“I am a big fan of both Apple and Tim Cook,” Eric Jackson writes for Forbes. “However, I do have a big problem with one choice Cook has made over his tenure as CEO of Apple. It’s not the lack of a bigger screen iPhone sooner or his original choice of head of Apple Retail before Angela Ahrendts. It’s his decision to spend $100 billion and counting of Apple cash on a capital return program.”
“To date, it’s been estimated that Apple has used more than $100 billion of its cash on dividends and stock buybacks. To me, that’s madness,” Jackson writes. “I believe the capital return program has been a total waste of Apple’s hard-earned $100 billion. I believe – although this is impossible to prove – that Apple’s stock price would be just as high as it is today (or more likely higher) had they spent that $100 billion on a combination of smart M&A and smart R&D that would have continued to extend Apple’s lead over other Android phone makers.”
“Apple could have a quarter of a trillion dollars today in cash to put to work today. They could become the overnight leader in smart cars by buying Tesla. They could – more importantly – acquire our generation’s single greatest technological leader in Elon Musk and give him carte blanche to paint his canvas. (Somehow, I think Musk could find a better use of $100 billion than handing it over to shareholders),” Jackson writes. “They could acquire the single most unique and intriguing asset in the social networking world today in Twitter which, despite the recent management criticisms, is only going to be more important to our culture moving forward. They could acquire the single greatest threat to Google search in the last 15 years by buying Pinterest.”
Read more in the full article here.
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If only all public traded companies did what Apple does with dividends and stock buybacks, we could stop hunger, bad health programs, social disparity, …
The primary duty of any joint stock corporation is to make money for its shareholders. This so-called “analyst” is full of shit.
-jcr
It is hard to comprehend how much money $100 billion is, but I do know that large capital firms have a hard time finding appropriate investments totaling one quarter of that in a year. I believe that it is just as likely that Apple, in its quest to put even more capital to work, could have gotten sloppy and wasted or overpaid for acquisitions given the abundance with which they had been blessed. They still have plenty of money for acquisitions and the discipline that goes into picking the very best investments as opposed to all the decent ones is good corporate hygiene in my opinion. They still will generate more cash this year than the market caps for all but a few Fortune 500 companies. I can see the author’s point, but I don’t think this return strategy will hurt Apple at all. Happy Thanksgiving
Having 100 billion to invest around different models-Tesla and the like -would fragment the company’s focus not to mention the price they would have to pay over market and the integration risks.
I say stick to the knitting and invest 50 billion of the next 100 billion in future innovation (develop internally vs big acquisitions)and provide 50 billion in increased dividends.
What a total non-story. Slow news day stuff.
Essentially, this guy working as a writer/whatever claims he has a better idea about how to use Apple’s money than the man who presides over the world’s most valuable company and continues to oversee the influx of gargantuan profits quarter after quarter.
Mr Jackson would instead have gone out and bought over almost every big corporate name he can throw out there, like it’s as simple as walking into a grocery store and picking up some bottles of milk.
For what purpose? To extend Apple’s lead over Android. Oh wow! Finally somebody with an idea for Apple to beat off that fierce competitor who continues to fight us neck-to-neck! That should put a dent in Samsung etc’s continued dominance!
This is stuff that belongs in the “What I Would Do If I Won The Big Lottery” pamphlet.
Eric: Please apply to your choice of writing topics what Steve Jobs said: “To focus means to say ‘No'”
Eric’s focus is to use his thinking to make money for himself. That results in articles like this. Such a focus does not play as well on any battlefield.
I would certainly prefer the Tim rewards his loyal customers by a solution to customers who bought 2011 MacBook Pros which are failing at a very high rate (over 25k users have signed to petition last time I looked). After buying 4 x mac book pros (various models), 2 x iMacs, 2 x iPads and 8 x iPhones for my small family, I have demonstrated my loyaly to Apple. How about some back instead of rewarding people who just happened to buy shares to profit from trading. How about doing the right thing Tim!!!!!
On the surface, he people in this thread who fall into three camps.
1. Pro-dividend and share-buy back to increase AAPL price
2. Pro-alternative uses of the cash in hand
3. Current management of current operations.
#3 is the least relevant to the original author’s intent.
Let us rephrase.
1. People who satisfied with current Apple operations.
2. Those who imagine something greater. (The author and I are in the 2nd camp)
Let us rephrase again.
What is Apple management’s intent with a share buyback.
1a. to satisfy stock holders
1b. to get stock holders to shut up
2. to help Apple Inc
3. to help management.
There are many good ideas in this thread. The people with high blood pressure might need to step away from the keyboard for a while. Read and think, before making quick judgments.
The purpose of a publicly owned corporation is to generate profit for its stockholders while operating in a lawful manner. Whether the company makes widgets to measure the temperature in a nuclear reactor, or manufactures comfortable workout outfit makes absolutely no difference to an investor who wants both the share price to increase and a nice juicy dividend.
You make the ridiculous argument that if the company were run in the Steve Jobs manner it would have been better for the stock.
You claim that Tim Cook did not need to institute the stock buy back program or to split the stock 7:1. You even argue that there were no stock splits while Jobs was CEO so how dare Tim Cook actually make his own decisions and announce a stock split. You made it sound like a dangerous maneuver not commonly done all of the time. You seem to be especially incensed about the dividend which apparently you’re against.
Instead Apple should have used the money which went to the company’s stockholders/owners in a different way. Presumably, Tim would drive to whatever bank Apple uses in a shiny new Tesla and withdraw a lot of money (luckily Tesla has a large trunk). Tim would then buy a bunch of cool sounding companies that I’m sure do really cool things that they love to talk about. Unfortunately their plan to generate a revenue stream leading ultimately to a higher stock price (company is increasing in value) and dividends (profit distributed to shareholders). You even are disappointed that Apple didn’t buy Tesla since both Apple and Tesla have batteries and the CEO of Tesla is a cool guy like Steve.
Accounting for the split the per share price of Apple stock on the day Steve died was $54. Todays price closed at $119 and appears to be setting records almost daily. That is an increase of 120% in the world’s most valuable company over a 3 year period. To clarify the logic you used, Tim Cook takes over, institutes new policies with the goal of increasing the value of the stock and over a 3 year period the share price increases 120% with distribution of dividends. I doubt that stockholders are lining up at post offices to return their dividend checks. The company has fantastic financials and still has a few dollars in the bank.
For you to criticize the financial decisions of one of the worlds most financially successful companies by comparing them to your ideas using scenarios that can never be proven one way or the other makes no sense during a time when all of the different parts of Apple including their products and the stock are doing incredibly well. I don’t see how you can criticize their decisions when the stock more than doubled, a dividend is being distributed and sales are breaking records on a routine basis.
The stockholders and consumers are happy.Why aren’t you happy? Did you sell all your Apple stock when Tim took over?
As usual, those who can do, do; those who can’t, preach (or criticize)
Apple has enough money to give some back to its faithful stockholders rather than hoarding it. I have had Apple stock for a very long time and I appreciate the dividends. Apple stock prices were in real trouble before Tim Cook started giving dividends and buying back stock. I’m shocked that this is your position. You want Apple to just accumulate billions and billions of dollars and not even give something back to the stockholders? Believe me there are billions and billions more funneling into Apple every minute of every day. There is no cash shortage. They can still buy Tesla if it were ever to go up for sale which is the only bright thing you said!
So Apple’s big mistake was paying me the dividends I need to survive in my retirement? Screw you!
Without even reading the article I’m going to assume this is some moronic dip shittery about the stock price or market cap or some other imaginary indicator that Wall Street likes to use to fabricate controversy.
Oh goody. Cook should’ve held onto the money so they could make some pie-in-the-sky purchases and become all things to all people. Fucking morons. The only people dumber than the people that refuse to except that Apple could become this successful are the people that think that Apple should take over every goddamn business in the world.