In the last quarter of last year, especially with the change in tax rate coming, I think Investors got exasperated. There were a number of investors that this was their largest holding, And it destroyed their record for last year. There were ramifications for what the board did. – Lawrence Haverty, Gamco Investors on Apple’s $137 billion dollar cash hoard
“That absurd quote above was heard this morning on Bloomberg with Tom Keene interviewing Haverty. The display of investing acumen cognitive dissonance is rather ironic,” Barry Ritholtz writes for The Big Picture. “As a longstanding Apple guy (think Mac Classic in 1989) and someone who was pushing the stock post iPod at $15 (pre-split), I cannot help but be astounded at the current crop of Apple shareholders. Wall Street has always misunderstood Apple but its now getting ridiculous.”
Ritholtz writes, “If you want to know why Apple is holding onto all that money (aside from obvious tax considerations), just look at Dell. It is a cautionary tale than any technology company can miss the next shifting tech trend and quickly become irrelevant. Bang, you are the next Maytag.”
“What should Apple do? For legal reasons, they should hear what these activist shareholder are suggesting, giving them a thorough hearing out, with all attendant chin stroking and ‘Hmmm, interesting’ — prior to ignoring them,” Ritholtz writes. “Apple has a long-term strategic plan which for obvious competitive reasons is top secret. Sorry, activist investors, but we cannot share them with you because it would give an advantage to competitors like Samsung and Google and Amazon and Facebook. But rest assured, we have a plan.”
Read more in the full article here.
MacDailyNews Take: As we wrote two days ago:
Obviously, as they’re not stupid, Apple has some master plan for all of that cash. Whether it be buying up content creators who refuse to play ball, snapping up Microsoft and putting them out of their wretched misery, building flying cars and developing iTransporters, buying Lithuania, or whatever… eventually we’ll find out what Steve told Tim to save up that mountain of cash for.
[Thanks to MacDailyNews Readers “Sarah” and “JES42” for the heads up.]
Related articles:
Cramer: By suing Apple, wrong-headed Einhorn has gone too far – February 8, 2013
Analysts: Apple may crack open its massive, bulging wallet for shareholders – February 8, 2013
Apple with $137 billion in cash considers preferred stock – February 8, 2013
Einhorn’s Apple lawsuit marks biggest investor challenge in years – February 8, 2013
Gamco’s Haverty: Apple’s cash is ‘shareholders’ cash’ (with video) – February 8, 2013
Apple shares surge following company response to Einhorn – February 7, 2013
Greenlight’s Einhorn sues Apple over plan to eliminate preferred stock, wants more cash distributed – February 7, 2013
Greenlight Capital urges Apple shareholders to vote ‘No’ on proposal 2 that would impede Apple’s ability to unlock shareholder value – February 7, 2013
Greenlight’s Einhorn sues Apple, ‘dissatisfied with capital allocation strategy’ – February 7, 2013
Legg Mason’s Miller: Apple stock would rise 50% on ‘sensible capital allocation’ alone – February 6, 2013
Gamco’s Haverty: Apple board can be sued over excessive accumulation of cash (with video) – January 28, 2013
Greenlight’s Einhorn: Apple ‘the best big growth company’; Fed stimulus ‘counterproductive’ – July 10, 2012
David Einhorn says Apple isn’t a below-average company, it’s just priced like one – May 30, 2012
it is no secret..
is saving all that cash for the day when they make out the Big Check to: M. Botvinnik, esquire.
Quite. Steve Jobs had been a chess fan, you know. 🙂
A true-life aside to your comment: when the great, but impoverished, Bobby Fischer was to play Spassky in ’72 at Reykjavik for the World Championship, it was none other than crooner/composer and fellow Brooklynite, Bobby Darin who stepped-in and financed his entire trip and expenses.
Nice.
Kevin Spacey played Bobby Darin. Val Kilmer played Jim Morrison. Who plays Bobby Fischer? (Uh…other than you, in ’62, of course.) Please don’t let it be Tobey Maguire.
among the current, insipid crop of American thespians, I cannot think of one who could portray the mighty Robert Fischer..if he could lose the weight for the role, perhaps the superb Philip Seymour Hoffman.
I loved him in Scent of a Woman.
I love all this movie talk!
IMO Leonardo diCaprio has the thespian skills and passion to portray the intensity and acumen of Bobby Fisher.
yes, but Mel Gibson has the stone-cold lunacy and paranoia required.
My sister is a thespian. It took time, but my family eventually came to accept that.
lol.
Apple shouldn’t return that money to the share market. Who will get their hands on that money may easy invest on some competitor, because they don’t have scrupulous, they’re vultures looking for money no matter how they’ll get it. Apple certainly has some long term strategy, they may buy some content provider like Disney, and so twist the content industry to play nicely.
To paraphrase Asimov in ‘Foundation’ – “The company is of the opinion that it knows what it is doing.”
This recent trend of analyst absurdity and investor irrationality will be looked on and cringed at how silly their poor evaluating skills have deluded them.
“Obviously, as they’re not stupid, Apple has some master plan for all of that cash. Whether it be buying up content creators who refuse to play ball, snapping up Microsoft and putting them out of their wretched misery, building flying cars and developing iTransporters, buying Lithuania, or whatever… eventually we’ll find out what Steve told Tim to save up that mountain of cash for.”
It doesn’t help the ignorati that MDN caters to, that MDN takes a different position in its “Takes” based on prevailing winds. MDN has been on the other side of the above fence so often they installed a turnstile.
I agree that MDN gets swayed by the changes of certain winds but his comment was pure sarcasm this time.
I find that its smarter to trust in the genius approach that made Apple great. There are a plethora of “analyst” observers, who have never run a business, giving their opinions. These opinions are somehow more trustworthy and superior than the intellect who made Apple the most valued company in the world? Pulease…..
If they don’t like the way the company’s managed, they should just sell their stock. Why not, many others have done so recently.
@cococanuck – Why can’t common shareholders exercise their voting rights and other legal and ethical methods to influence company policy? Why does a major long-term investor (1.3 million shares since 2010) need to hear carping from the cheap seats about how they should just sell their stock if they don’t approve of the “secret plan” for Apple’s cash? With Apple holding $137 billion in cash, why do I and other shareholders (owners) of Apple need to wait even longer for a distribution of earnings generated when OUR capital was deployed? Why do you think it would help Apple or its shareholders if David Einhorn sold 1.3 million shares of the company?
There is much evidence that Apple is out of its depth in economic and financial decision making. I strongly doubt if Tim Cook et al have any specific plan at all for its liquid assets. They’ve had other things on their agenda.
Totally agree with cococanuck. Sell your shares if you don’t like the Apple way.
On the other hand Apple should now give out all future profits (after paying for all expenses and a modest increase in the cash by at least inflation) to shareholders who hold shares for the complete three months of the quarter.
For example….in the last quarter profit was 13.1 Billion. Take out 4 billion for a modest increase in the cash and funding future R&D say and distribute 9 Billion to people who held shares throughout the Quarter. That would be $9.5 per share to the share holder JUST FOR THIS Q.
Based on this, no one in their right mind would ever sell their shares and the share price will rise to their TRUE worth.
Only US holdings cash can be distributed in that Anne’s without an enormous double taxation penalty.
mmmmmm Yes and No : that’s a maybe. But it’s your right to think the way you want and express it so good for you. Looks as though you do think that Apple should be giving more back to the shareholders though. I certainly agree with you on that.
Regarding: “Based on this, no one in their right mind would ever sell their shares and the share price will rise to their TRUE worth.”
Now that is truly a brilliant idea. Well done “Yes and No” (if that is your real name). 🙂
True worth of anything is what someone is willing to pay for it at this very instant. Nothing more. Nothing less. Was it overvalued in September? Says who? Is it undervalued in February? Says who? It’s only worth what someone is willing to pay for it. Technicals only matter so much. It is what it is. And I’m in my right mind, I sold at the end of September. I had made enough profit and didn’t want to be greedy. I’m happy! Very happy! Bought back in some on Wednesday at a much more profitable price. Will buyback more if it looks favorable going forward. Options. Individual shares are too expensive and just don’t have the same bang for the buck as options. Remember, you don’t have to get in on the first 10% or the last 10%. Be smart and take your profit when you can. Buy-and-hold just makes no sense.
“There is much evidence that Apple is out of its depth in economic and financial decision making.”
What evidence? What a bunch of so-called analysts say? Hmmm. More profits than ALL OTHER MOBILE COMPANIES IN THE WORLD COMBINED. Sooooo obviously have no clue! Soooo out of its depth.
“I strongly doubt if Tim Cook et al have any specific plan at all for its liquid assets.”
Yehh. Most of this saving was done by SJ. Steve Jobs – possible one of the greatest business people ever – was just saving up all this cash because he just couldn’t figure out anything productive to do with it. Yehhh. That’s it.
I’m sure Tim has as much idea as Steve, and we’ll know about it when we do — when they’re good and ready to blow our minds with something.
They are probably building a giant Space Ark to transport all of the employees and shareholders off the planet when the Euro, Dollar & Yuan all simultaneously implode, sending the world economy back to the Middle Ages. Everyone will be happy, safe and obese, like the Humans from the movie Wall-E. See Ya in $700 years!
Steve81,
This is the fallacy, you don’t own Apple. You own shares in Apple. You are not even an investor. You own nothing other than a piece of paper, which you may buy more of or sell at market going rates. Also you own a right to a dividend, if and when the company board sees that it’s permissible.
You can go piss in a lake until then.
You bought shares on the open market. You did not buy them from Apple. Apple did not sell you part of the company.
You have the right to vote your shares at the next shareholders meeting. Apple’s board has the right to tell you to piss off with your stupid ideas.
Einhorn CAN vote his shares at the next stockholder’s meeting. There is absolutely NOTHING preventing him from doing so.
The issue is that he is using lies about how corporations really work and how corporate finance really is run in attempt to induce people to pressure Apple to make him rich in the short term.
Get this straight: you have absolutely no direct, legal right to any of Apple’s cash holdings. Apple does not legal *have* to give any dividends at all. Don’t like that reality? Get out of the system.
I don’t think Einhorn selling 1.3 million shares of AAPL would benefit Apple or AAPL stockholders.
I do think it would benefit both Apple AND AAPL stockholders if Einhorn would stop lying to everyone and just voted his stock like every other common stock holder.
“There is much evidence that Apple is out of its depth in economic and financial decision making.” As mentioned elsewhere — what evidence? What has Apple done improperly with its cash? In the last two to three years what purchases have been bad enough?
“I strongly doubt if Tim Cook et al have any specific plan at all for its liquid assets.” 100% pure speculation. You have no idea either way.
“They’ve had other things on their agenda.” Like what? Figuring out how to use company assets (including the cash) to make the company better?
You and everyone else needs to remember that the stock awards to Tim Cook after he became CEO had 5 (for half) and 10 (for the second have) maturation dates. The board did this so that Tim would focus on the long term health of Apple. (My personal opinion is that all senior executives should be on such a plan — every year they get a stock award with a strike price that is at 95% of the then current sell price and have every year’s award have a 10 year vesting period. But I digress.)
If Tim has APPL at 100% increase in 5 years and another 100% increase in 10 years then everyone — including Tim — wins.
If Tim has Apple go up 100% in six moths due to big dividends, preferred stock issuance, huge stock buybacks — then it falls back down so it is at an increase of 0.0% in 5 years then everyone — including Tim — loses.
Stop thinking about short term greed. Think long term. I’m sure Tim is. Finally, STOP listening to the lies put forth by all the greedy Wall Street screamers!
I think Einhorn is in deep doo-doo and I doubt if he has the stones to sell 1.3 million shares of Apple because he probably couldn’t find a better company to invest in. I don’t think he’d be squawking like a chicken if it was that easy for him to move those shares. He’s doing an awful lot of saber-rattling and chest-puffing, but he’s not going anywhere. He’s just a bluffing poker player with an empty hand.
Totally agree with you Steve.
Er, @steve81….. You were probably with Michael Dell (and a lot of Wall Streeters too) who thought Steve Jobs, on his return to Apple, should have shut down the company and given all the money to the shareholders….
Now look at Mr Dell and how foolish he (and Wall St) looks! The amazing thing is, Wall St never seems to look back and realize what morons they were… They just continue to rape & pillage American companies while adding NO VALUE!
Share holders do not own the company nor do they have the right to determine how it is run.
For proof please read this article. http://www.directorship.com/stout-shareholders-as-owners/
Steve if your not happy, SELL YOUR FREAKING STOCK YOU MORON!
Next.
Greedy little Einhorn makes make laugh. The music stopped, he looked around and he was the only one standing. Everyone else was sitting comfortably in a chair. Since he was the only fund manager who didn’t notice Apple was sinking like a stone, he now goes into a tirade. If he had listened to that little voice in his head telling him that a falling guillotine doesn’t look anything like a slingshot, he might not have gotten caught with his pants down.
When Apple collapsed, with his personal wealth he could just have soon jumped in his Bugatti Veyron and partied all night with a couple of shapely, young fashionista bimbos. The best I could do is go down into my basement and look for some pieces of rope long enough to hang myself. I’m sorry, but I have no pity for him and his wailing about Apple not giving him his deserved money. He should take his lumps just like everyone else and suck it up. He’s only 44 years old and still young enough to accumulate a few billion dollars more in his lifetime. I’ve only got a few years left, tops, to trade in my Apple shares for a mahogany casket.
…That and some!
It wouldn’t hurt either, to investigate deeper into the timing of Einhorn’s recent purchasing and selling of Apple shares, to learn what else he cooked up. He has enough shares to spend on creating a selling spree and feeding the cetralized media FUD channels .
Screw it all. I was promised a flying car by Mechanics Illustrated and 1956 and I want it NOW!
Sorry, Captain Sisko and IBM beat you to the punch line almost 20 years ago
And by almost 20, I mean 13. Don’t want to get flamed for over stating the truth too badly
Give a half dozens years here, or give a half dozen there, pretty soon we are align about some real time.
… and don’t walk between the charging port and the power source. Daystrom out.
they plan on giving all Apple employees $1.7 million bonus this year
I voted today for all items as recommended by the Apple board. Akin to giving Steve/Tim my vote.
I was howerver puzzeled why they wanted to limit Apple directors from owing “large” amounts of Apple stock. Why? Anyone.
Can you say insider trading?
I’d be far more worried about them not having the company’s financial well being at stake than the threat of insider trading.
Not insider trading and not ignoring the company’s well being.
All AAPL board members get AAPL stock for being on the board.They all have a financial stake in the well being of Apple through that.
It comes down to a conflict of interest. If a board member has a huge fraction of the stock, then s/he can orchestrate it so they always get voted onto the board.
Another conflict of interest that is quite applicable to recent discussions is short term gain versus long term viability of the company. If a board member has a huge pile of AAPL then s/he might be tempted to argue to the board directly (and access that 99.99% of shareholders do NOT have) to do something that would enrich that board member in the short term and hurt the company in the long run.
The SEC and FBI need to lock up these exotic financial derivative and hedge fund criminals.
having to go hat in hand to bill gates for help was really traumatic for apple and for jobs . the mess Gill Amellio made of the product line was not a lesson Apple will ever forget. if the cash pile keeps the company away from geckos with a huge credit line like mr investment bank Mit Romney it’s a good idea . remember a LEVERAGED buyout only requires 1/10th the money apple has on hand as an investor i am comforted to know there will be no hostile takeover of Apple EVER.
Apple, Get rid of the Hedge Funds !!!
Hey, Einhorn, you lousy fund manager. I hope all your clients come a knockin’ on your door at midnight with pitchforks and burning torches asking when they’re going to some profit from their Apple investment. “As soon as Apple goes back up to $706.” They should be happy to hear that.
I can just hear the conference call with Einhorn, Cook and Oppenheimer:
Oppenheimer: Thanks for all your great ideas on what to do with our money, David.
Cook: Maybe you’d like to advise us on the screen size of the next iPhone?
Oppenheimer: Or maybe give us a list of companies we should acquire?
Cook: How about whether or not we should build a TV?
Cook & Oppenheimer [laughing]
*click*
That scuttling sound we’re hearing from the next room is beginning to unnerve me
“Flying cars” – with a flux capacitor.
Roads? We don’t need . . . roads!
The future strategy is that Apple develop its own worldwide network that only its products hook up to. The crap delivery from so many providers plus the charges for data exceeding limits is a threat to Apple. Android users don’t use the Internet. Apple users do. As your data plan is exhausted, end of month browsing becomes slow. You think it’s your phone when it isn’t. Apple’s interest is to provide their cusrptomers with unlimited access to their digital life. I believe a worldwide Apple network is coming. It won’t cost more, it will be a flat fee and it will perhaps be worldwide. Buying AT&T, Deutch Telecom and a major Chinese player could make them the most powerful network provider in the world. That I would love!
The Apple envy around wall street has become very apparent. I think most analysts and people in general dont grasp the magnitude of what this company is capable of.
They are holding on to cash to offset the coming uncertainty.
Apple is saving their money to buy a country with a closer in location than they can currently buy. No taxes. No restrictions on labor or environmental requirements (which Apple is likely to do anyway). A relatively small navy for defense and product deliveries will support their fleet of delivery jets.
They’re still a bit short so everyone needs to just keep their mouths shut while they accumulate the rest of the money they will need.