call for Illumina to stick to and grow in its core businesses. There were two areas mentioned-- sequencing in which you call for maintaining a lead and multi-omics, including single cell and proteomics. How can Illumina best do both?
CARL ICAHN: Well, let Andrew because he really knows the details of this--
ALEX PHILIPPIDIS: OK.
CARL ICAHN: --this type of question. But I think they can do both. But let Andrew. Andrew, go ahead.
ANDREW TENO: Let's say, if you're a customer of Illumina, you're looking at Illumina today, assuming it has no Grail. It's a very large business, generates significant cash flows, has a healthy balance sheet, will be around for a very long time, assuming they get rid of Grail and fix the management at the top. Now, when you're dealing with a large organization, like Illumina, it's easier to buy new technology for them because you're not worried about will that company be around five years, three years, 10 years.
ANDREW TENO: If you look at startups today, you don't know if they could have great technology. They might be good businesses, but they might not make it. Funding is not here today. So Illumina should be able to grow in its core business, in related businesses, and shouldn't need M&A in order to grow. I mean, they should be doing over a billion and a half dollars of EBITDA, over a billion of free cash flow per year without any issues and growing, and that should give them plenty of opportunities to grow.
ALEX PHILIPPIDIS: Right. And also looking at the-- actually, there were some dueling presentations, one by Carl and one by Illumina. And Illumina restated the argument that you and your two other nominees would be beholden to Carl Icahn and lacked certain experience, that they say, is needed for a board member.
ALEX PHILIPPIDIS: How do you respond to that kind of--
CARL ICAHN: I don't even know what it means-- beholden. I mean, we want to stock up, yeah. Andrew wants to stock up. He gets paid if the stock goes up. He gets paid if it doesn't go up. The whole thing is ridiculous. But then, they say, we don't have experience in this area. What experience does the deSouza have in it? He didn't know a damn thing about it.
CARL ICAHN: I don't think he could have smelled a thing before he got there. So what was his experience?
ANDREW TENO: I mean, look, their experience with Grail has been $50 billion of value destruction. Carl, as a representative, is one shareholder. There are many, many shareholders are upset. Many shareholders would like this situation to be fixed.
CARL ICAHN: And my argument for myself is, if you look back at our record, you looked at all the companies we've got into, it became active in this paradigm. We've been shareholders all over $1 trillion, if you add it up on Warner and Apple. We were able to really make these companies more productive. I wish I had kept the companies, but our paradigm is, we keep them for four or five years even.
CARL ICAHN: Sure, there's a lot of them, when we were at Apple, Netflix, every one of them. We got Netflix to do the buyback. They didn't want to do it. But then, we were there, and we pushed for it. So we've been very productive for the shareholder for the companies over a period of time. Sure, we had mistakes. But if you invested in my company, IEP, and you invested when we started doing this, I look back, I think it's from 2004 to now, you would have made an annualized return over 15%.
CARL ICAHN: And the closest of that I think is Buffett at 7% or 8%, 9%, 8%, the closest. So you would have done better. If you just bought that stock and kept it, reinvested the dividend, reinvest whatever dividend, you would have made well over or about 2,000% overall or annualized 15%, 16%, something like that. So the paradigm works. That's my argument.
CARL ICAHN: Because they say, you didn't have experience. We didn't have experience in Apple either. I didn't understand what the hell they did, a lot of the stuff they did. It's not the issue. The issue is that if you look at boards today, and I can go on forever with this, that the problem-- one of our problems in this country, it's going to manifest itself, possibly now.
CARL ICAHN: But when the tide is up, as they say, the tide is up, everybody's do it all right. Tide goes down, you see who has no clothes. And I think Buffet said that, so I'm not taking credit. And so, I will tell you that if you look at our situation in this country, there really is very little accountability, which is a sad commentary. Because you end up getting guys like deSouza.
CARL ICAHN: If it was a company-- Burley never thought this would happen. He would say, well, separate management and ownership, it's OK because if management was not doing OK, the ownership will come in and kick him out. But you can't do that today. So Burley means was right was wrong. And so, that's the trouble we got today. But this is almost the quintessential example of what's wrong.
CARL ICAHN: This is the poster boy for what's wrong in America. This kind of corporate governance, this board, the way the board is selected. And for the most part, boards don't save companies because the boards come in and far too many are beholden to the CEO. You analyze it, and I'll say it, it's just too many of them with many exceptions. You go to a board meetings-- I mean, the guy could be a smart guy.
CARL ICAHN: He could be Einstein. You give him this book with a thousand pages to read on the plane coming over. They give it to him at
10: 00 in the morning,
10: and then the guy, the CEO, comes up. They have lunch together, and they're all Bon vivant. And then they say, well, I want you to vote on this acquisition I'm making. And you had two hours to look at it. Well, you got to trust me. And that's the answer. The board does because if somebody comes in, they has to go against the CEO, then what happens is he doesn't get renominated.
10: And he's making 400 grand for going to four meetings. And he likes it. He goes on the plane to the Super Bowl. Let somebody else do that, do the betting. That we get in after. It takes time. But after a while, we're always friendly. There's no disturbance. But you get to talk to one or two guys.
10: So you get two or three. That's why we need three guys in this one because it's so bad, because there's so many guys that are completely beholden to deSouza. But if you're not too beholden to him, some guys come off and say, well, look, I don't want to be the bad guy here. What the hell? You know, I like the guy. But I agree with you.
10: And if you go out there and say, we don't want this deal. We'll say, we don't want it either. Some deals have put up a good saying. I can't tell you how many deals we've stopped on these boards, even though we're a minority. I mean, there's no way they would have done this deal if we were there. Because even this board, after we would show you how crazy they were and how they're going to get their ass suit off, this board wouldn't have done this deal.
10: We would have fought it through the day. And that's one of the things we do, keep these CEOs-- a lot of these CEOs are megalomaniacs. They get there because it's the nature. The good guys have slapped you on the back, but they think-- it's worse because as they get successful, if it's successful, they start thinking they're really smart, right? So I told one of them that, who really made a lot of money, a lot of money on one of these companies-- CEO.
10: He made a lot of money. I said, let me ask you a question. If you're so rich, how come you're not smart? That's why he got pissed off at me a little bit. But that's the way you go to look at some of these guys. So I could get going on. It's a shame for this country what's going on. It's going to-- I think it's going to manifest itself one of these days, where this whole system is going to break down because we're not productive enough in this country.
10: And now, with the government you have, it's really almost as insane. Because you put China and Russia together. We had enough trouble fighting. The three of us would be fighting each other, now you've got two of them. Do we push together for no goddamn reason? So you get me gone forever on, but why don't we get this thing over?
ALEX PHILIPPIDIS: Sure. I'll wind it down by mentioning a rival of-- you mentioned Netflix earlier. Back in February, HBO presented the Restless Billionaire. It was a documentary, and you talked about comparing yourself to Alexander the Great, which caught my eye.
CARL ICAHN: Because I'm a Warrior. I do it because I keep working, like he did. I could do it because I know they don't have a sword. They don't have bows and arrows to shoot at me. He said, he couldn't stop doing it. People say, why do I keep doing this? Why do I keep buying this? I said, I'm like Alexander the Great. I mean, he could have-- he had everything in the world, and he went after India with his elephants-- he went with the elephants.
CARL ICAHN: So I said the same thing. That's why I do it. So it gets you enraged a little bit when someone do the stuff like this. I mean, it really does get you mad. What the hell.
ALEX PHILIPPIDIS: He wanted to conquer the whole world. What's your ultimate objective?
CARL ICAHN: I don't even think he wanted the conquer the world.
ALEX PHILIPPIDIS: Really?
CARL ICAHN: I don't think so, no.
ALEX PHILIPPIDIS: Even though his generals toured the back?
CARL ICAHN: I think he loved doing it. He just loved doing what he was doing. OK, you made me figure this. I never though of this before. I would give you analogy. You saw the movie Patton, and everybody should have. And in Patton, at the very end, Patton wanted to go into Russia, finish them off. And Omar Bradley was with him. And he said, you can't do that bullshit.
CARL ICAHN: We can't do it. We're done. And I think Patton said to Omar, what's the matter with you? You're weak. He said, you know the difference between you and me. He said, we're together here. We're in this together. We are together. He said, that is a big difference.
CARL ICAHN: You love what you do. Omar Bradley didn't love it. Patton loved it. So I love it. That's why I do it. And what else would I do? If you give me a couple of ideas, what I should do? But I do enjoy doing these.
ALEX PHILIPPIDIS: Great. And I thank you very much for taking the time to join us on Close to the Edge, and Andrew as well.
Segment:0 .
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ALEX PHILIPPIDIS: You're on a special episode of GEN's Close to the Edge, with guest Carl Icahn, the activist investor who's made news in recent weeks with a proxy contest to change the direction of Illumina's board and, thus, its management by planning to nominate three allies to the board of Illumina. Carl, thanks for taking the time, first off. And with us, also, are two of Carl's three nominees-- Jesse Lin, General Counsel of Icahn enterprises, and Andrew Teno, a portfolio manager at Icahn Capital.
ALEX PHILIPPIDIS: Thanks, Jesse and Andrew as well. First off, Carl, how did you come to get interested in biotech and life science companies enough to invest in many of them over the years?
CARL ICAHN: Well, I know something about everything. I guess, a little something enough to be dangerous. And so, in biotech-- you know, I actually went to medical school for a few years, so I know something about it. And we've had some good luck with it. We were involved, obviously, in Forest Labs, which worked out very well. And ImClone, we were in it. I had gotten out before the crash, so to speak, then I got back in when the thing went way down.
CARL ICAHN: And it was a good company, and we took it over, then we actually controlled it for a while and sold it to Eli Lilly. So we've done well with it. In this case, though, it's a disturbing case because it's actually-- it makes a travesty of a few things. It makes a travesty of corporate governance, in a way, because the guys who run it-- and we've said this.
CARL ICAHN: And that's the trouble with corporate governance today, in many cases, there is no accountability. And as you know, because I know your magazine wrote an editorial-- not an editorial, a Q&A on it before. And so, you do know the situation there. And I frankly never saw one this bad, and I've been a critic of a lot of boards and a lot of corporation, but I never saw one where these guys went in-- If you follow it, I'll just make it real quick.
CARL ICAHN: If you follow it. The way to end it, this guy, de Souza really does not have knowledge. He doesn't have great knowledge of gene sequencing, which is really what Illumina does. Illumina makes the technology to do the gene sequencing, and he doesn't have much knowledge in it. But somehow, he got to be. He's a great-- I think he's a great politician, and he moved up the ladder there for a few years.
CARL ICAHN: And if you look at his history, it's very tarnished. And he was able to handpick his board. He was able to get to the top and be the CEO. And it didn't do a good job and has robbed the revenue of this great company. It's a great company because it really is ahead of the pack and still is. And gene sequencing, the stock went up worth billions and billions of dollars.
CARL ICAHN: The stock was 520 at one time. Now, it's down to 230. And it went even lower before we came along. He went in. And subsequent to his being there, but right before he was there, they had a company. Illumina had a company called Grail. And to analogize this, if you look at the gold rush in 1849, a lot of people who ran out to get the gold.
CARL ICAHN: They ran out to California. They went to get the gold, and a few of them hit. But for the most part, they lost their money. The guys that made the money and kept it were the guys that made the shovels and made the jeans and sold it to the miners at huge prices. So a Illumina, to think of, is the guys that made the shovels. They make the shovels, but very, very sophisticated shovel, and nobody else could make the shovel as well as they could make it.
CARL ICAHN: And [INAUDIBLE] was more of the miner, the guys that go for the gold. Grail was a miner. So Illumina developed that company. So in a sense, Grail would be one of their customers, but they went out and developed a customer that they figured they would just go out and go for the guys that are going for the gold, which is the software companies that could take it-- very simplistically, take and interpret the gene sequence.
CARL ICAHN: So the gene sequence comes in, and they can interpret it. Illumina does the gene sequence. So what they did was they had it before Francis got their first services. They decided they would sell what they developed in its nascent stages. They thought that they had the best software. It would be a great company. And they sold it to a few billionaires and others.
CARL ICAHN: They sold it, maybe, for-- I forgot the number. Andrew will get into it a little bit. It's about a billion-- 1 billion, 2, to guys like Bezos, Gates, and all these guys. And nothing wrong with those guys. I'm friends with Bill Gates. I mean, it's not that-- they did anything wrong here, but here's what happened.
CARL ICAHN: But not that we know of anything. They went out, and deSouza is there. They sold it for a billion or two. Anybody who read about Grail subsequently to that, the next few years, saw they weren't quite making it. There's a lot of argument about this because it's a very, very esoteric thing. And they weren't quite getting to the goals. In fact, the FDA never approved their products.
CARL ICAHN: And therefore, you could get rebates if you use them. I'm talking about Grail now. Lo and behold-- and Francis is not doing well. Francis deSouza is not doing well. There was a lot of overlap and a lot of interplay between some of the people at Grail and some of the people at Illumina, and Andrew will go into that a little bit. What happens is-- what happened was, the guys at Grail that weren't doing well, so to speak, the billionaire group, we think weren't doing well.
CARL ICAHN: And if you read any articles about this from scientists, they would say, there's a lot of questions about this company. They went out, and the company was trying to go public. And I don't think they were doing it successfully. They went out, these guys, and decided in their great wisdom to buy Grail. And they paid $8 billion for it, which is an absurdity. And from a business point of view, absurdity.
CARL ICAHN: But by this time, we believe they had handpicked the boys, and this guy, Francis deSouza, was able to-- we don't know why the board did it and allowed it. We just think it was negligence on the part of the board, as well as, obviously, deSouza.
ALEX PHILIPPIDIS: So was it the Grail? Was the problem with the acquisition the very strategy or just the tactics that Illumina employed to try to gain approvals, that posed the problem in which you would account for the stock going down.
CARL ICAHN: Well, no. Here's what happened. I'll just finish the story quickly, and then you can ask questions. So what happened was, they go in. They announced they're making this deal for $8 billion, right? And they've got to get board approval, right? And so, the amazing thing that happened here, Alex, is-- which really puts the icing on the cake or even more than the icing, which makes this the nail in the coffin, which makes this case.
CARL ICAHN: In any other world, these. guy wouldn't not only lose their jobs, but would be sued for sure. If it were the army, they'd be court martialed, maybe firing squad for what they did. Because what they did was, they went in, and they not only paid-- they made a deal to buy it for 8 billion. A long cause before they closed on August 21 in '20 and '21. Before they closed, the EU comes in and says, you better not close.
CARL ICAHN: We don't want you to close because we think it's antitrust. The reason it's antitrust is that if you're the great technology guys that make the shovel, so to speak, now, if you start buying your own customers up, nobody else is going to pay money and go in and try to do the software needed to use this gene sequencing, which is a great thing. Because if you look at the future of diagnostics, this is going to be the way it's going to go.
CARL ICAHN: And they said, do not close. We're telling you, do not close over what we're telling you. Because we're going to come in and sue you. We're going to fine you for or $500 million. We're not going to let you take the company over, but we're going to insist that if you buy it and close, you're going to have to pay the expenses for Grail, which were huge. So Grail was losing money.
CARL ICAHN: So you're going to have to, then, go in and spend another $800 million. And you've got to remember that you're not talking to Microsoft here. You're talking to Illumina that doesn't have much cash. Illumina has its own CapEx to do. And while it was doing pretty well, it wasn't doing as well as it was and didn't have the kind of money to survive in this, possibly.
CARL ICAHN: So anyone in their right mind, after reading about Grail and their problems-- I said it was a big mistake to buy it for 8 billion or anywhere close to it, but it's insane, not just the mistake, and insanity to go ahead and close over the EU telling you this. And the FTC was against it also, which you just heard about. And the FTC still coming after them. We confront the company with that.
CARL ICAHN: And they say, come on. Did you do it or the board? Did you do an investigation? Did you look into the relationships? There's all kinds of overlapping relationships here. Did you do any of that? And basically, the interesting thing is, in this proxy fight, which is unusual, we ask these questions. We say, did you board look at this?
CARL ICAHN: And there's a whole litany of things that the board should be doing or should have done. They don't answer it. They don't even fight with this. They just say, we think, Icahn, these guys don't have the experience. We do. Vote for us. So they're not even bringing that into play, and that's why we're here.
CARL ICAHN: I go look for companies that I think are very undervalued for certain reasons. And the reason this company, I think, is undervalued is because it's gone down from 530 to 200. It went to 200 when we started buying it. I think. I forgot exactly. That there is something here, as we said at the beginning of the whole thing, to paraphrase Shakespeare, is something rotten in the state of Illumina.
CARL ICAHN: And that's why we're here. We're saying, it was just insane to do this deal. And you're really not only-- you're not only putting Illumina in jeopardy. It's not only an existential question for Illumina that you've done. You're hurting Grail also, as a CEO of Grail said. You're hurting two companies. You're hurting a great nation industry.
CARL ICAHN: But worse than that, what you've done is illegal, we think. And that's basically the whole story. Now, you go ask the questions.
ALEX PHILIPPIDIS: Sure. You've called for Illumina's board to fire Francis deSouza and replace him with Jay Flatley or someone else on his level, your words. Have you discussed this with Jay, and is he indeed agreed to come back?
CARL ICAHN: Well, look, unlike these guys who violated-- the first time they violated, when you talk settlement, you agree, you can't talk about what was said. And my discussions with Flatley-- I've had a couple of with him-- is we're not going to discuss them. So I can't really go into that. I have talked to Flatley. Suffice it to say, I believe you could get somebody very capable to run Illumina very quickly.
CARL ICAHN: But I can't-- I'm not going to tell you what Flatley said.
ALEX PHILIPPIDIS: And what basis would you look at him as a permanent CEO or a temporary until somebody else comes along?
CARL ICAHN: You've got to understand something. Even if I win this proxy fight, you know, I win the three seats, I still don't control this board. So you're asking me questions that you would ask somebody in control. I'm not in control of the company, but I do say that we need three people to try to influence a board that has been handpicked by deSouza. So it's very difficult for us, even with three seats, to accomplish much at the beginning, but we've been in companies like this, where the boards were pretty much under the thumb of the CEO, and we got them to change.
CARL ICAHN: You get a couple of board members here, and they had to change. And we think we could do a lot with the three seats. However, we're not going to be able to go in and immediately and say, we call on the board to do it. But the board doesn't seem-- the board is there. They're in a state of lockdown. You can't talk to the board.
CARL ICAHN: They're told not to talk to us, so that's where we are with them.
ALEX PHILIPPIDIS: So as you said, even your three people wouldn't be a majority. How can they generate the disruption to business as usual that you said Illumina sorely needed.
CARL ICAHN: I don't like the word disruption.
ALEX PHILIPPIDIS: What would you call it then?
CARL ICAHN: [INAUDIBLE] accomplish what we want to accomplish. The answer to that is, it happens. And it's the story of us for 30 years, where we took over all these companies. Like, eBay took three years to get them to do the obvious of spinning off PayPal. I mean, use an example of a thing that went up eight times after that. Reynolds Tobacco spinning off the Nabisco.
CARL ICAHN: I mean, we're saying they should spin off. They should spin off analogous somewhat to spin off to the shareholders Grail and do it with the right software. Because there are people that would like to buy Grail and like to put money into it. And those are people or companies that have the capital to support Grail, which could be a great company, but a gamble.
CARL ICAHN: And that's what we would like to do now. You need people, especially on this board. You can't do it one or two. You need, at least, three. Now that I know the situation, I would have tried to get more people on the board. It wouldn't get a majority, but you would get enough to influence. So I think we would do be able to influence the company.
CARL ICAHN: But this thing, in some ways, it's almost frightening because there's more to it than meets the eye. And I mean, you have deSouza, who-- I mean, just a little work we've done on his background is really pretty questionable. He's never really accomplished a damn thing in his company before. And he obfuscates.
CARL ICAHN: He just doesn't tell the truth. For instance, it is I don't like to do personal stuff, but I want to make that clear when you do this. So in all our proxy fights, we never really dug into the backgrounds of people. We haven't made a person. We just say, you're running the company badly. You should do this, this, or this, or you run the company badly.
CARL ICAHN: You should leave.
ALEX PHILIPPIDIS: What makes this different?
CARL ICAHN: And this is different because you got-- here, we don't think there's any knowledge. But we honestly say, not trustworthy. I don't have to say it, which is very rare. If you go back and look at his divorce, for instance, the judge basically almost called him a liar. I forgot the words. He just said, you're not to be believed. It really went against him. I mean, in other words, he hid from his wife money that he was supposed to having, some Bitcoin or something like that.
CARL ICAHN: And so, he's been in a couple of situations, where his veracity is very questionable. And his compatriot is also Johnson, who was also Microsoft, and so there's interplay there. In other words, there's been questions of his veracity. But the real issue is, why did they do it, which is hard to understand.
CARL ICAHN: Why did they-- I mean, it's almost impossible to believe that, if you take a company, and you own 51% of it, you would never ever, ever do this deal because you would take it-- first of all, it was crazy to for 8 billion. Crazy. But, OK. You could argue, all right, this is judgment, something like that.
CARL ICAHN: But why would a board allow him to go in and do this in the face of the EU coming down on them and telling them-- it's not like they didn't know-- telling them, you close this deal, we're going to find you. We're going to kill you. OK, now, you go in against the government agencies. You've got all the power in the world. So my question is, what the hell is going on? And frankly, it's one of the more interesting things.
CARL ICAHN: They believe, I think, that they're going to win this proxy fight, hands down, because this is what they were told, that the index funds will go with them. The index funds generally go with the incumbent. This is what they're told. And I'm not saying it's right because I've seen index funds to go against guys like this, but they're saying that's why they're going to sell.
CARL ICAHN: In this country, that's one of our problems. You're going to see it manifests itself in this economy. I think, now, you're going to need productivity. And a lot of our companies are well run, but a lot of them are terribly run. And you're going to see that because there really is very little accountability, in general, in the country. But in particular, in this one, I believe the index funds, hopefully, are going to realize this and say, hey, come on.
CARL ICAHN: Why did you do this? Why aren't you answering these questions? So that's how I believe. We believe the board. The board went out. They're supposed to be doing a business judgment, and it's a blue ribbon board that Francis puts together. He likes to hobnob and go at Davos. Go here.
CARL ICAHN: Go there. Meet all these big deal guys. And I think he's put a few-- he's put a lot of them on the board. So they were on the board. But what happened was, with all the indemnification the board has and with all the insurance they have, this board realized, they must have realized how crazy this was.
CARL ICAHN: So they're supposed to use their business judgment, their duty of loyalty, their duty of care. They didn't use it. What they said was or what it said was, we need more insurance. So we're going to do, which is insane. I'm just imagining I was a fly on the wall, listening. If we're going to do this, which is almost an insane deal, we want more insurance.
CARL ICAHN: So they gave them a lot more insurance to protect them. However, if they really were completely lax to do a business judgment, and so if that is found, that insurers may not cover them. But the board doesn't seem to care. So in other words, it's a very, very interesting and strange situation. I've never seen one as bad as this, and I've been around a long time.
ALEX PHILIPPIDIS: Now, Jay Flatley spoken out about the Grail deal. He's alleged that the deal value would have been just $2 billion, had Illumina waited a year. How much did that sell you on Jay as being the solution again for Illumina's current challenges?
CARL ICAHN: I think that's all about Jay. Because I would say-- so we say Jay would be good. We've got more calls on this than most deals we've ever been in, and most of the people that have been in the company for a long time say Jay was very good. And so, all these people and shareholders are saying that. And if you look at his record, he did build up the company. So that's one of the reasons we would be behind Jay.
ALEX PHILIPPIDIS: When you talk about someone else at that level, if it's not Jay, who else might be a good CEO to bring in to Illumina?
CARL ICAHN: I'm not to go into this interview to speculate like that. I mean, I can't do that.
ALEX PHILIPPIDIS: How much does your argument against Francis deSouza based mainly on the Grail acquisition and how much on other actions he's taken as CEO?
CARL ICAHN: Well, I'd like you to talk to Andrew, who is really the point man on it, and he'll go into some of those details more than I can. So let him tell you.
ANDREW TENO: So it's probably fair to say that had they not closed the Grail acquisition over regulators, it probably wouldn't be involved. So that's number one. Now, that's not the only mistake, though. If you look at the last M&A deal they tried to do, they tried to buy PacBio. That was blocked. So clearly, in terms of strategy or anything inorganic growth, they've been a complete failure.
ANDREW TENO: Now, organically, the business has also slowed. So if you look at revenue growth this year, maybe it gets a high single digits. It used to be north of 20. Margins used to be 31%. Now, they're 22%. If you look at the management team, there's really been an exodus of talent. We have a slide in our most recent presentation, where we show everyone who was there, everyone was part of the management team when he became CEO.
ANDREW TENO: And the only person that's left is the general counsel. So all those people have left. We've heard that the, I'd say, culture at the top is not great. And more or less, Francis encourages anyone who is a threat, and he tries to find a way to get them out of.
ALEX PHILIPPIDIS: How does a Illumina address the talent exodus that you've cited, should you and your colleagues win appointment to Illumina's board?
ANDREW TENO: If you have a new CEO, that changes quickly. And if it doesn't, then things get worse and worse.
ALEX PHILIPPIDIS: And more broadly, how much does the company's mission and vision change, should you and colleagues prevail and join the board?
ANDREW TENO: So we think what's interesting about the Grail deal and to answer that question, which is, by buying Grail, Illumina is competing against its customers. And if you compete against your customers, you are essentially encouraging them, you're giving them a nudge to use Illumina's core sequencing competitors. You're helping out the competitors and hurting your own long-term growth rate, right?
ANDREW TENO: Hurting the core sequencing growth rate. So we would think Illumina should do is stop competing against your customers. Instead, go back to the days where you're trying to come out with new sequencing platforms as quickly as you can. You're trying to lower the cost as quickly as you can to really encourage that elasticity and encourage more and more people to use gene sequencing more and more novel ideas.
ANDREW TENO: So our real push is to get back to the core.
ALEX PHILIPPIDIS: Illumina would argue that they're doing that by rolling out NovaSeqX now. Why challenge Illumina before any numbers come out to see whether NovaSeqX delivers on what's the company's promise of restoring its growth in sales and earnings and where is that analysis amiss.
ANDREW TENO: So Francis did not-- we don't think Francis' background is in genetics. We don't think he's an expert in genetics. He didn't design the NovaSeqX. He's not selling the NovaSeqX. He's not working with the customers day-to-day on the NovaSeqX. We think that the NovaSeqX rollout would do better without Francis.
ALEX PHILIPPIDIS: And this is NovaSeqX coming out at a time when Illumina is facing competitors introducing newer sequencing systems to market over the past year. We've seen Singular Genomics, MGI out of China, PacBio and its long read focus, Oxford Nanopore, Element Biosciences, which says they, too, can deliver a $200 read on a human genome about the same price as Illumina is claiming with NovaSeqX. How well-positioned is Illumina to withstand that competition and remain a dominant player in sequencing and genomics?
CARL ICAHN: Let me come in for a second. That's exactly the point you're making, that Illumina should be hoarding all the cash it has, building a war chest to fight off the competitors coming in, all the ones you just mentioned, if they understood-- that's why we think that Francis has is just messing the business. He not only made a ridiculous deal, paid 8 billion, an insane deal if he's going to pay that and go and fight the regulator.
CARL ICAHN: But even perhaps worse is, he's squandering money that he needs to defend to stay in the position of being number one. You hit it. There's a lot of competition coming on. What the hell is he doing? NovaSeqX, yeah, it could be very good. Maybe it isn't. The jury's out on it.
CARL ICAHN: We think it, hopefully, will be. But he needs money to build it. He needs money for capital. This business is not stagnant. You're not making widgets here. You're making something that's moving like crazy. So it really is artificial intelligence, for instance, is going to be part of this business coming up.
CARL ICAHN: Because artificial intelligence is going to be able to do some of the stuff that is unthinkable now with the gene sequencing. So that is something that Illumina should be focusing on, how do you put that together with what they got, instead of squandering this money. And why the hell did he pay it? To me, you don't have to be Sherlock Holmes to say, well, what the hell?
CARL ICAHN: There's a lot of interfacing here between Grail and Illumina. In fact, Andrew, you can speak to this about the guy that was running Grail. He used to run Illumina, went over the Grail, help to get this deal done, and then sold all the stock immediately. All right, so you could go into it a little better. We could get the details on it.
CARL ICAHN: So there was something-- this thing is not going to go away in a proxy fight. And this is unusual for me to say. Because most of the times, we go to a company-- in fact, a lot of times, we don't go into the details. It's a personal thing. We don't say, you did something that we think could very well be illegal. We don't say that.
CARL ICAHN: We go in and say, hey, you're running your company badly. You miss at this point. You shouldn't have done that. You miss this. Why aren't you doing this? We get on the board very friendly. We get friendly with board members. We put them on other board, some of them. So it's not that we take this attitude.
CARL ICAHN: But in this attitude, it's so blatant that it enrages you that it's been done. We were called in by-- we're like Ray Donovan in a way. I mean, these crises come, and they call us. So they called us, and this one we looked at, and said, yeah, this is terrible. But once we dug in, if I knew what I knew now, I wouldn't even put three people up and look for control, which I probably wouldn't get.
CARL ICAHN: So maybe talking against myself. This is a lot of work here. And this is not going to go away. This is going to be in court. I believe, it's going to be in courts, and it will survive summary judgment motions. And it will get discovery somewhere. And if you get discovery, I really think you don't have to be Sherlock Holmes to figure something was going on.
ALEX PHILIPPIDIS: Illumina has sought to buy Grail for more than two years now, including the last year in which its market cap decline, which you've brought out. Why did you wait until last month to begin challenging the current board and management?
CARL ICAHN: I have to admit it to you, I really didn't know much-- I didn't know much about the company, too, a couple of months ago. When it was brought to us, we're in so many companies. I mean, a lot of companies, a lot of deals. Like I say, frankly, we did not know much about it. It was brought to us by a top analyst and said, you ought to be looking at this one. My God, look what's happening here.
CARL ICAHN: And so, then we looked at it. But I didn't believe that it would be so flavored. When you meet even Johnson, you realize, they don't have knowledge. And then, this guy comes on like a nice guy and all, but there's so many things that he's obfuscated, that he's basically lied about. I mean, he's even put something out now that, oh, I don't understand why they say it's a handpicked board or something like that because I didn't nominate any of them.
CARL ICAHN: Well, of course, he didn't nominate them. He got his other board members to nominate, so he put Johnson on it. He worked for Johnson. So he said, well, I didn't put him on. Well, who the hell put him on? Who brought Johnson to be the chairman? Hey, he did, obviously.
ANDREW TENO: You can't avoid-- I mean, if you look at deSouza and John Thompson, since 2006, right? So John Thompson bought deSouza's business in 2006. DeSouza stayed on at Symantec. He left Symantec to come to Illumina within a year of being announced to CEO. Then, John Thompson shows up on the board. I mean, it's not a coincidence. They clearly knew each other.
ANDREW TENO: And then, you can-- and afterwards, Francis is picking the people he wants to be on the board and pushing them through his committee. So it's the same with the insurance. We put out something, saying how could the board-- the board must have known there were real issues, significant risks, if they were going to buy an extra insurance policy.
ANDREW TENO: That is unusual. That's highly unusual for a company that's $70 or $80 billion in size, buying an $8 billion company to all of a sudden buy extra insurance then disclose it three months later. And so, the way they describe everything is just very questionable.
ALEX PHILIPPIDIS: So your argument that the relationships have compromised Illumina's ability to make money. Is there anything necessarily illegal in that, or is that just a matter of fiduciary.
ANDREW TENO: If you hired your friend of 20 years, you've known someone for 20 years, do you think they treat them a little differently than you treat someone that you don't know? I think the answer is absolutely. That's why they have the separation of powers.
ALEX PHILIPPIDIS: One of Carl's arguments on Illumina has been the loss of about $50 billion in market cap since the deal was announced. First, market cap actually rose in the first year since the deal was announced then went way down. How do you account for the first year going up?
CARL ICAHN: I think and looking into it and talking to different people that bought it, that nobody believed they were crazy enough to close the deal, right? And everybody was hoping, people that bought it didn't believe they close it because they believed that the EU had already said things about the fact that they were going to challenge the FTC. So they said, OK, this is just a mistake. It's stupid.
CARL ICAHN: The company's still a very good company. It's going to do great. They're never going to close this deal and whatever. And then, when it started to go down and started a precipitous fall was when they closed over the yield. So if you look at the trend, it went up until they announced that they were going to close over the yield. And I think they always planned to do it, and they never disclosed that they planned to do it.
CARL ICAHN: But they had planned to do it, months before, that they were going to do it, no matter what. They had a deal that they were going to close, and they kept it for shareholders. As they kept the insurance, they set it all up and gave the actual insurance. They never told the shelves for months after that.
ANDREW TENO: And there are some other data points, too, right? So when the deal was leaked, until when the deal was formally announced, the stock went down 23%. When they closed the deal over the explicit prohibition from regulators, the stock went down 8%. And just look at the-- I don't know what you wrote that day, but I think someone else wrote, Illumina Closes Grail Acquisition. Regulators be Damned.
ANDREW TENO: And plenty of people who were saying that there was a shocking move, questionable move, hard to imagine that someone would close over known regulatory prohibitions.
CARL ICAHN: And if you dig in-- if you dig in, you look at the position of Illumina. They've been, I believe, losing cash and losing liquidity for the last two years. Even if you were a company like Apple, or Microsoft, or some with billions, and billions, and billions of dollars, OK, that's not the consideration. Inf fact, you don't have enough money to withstand storm ahead of the hurricane ahead.
CARL ICAHN: But you don't have that luxury in Illumina. And so, it's an extremely questionable deal. And it might be a watershed event, both in the annals of corporate governance and the annals of a biotech, where you really see some of these deals being done. And here, even more importantly, in this new very dynamic industry.
CARL ICAHN: And I think it's certainly a watershed event for Illumina. So there's a lot of things here that are on line. I don't think they're going away, partially because where they are. But more importantly, I think it's too flagrant to go away, even when we give so much latitude the boards today and to the system today.
ALEX PHILIPPIDIS: How is it that $50 billion loss in market cap that you've brought up would have happened in any case because of the broader market decline we've seen in the last year and a half? Is that all Grail?
CARL ICAHN: You should address that because the comps show that they have gone down somewhat, but not nothing like.
ANDREW TENO: Yeah, I'll just give you the real numbers. So if you look at Illumina, so I would look at it in two different ways, right? So first, let's just address the $50 billion. So $50 billion is strictly the share price the day before the deal closed and then the day before we announced times a share count. That get you $50 billion. And if you look at Illumina, and you look at peers companies, like a Thermo or Danaher, so those companies are down 12%, whereas Illumina was down 62%.
ANDREW TENO: Now, you could say, it might not be the perfect comp set. Maybe you should look at other health care leaders, look at companies like--
ALEX PHILIPPIDIS: Danaher is a lot more diverse than health care. Danaher is a lot more diverse than health care.
ANDREW TENO: They have a broader life sciences, but maybe Thermo is your best company. And Thermo is actually-- I think it's actually up a little bit over that time period. So the outperformance would be worse. But whether you look at other companies with large market shares in health care that are growing with big modes, giant margins and should be growing for double digits companies, like Intuitive Surgical or IDEXX.
ANDREW TENO: If you look at that peer set, that peer set was down 26% versus Illumina at 62. So no matter how you cut it, Illumina has significantly underperformed. Now, Illumina will say, if you look at just the pure plain genetics companies, all of which are small, which lose money on a scale, 1/10 the size or smaller, the performance is more similar. But there's no reason that those companies should trade similarly.
ANDREW TENO: Companies that burn money today, that people are scared of whether they're going to exist or not, that should not be Illumina's concept. Illumina only created that because they've made the terrible decision to Grail.
ALEX PHILIPPIDIS: Now, should Illumina finally walk off from buying Grail, if they're forced to by the European Commission, what should that do for them in terms of M&A? Actually, Carl mentioned the effort Illumina had to try to buy PacBio. That ran into FTC opposition. Illumina left that deal. What, if any, role should M&A play in Illumina's future once it get past Grail.
ANDREW TENO: It shouldn't. I mean, Francis should not be buying companies.
CARL ICAHN: I'll state in a couple of ways. Illumina is a great company, got great technology, and is still ahead in gene sequencing. The future of that-- and I'm certainly no expert, but I know more than the average layman about this stuff-- the future is, in this technology and being the number one gene sequencer in the world, they can't do that by spending 800 million bucks to keep Grail alive, which the EU is making them do.
CARL ICAHN: It's the dumbest thing I've ever seen. So by definition-- I mean, I've never seen one where there is no argument for what they did. It just-- it's stupid. Because they don't have the money to do it, even if it was a smart deal. So the only thing, maybe, they're thinking about, which is legal completely is, they want to get that they want to get Grail out of the picture completely because they're afraid Grail will start using a competitor rather than them.
CARL ICAHN: That is their only excuse. Actually, that excuse, even though it's illegal, is better than the excuse that they were getting favors from the guys that they pulled out of the fire, so to speak. I'll put it-- try to be euphemistic about what I'm saying. And so, that is where they should be going. They're great company with a terrible management team, and they lost a lot of their good people.
CARL ICAHN: And I've talked to good people in the industry would never go work for them. So you got a terrible situation. And I hope that the index funds are going to come in and support us. Because in a situation like this, where it's a big company like this, the index funds are really important in this situation. And these guys, I think, believe-- this is what I'm told, that they believe that the index funds will go with them.
CARL ICAHN: They got nothing to worry about.
ALEX PHILIPPIDIS: What feedback are you getting from the fund? Say, if any funds come on board onto you and your allies?
CARL ICAHN: We can't talk about that. By the way, the big guys don't tell you anyway, generally.
ALEX PHILIPPIDIS: In and in your presentation a couple of days ago, you'd call for Illumina to stick to and grow in its core businesses. There were two areas mentioned-- sequencing in which you call for maintaining a lead and multi-omics, including single cell and proteomics. How can Illumina best do both?
CARL ICAHN: Well, let Andrew because he really knows the details of this--
ALEX PHILIPPIDIS: OK.
CARL ICAHN: --this type of question. But I think they can do both. But let Andrew. Andrew, go ahead.
ANDREW TENO: Let's say, if you're a customer of Illumina, you're looking at Illumina today, assuming it has no Grail. It's a very large business, generates significant cash flows, has a healthy balance sheet, will be around for a very long time, assuming they get rid of Grail and fix the management at the top. Now, when you're dealing with a large organization, like Illumina, it's easier to buy new technology for them because you're not worried about will that company be around five years, three years, 10 years.
ANDREW TENO: If you look at startups today, you don't know if they could have great technology. They might be good businesses, but they might not make it. Funding is not here today. So Illumina should be able to grow in its core business, in related businesses, and shouldn't need M&A in order to grow. I mean, they should be doing over a billion and a half dollars of EBITDA, over a billion of free cash flow per year without any issues and growing, and that should give them plenty of opportunities to grow.
ALEX PHILIPPIDIS: Right. And also looking at the-- actually, there were some dueling presentations, one by Carl and one by Illumina. And Illumina restated the argument that you and your two other nominees would be beholden to Carl Icahn and lacked certain experience, that they say, is needed for a board member.
ALEX PHILIPPIDIS: How do you respond to that kind of--
CARL ICAHN: I don't even know what it means-- beholden. I mean, we want to stock up, yeah. Andrew wants to stock up. He gets paid if the stock goes up. He gets paid if it doesn't go up. The whole thing is ridiculous. But then, they say, we don't have experience in this area. What experience does the deSouza have in it? He didn't know a damn thing about it.
CARL ICAHN: I don't think he could have smelled a thing before he got there. So what was his experience?
ANDREW TENO: I mean, look, their experience with Grail has been $50 billion of value destruction. Carl, as a representative, is one shareholder. There are many, many shareholders are upset. Many shareholders would like this situation to be fixed.
CARL ICAHN: And my argument for myself is, if you look back at our record, you looked at all the companies we've got into, it became active in this paradigm. We've been shareholders all over $1 trillion, if you add it up on Warner and Apple. We were able to really make these companies more productive. I wish I had kept the companies, but our paradigm is, we keep them for four or five years even.
CARL ICAHN: Sure, there's a lot of them, when we were at Apple, Netflix, every one of them. We got Netflix to do the buyback. They didn't want to do it. But then, we were there, and we pushed for it. So we've been very productive for the shareholder for the companies over a period of time. Sure, we had mistakes. But if you invested in my company, IEP, and you invested when we started doing this, I look back, I think it's from 2004 to now, you would have made an annualized return over 15%.
CARL ICAHN: And the closest of that I think is Buffett at 7% or 8%, 9%, 8%, the closest. So you would have done better. If you just bought that stock and kept it, reinvested the dividend, reinvest whatever dividend, you would have made well over or about 2,000% overall or annualized 15%, 16%, something like that. So the paradigm works. That's my argument.
CARL ICAHN: Because they say, you didn't have experience. We didn't have experience in Apple either. I didn't understand what the hell they did, a lot of the stuff they did. It's not the issue. The issue is that if you look at boards today, and I can go on forever with this, that the problem-- one of our problems in this country, it's going to manifest itself, possibly now.
CARL ICAHN: But when the tide is up, as they say, the tide is up, everybody's do it all right. Tide goes down, you see who has no clothes. And I think Buffet said that, so I'm not taking credit. And so, I will tell you that if you look at our situation in this country, there really is very little accountability, which is a sad commentary. Because you end up getting guys like deSouza.
CARL ICAHN: If it was a company-- Burley never thought this would happen. He would say, well, separate management and ownership, it's OK because if management was not doing OK, the ownership will come in and kick him out. But you can't do that today. So Burley means was right was wrong. And so, that's the trouble we got today. But this is almost the quintessential example of what's wrong.
CARL ICAHN: This is the poster boy for what's wrong in America. This kind of corporate governance, this board, the way the board is selected. And for the most part, boards don't save companies because the boards come in and far too many are beholden to the CEO. You analyze it, and I'll say it, it's just too many of them with many exceptions. You go to a board meetings-- I mean, the guy could be a smart guy.
CARL ICAHN: He could be Einstein. You give him this book with a thousand pages to read on the plane coming over. They give it to him at
10: 00 in the morning,
10: and then the guy, the CEO, comes up. They have lunch together, and they're all Bon vivant. And then they say, well, I want you to vote on this acquisition I'm making. And you had two hours to look at it. Well, you got to trust me. And that's the answer. The board does because if somebody comes in, they has to go against the CEO, then what happens is he doesn't get renominated.
10: And he's making 400 grand for going to four meetings. And he likes it. He goes on the plane to the Super Bowl. Let somebody else do that, do the betting. That we get in after. It takes time. But after a while, we're always friendly. There's no disturbance. But you get to talk to one or two guys.
10: So you get two or three. That's why we need three guys in this one because it's so bad, because there's so many guys that are completely beholden to deSouza. But if you're not too beholden to him, some guys come off and say, well, look, I don't want to be the bad guy here. What the hell? You know, I like the guy. But I agree with you.
10: And if you go out there and say, we don't want this deal. We'll say, we don't want it either. Some deals have put up a good saying. I can't tell you how many deals we've stopped on these boards, even though we're a minority. I mean, there's no way they would have done this deal if we were there. Because even this board, after we would show you how crazy they were and how they're going to get their ass suit off, this board wouldn't have done this deal.
10: We would have fought it through the day. And that's one of the things we do, keep these CEOs-- a lot of these CEOs are megalomaniacs. They get there because it's the nature. The good guys have slapped you on the back, but they think-- it's worse because as they get successful, if it's successful, they start thinking they're really smart, right? So I told one of them that, who really made a lot of money, a lot of money on one of these companies-- CEO.
10: He made a lot of money. I said, let me ask you a question. If you're so rich, how come you're not smart? That's why he got pissed off at me a little bit. But that's the way you go to look at some of these guys. So I could get going on. It's a shame for this country what's going on. It's going to-- I think it's going to manifest itself one of these days, where this whole system is going to break down because we're not productive enough in this country.
10: And now, with the government you have, it's really almost as insane. Because you put China and Russia together. We had enough trouble fighting. The three of us would be fighting each other, now you've got two of them. Do we push together for no goddamn reason? So you get me gone forever on, but why don't we get this thing over?
ALEX PHILIPPIDIS: Sure. I'll wind it down by mentioning a rival of-- you mentioned Netflix earlier. Back in February, HBO presented the Restless Billionaire. It was a documentary, and you talked about comparing yourself to Alexander the Great, which caught my eye.
CARL ICAHN: Because I'm a Warrior. I do it because I keep working, like he did. I could do it because I know they don't have a sword. They don't have bows and arrows to shoot at me. He said, he couldn't stop doing it. People say, why do I keep doing this? Why do I keep buying this? I said, I'm like Alexander the Great. I mean, he could have-- he had everything in the world, and he went after India with his elephants-- he went with the elephants.
CARL ICAHN: So I said the same thing. That's why I do it. So it gets you enraged a little bit when someone do the stuff like this. I mean, it really does get you mad. What the hell.
ALEX PHILIPPIDIS: He wanted to conquer the whole world. What's your ultimate objective?
CARL ICAHN: I don't even think he wanted the conquer the world.
ALEX PHILIPPIDIS: Really?
CARL ICAHN: I don't think so, no.
ALEX PHILIPPIDIS: Even though his generals toured the back?
CARL ICAHN: I think he loved doing it. He just loved doing what he was doing. OK, you made me figure this. I never though of this before. I would give you analogy. You saw the movie Patton, and everybody should have. And in Patton, at the very end, Patton wanted to go into Russia, finish them off. And Omar Bradley was with him. And he said, you can't do that bullshit.
CARL ICAHN: We can't do it. We're done. And I think Patton said to Omar, what's the matter with you? You're weak. He said, you know the difference between you and me. He said, we're together here. We're in this together. We are together. He said, that is a big difference.
CARL ICAHN: You love what you do. Omar Bradley didn't love it. Patton loved it. So I love it. That's why I do it. And what else would I do? If you give me a couple of ideas, what I should do? But I do enjoy doing these.
ALEX PHILIPPIDIS: Great. And I thank you very much for taking the time to join us on Close to the Edge, and Andrew as well.
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The cadmore media player is a professional video and audio player experience designed to deliver media as well as relevant transcript, segmentation, and metadata. On the screen is a traditional html video player with buttons such as play, pause, forward, captioning, language and play speed selection and more. Adjacent to the video player are generally tabs, one of which shows a scrolling transcript of the video and the other shows any segmentation of the media, sometimes referred to as chapters. At the top of the video is a menu bar containing an Explore button and Tools button. The Explore button allows you to dig deeper into the video by opening up an explore dialog which contains tabs for a visual navigation of the video using thumbnails, an about tab which contains rich metadata about the media, a segments tab which contains further information about the video, and a related tab which contains links to other media related to this media. The tools button opens a menu with options for sharing the media on social media, creating bookmarking links, creating embed codes for your website, generating citations, and more.
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