“The folks at Apple could learn a lot from Progressive Corp., the auto insurance company made famous by the ubiquitous Flo, star of its endless flow of ads,” Allan Sloan writes for Fortune. “Apple doesn’t need help from Progressive when it comes to selling products. But Apple could really profit by studying how Progressive deals with the companies’ common problem, one that most firms would be thrilled to have: more cash flow than it needs.”
“Progressive has an intelligent, rational, and transparent way to deal with the surplus cash that its operations generate. Apple doesn’t. It has fumbled around, trying half-heartedly to make Wall Street and good governance types happy, but in the process managing to ensnare itself in a nasty debate about whether it’s shortchanging its shareholders by hoarding cash,” Sloan writes. “As a result, what should have been a normal, boring Apple shareholder meeting next week has become a confrontation between Apple and some sharp-elbowed Wall Street types who want Apple to goose its stock price by giving $50 billion (or more) worth of new preferred stock to its common shareholders.”
Sloan writes, “Apple is likely to ultimately prevail in a shareholder vote to eliminate its board’s right to issue preferred stock. But its Street image has taken a whack, because it has come out looking clueless about how to handle its cash. Progressive has no such problems. It pays its shareholders (who include me) an ultra-rational dividend: a variable, once-a-year payment based on the success of its business.”
Read more in the full article here.
The Manipulator: Wall Street lines up for Apple’s cash in preemptive hope of avoiding another government bailout.
Yes. Please.
Everyone seems to know better than Apple. I’ll just point to Kontra:
“It’s hard to like Apple. To the dismay of conventional thinkers everywhere, the fruit company sambas to its own tune: makes the wrong products, at the wrong prices, for the wrong markets, at the wrong time. And, infuriatingly, wins.”
http://counternotions.com/2013/02/06/notdone/
Apple BoD: stop Einhorn at all cost.
I can’t believe how these articles get more ridiculous by the day.
Excess cash accumulation in an in insurance company means they’re charging their policy holders too much. Your dividend comes from premiums collected that were never paid in claims and, once paid out as dividends, are no longer available to pay future claims. Flo(w) was well chosen as descriptive of the process.
Caveat emptor. Both customers and investors.
I suppose this moron would suggest that Apple follow the R&D lead of the insurance company as well. This article uses what has to be one of the worst analogies I’ve ever heard by someone who clearly doesn’t get why Apple is a success.
Wait a minute, are you trying to say that a technology company has a different set of needs than an insurance company?
Go ahead ask Flo about how many times Progressive has purchased other companies to produce newer better materials for build out of policies. Apple isn’t the only company that needs liquid metal.
Ask Flo how many times Progressive has made huge investments in other companies to increase their critical production lines insuring that only they get the best pricing and availability on insurance components used in the building of their policies.
Ask Flo about the billions needed to bring revolutionary products like snapshot to market.
Now that I’ve said (typed it) yeah, its just silly to think that the needs of 2 completely different industries aren’t exactly the same. Think different Apple, think progressive.
MDN, thanks for cutting out the end sarcasm tag on the above post. (Just in case someone didn’t get it)
If I ever did find Flo, I’d prefer to do other things with her; sorry.
How much money does it take to research, develop, test and market an iPad? Lets us say the first iPad?
Break it down further. How much did it cost to develop the first A4 chip?
If Apple inc. are indeed in the process of developing a new product, how much has it cost them so far even before the mass production belts begin to roll?
The money held in Europe by Apple inc. has already been taxed in Europe, until the US government declares it’s tax policy on taxed profits abroad, why should Apple inc. and other companies remit that money into US banks (The bastards!) only to have half of it swiped by the government who then misspend it on black hole projects?
If the world and it’s stock broker wants new toys and therefor new income streams from business’s, then the Wall Street gamblers should not have a say in how companies are run. If anything, those gamblers should face constant scrutiny and stiff taxes for profits gained through shorting hard working business’s.
I want Apple to save up enough to buy 1 or 2 media companies so the Apple-TV will have something to put on its screen.
This whole situation makes me angry. How many times have the Wall Street wizards through their short term mentality screwed something up so bad that we all regretted their actions later? For an example, look around you – you might start with your unemployed and under employed acquaintances and why they are in their current situation. People like Einhorn, as a general rule, are amoral and hide behind some mantra about market efficiencies and other babble. I call shenanigans!
The rub here is that Progressive provides a super shitty service for the people that are most important, THE CUSTOMERS! I switched over to progressive to save some money only to have my rates gradually increase every 3-4 months for no other reason than they wanted more money! Never filed a claim or had an accident and ultimately had to pay a stipend to get out of my contract with them, to which the local provider immediately called my lender and informed them that I was uninsured(which was not true) thereby freezing all of my accounts causing multiple problems such as over drafts and the fees associated with them. So despite the fact that they are rewarding their shareholders, they continue to fsck over their customers! Bad business model, Flo can shove it up her a$$!!!
Make more stupid commercials so you don’t have extra cash laying around?
What Wall Street doesn’t seem to realize or likely even care about is that the average Apple investor holds their ideas at about the same level of esteem as we do the performance of the US Congress.
Insurance like Progressive and corporations like Greenlight Capital (a.k.a Einhorn) are a scams designed to take money and sell you services they cannot adequately provide.
Apple’s business model is the pinnacle of success and customer service.
Thanks but no thanks stupid article.