“Warren Buffett, was on CNBC‘s Squawk Box this morning for a special three-hour segment with Becky Quick, taking people’s questions across a number of topics,” Tiernan Ray reports for Barons.
“He was asked by Quick about Apple (AAPL), and about pressure to raise the dividend, do splits, etc., etc.,” Ray reports. “Buffett’s advice was to basically ignore all of it:”
I don’t own any Apple and I haven’t, though I did talk with Steve Jobs a few years ago about what they might do with the cash. The best thing you can do with a business is run it well, and the shares will respond. There have been all kinds of times when people have criticized us [Berkshire], saying you could do this thing or that thing. – Warren Buffett, March 4, 2013
Read more in the full article here.
“Buffett addressed two burning issues in the minds of Apple (AAPL) investors: Apple’s depressed stock price and what to do with the $137 billion in cash burning a hole in David Einhorn’s pocket,” Philip Elmer-DeWitt reports for Fortune. “On David Einhorn’s push to get Apple to issue preferred shares:”
“I would ignore him. I would run the business in such a manner as to create the most value over the next five to 10 years. You can’t run a business to push the stock price up on a daily basis. Berkshire has gone down 50% four times in its history. When that happens, if you’ve got money you buy it. You just keep working on building the value.
“I heard from people each time [Berkshire shares went down], saying why don’t you do this or that. Pay a dividend. I think Apple’s done a good job of building value. They may have too much cash. Now one reason they have so much cash is two thirds of it has not yet been taxed.
“When Steve called me, I said, Is your stock cheap? He said, yes. I said, Do you have more cash than you need? He said, a little. [laughs] I said, then buy back your stock. He didn’t. Now, when our stock went from $90,000 to $40,000 to $45,000, I wrote about, we wanted to buy the stock. We didn’t quite manage to.
“But if you could buy dollar bills for 80 cents, it’s a very good thing to do. – Warren Buffett, March 4, 2013
Read more in the full article here.
MacDailyNews Take: “If you’ve got money you buy it.”
Does Apple really need to have 939,060,000 shares outstanding?
[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]
That fat coke swilling dumb f*** knows nothing about tech stocks and even less about running tech companies.
Does Tim Cook advise him on how to run railway companies. That dumb f*** should just stick to running dinosaur companies like the old out of touch dinosaur that he is.
Shut the f*** up asshole.
Oooh… didja get up on the wrong side of the bed today, BLN?
Steve Jobs told that sucker to stuff his advise up his own ass. Need I say more?
Perhaps if Steve took Warren’s advice (which he did ask for) Apple wouldn’t have such a dilemma on their hands now.
Absofuckinglutely.
Ballmers been scratcching the right one, and ignoring the itchy left one I think…thats why its so irritable…
And the real BLN rears his ugly head once again…
As the stock continues to go down, Apple Corporation can ramp up its buyback program more quickly and reduce the liabilities.
Buyback at $800 – dumb. Buyback at $400 – smart.
only if those arrogant caretakers APPLE EXECUTIVES will do a big
stock buy back. they even have no idea on what to do with dropping
stock price or company perceptions. They just don’t care like Steve
Jobs, bue he’s gone and only SJ can get away with it. As long term shareholder, what in for us? while Apple executives have yearly
stocks options and high compensations. Apple don’t need caretakers.
You should be angry at the Einhorns of the world, bad press, and the stock manipulators (analysts) of the world who are bringing the stock down because by any other measure, Apple is doing a fantastic job.
You bought knowing the stock could go down. Now you’re pissed because market risk became a reality? That’s a fact of life investing in stocks, pal.
If Apple buys back stock, you won’t have to sell. You can hold out for a higher price. Or you can sell and take a tax write-off if you lose money. Ether way, you should be mad at the stock manipulators, not Apple, for this situation.
Apple (or any public company) should not be in the business of manipulating its own stock price just to satisfy shareholders. The company should be focused on improving its products and services, which will generate more sales, thus more profits, thus a better value for shareholders.
And if Wall Street hedge fund managers don’t like it, they can jump into the Hudson and join the rest of the trash.
If they can buy back AAPL on foreign stock markets using overseas money, then perhaps this is a win-win situation. A buy back using some of the tens of $B of profits that are sitting overseas would reduce the Apple cash/securities hoard while (I am guessing) not incurring the U.S. repatriation tax.
Tell you what, if I had that kind of money, I’d be all over AAPL. Man, what an opportunity to make money.
Unless Apple has other plans for the money, which I’m sure they do, a stock buy back sounds like a win/win for the shareholders and Apple. We can all ride it back up to $700.
Sounds like a better idea than preferred stock to me.
Why would say assume apple has “other plans” for the money..
A few years ago Steve Jobs reached out to Warren Buffett and asked for his advice, and currently the Apple board is figuring out what to do with it… So I’d say, No – they don’t have any major plans yet.
I assume that Apple has “other plans” for the money because I believe the Apple executive team to be smarter than I am (and I can come up with a few uses for the money).
Apple does not tend to make huge acquisitions. Most of its corporate acquisitions have been in the tens of $M to hundreds of $M as it makes strategic purchases in targeted technologies.
In recent years, Apple has spent far more money on logistics to develop/secure manufacturing capabilities, long term supplier agreements, and intellectual property (IP) such as their major patent portfolio acquisitions.
In my opinion (for what that is worth), Apple has far more money than it needs for a security nest egg and future major R&D efforts. I do not believe that Apple intends to make a corporate acquisition costing many billions of dollars. Those types of acquisitions have historically been financial failures (for recent examples, see Motorola and Skype), and Apple has long been a financially conservative company. Apple has a Great Depression mentality, and that has served it quite well since 1998.
Heed the Buffet
Drive it into the ground and buy it all back.
Apple was never meant to be a money machine. They are an artist.
Investors tend to not invest in artists.
“never meant to be a money machine.”
so why then did Jobs ask Warren Buffet (the No. 1 Investor and Money Manager of the 20th Century) for money advice?
woz STILL criticizes Jobs for thinking TOO MUCH about sales and money. Woz says he would have given everything away for free.
Jobs was the best business person of my generation (voted CEO of the decade by fortune etc) because he cared for ALL aspects of a healthy company and that includes making money. He learnt from the near death of apple , the struggles of Next and Pixar (funding was one of the biggest issues) that money was key.
(I watched a long, I think about 40 min video of Jobs working at Next and so much of the time he was talking about money, even asking his managers to buy used Macs to save money)
You get it.
This advice makes excellent sense
I’m still trying to get my head around the fact that a company with 137B in cash and no debt that pays a dividend with plenty of room for growth has declined in value 40% while outselling every tech co. in the industry. If I was TC and raking in 40B a year I’d be buying stock hand over fist. 100M shares 400 a share=40B. Apple could do that every year for 10 years and not touch there 137B in cash.
It’s about growth. It’s about potential for growth going forward. It’s not what it was several years ago or even a year ago. It’s about Samsung mostly. It’s not about what you did last quarter or last year. It’s about what you can do next quarter or next year.
Certainly buy back is happening right now, perhaps not as fast as it could. I don’t think throwing huge wads of cash at a buy back is a sensible option, too much risk that the share price dives some more and APPL gets egg on it’s face. But to say, double or treble, the already announced buy back scheme would make a lot of sense.
MDN on Mar 4, 2013: “Does Apple really need to have 939,060,000 shares outstanding?”
MDN take on Feb 28, 2013: “Over time, though, the results of a significant split might be a different story” [would unlock value]
What? MDN: Number of shares outstanding has nothing to do with Apple’s valuation. A buy-back is good if a company is undervalued and cannot receive better value through other investments (not because there are 939,060,000 shares outstanding).
Buffett’s take is accurate in the general case, even though he is not an expert on tech companies. I don’t think he is privy to Apple’s capital allocation plans but his point is probably still valid.
I hate that true Apple supporters here lose money because they make emotional, speculative decisions rather than quantifiable, value-based judgments. Many have found value in reading The Intelligent Investor and Buffet’s annual letters to shareholders.
I’m buying AAPL on the fundamentals (the shares are grossly under valued considering just their cash, earnings & growth).
Looks like the market is selling AAPL on emotion.
Apple is now less worth than Exxon Mobile (398B vs. 401B). Tim can stay as CEO but elect Wozzie as chairman of the board, he will give Apple new ideas like only Wozzie can.
Was just filled on some more shares, will continue to buy at these levels–Apple rarely goes on sale $$$