Berkshire Hathaway Discloses Nearly $1 Billion Stake in Apple

[ApfelKuchen]

Agreed.. In this economy where I have to decide do I want a top of the line $3000 MBPr? or a weeks vacation in Honolulu...

Apple needs to get off its high horse and cuts those profit margins in half

So says someone who's looking for a lower price, without regard to the consequences for the company as a whole. Clearly, you're not a shareholder. I guarantee you that Berkshire Hathaway would not have invested in Apple if it was just another high-volume/low-profit-margin electronics company.

Do you seriously think that Apple could double the number of Macs it sells by halving its profit margin? Halving profit margin doesn't halve the price. So, if the 40% gross profit on that $3000 MBP is $1200, and they cut that in half, it means they cut the price by $600 - a 20% price cut on the MBP itself (costs are unchanged when profit margin is the only variable). Is that enough of an incentive to more than double the number of Macs Apple sells? Do you think a 20% price cut would induce 10% (or more) of Windows users to switch to Mac? Not likely.

Apple is an enormously profitable company, based on their ability to get people to pay those prices. Apple is estimated to sell about 8% of the worlds PCs, but it's estimated they make 90% of the profits. Why, then, should Apple change its current strategy?

Speaking of current strategy... This has been Apple's strategy going all the way back to the beginning. This is Steve Jobs' strategy, not Tim Cook's.

 

[MillieWales]

Well I'm very confused, I was just a minute ago reading how Apple is doomed and it will be dead soon - it has to be true as experts on this very forum were saying it.

Warren Buffett is such an idiot, if only he had read the forums before making such a large investment he wouldn't have wasted all that money. I mean, it's obvious he isn't a clever investor, that small fund he manages is worth next to nothing, it's a failure, and he just keeps making terrible investment decisions. If only he had the insider knowledge that many on Macrumors have, people here know exactly what's going on, they know Apple are only interested in watch straps now and have only a few months to go unless Steve Jobs can be successfully resurrected very soon.

 

[patrickbarnes]

More like 800m now.

 

[nadaclue]

Well I'm very confused, I was just a minute ago reading how Apple is doomed and it will be dead soon - it has to be true as experts on this very forum were saying it.

Warren Buffett is such an idiot, if only he had read the forums before making such a large investment he wouldn't have wasted all that money.

Buffett didn't do the investing. There was a deputy investment manager that did the investment. Buffett apparently did't know and wasn't consulted on it. Remember too, Buffett invested in IBM five years ago and lost a great deal of money in it.

 

[Solomani]

Well I'm very confused, I was just a minute ago reading how Apple is doomed and it will be dead soon - it has to be true as experts on this very forum were saying it.

Warren Buffett is such an idiot, if only he had read the forums before making such a large investment he wouldn't have wasted all that money. I mean, it's obvious he isn't a clever investor, that small fund he manages is worth next to nothing, it's a failure, and he just keeps making terrible investment decisions. If only he had the insider knowledge that many on Macrumors have, people here know exactly what's going on, they know Apple are only interested in watch straps now and have only a few months to go unless Steve Jobs can be successfully resurrected very soon.

Yeah. Buffet clearly did some insider trading. Some dodgy fellow at Apple told Warren Buffet that Jony Ives just hired a brilliant new intern named Herbert West…. who has the the know-how of resurrecting the Dead Steve Jobs back to life.

 

[Rocketman]

After lurking for literally five years, this comment was so silly I just had to register. There is absolutely no such thing. Are you aware of the concept of arbitrage? I'm looking at my quote system now and there are thousands of shares for sale, we should go buy all of them, after all we're going to get a $40,000 premium for selling them aren't we?

Oops!

http://www.investopedia.com/ask/ans...-buy-back-shares-instead-paying-dividends.asp

The company also engages in a generous stock buyback plan. In a Berkshire Hathaway buyback, shareholders often receive as much as 120% of market value for shares they wish to sell back to the company.

You can unsubscribe now.

BTW, if you have $212,000 per share to invest and also want to sell back to the company direct, yes the instant 20% return is a feature. I believe they are addressing longer term investors and might reduce the offer if capital gains tax rate drops from roughly 23.8% to roughly 15% like it used to be.

If you hold the shares for under a year the tax rate is 43%. Oh frick!

If you returned 1 share a month for a year you could easily make 57% of 20% times 12 or $290,000, after tax.

You would be giving $218,750 to the darn FEDGOV too. Probably not worth the hit to your ethics and sensibilities to pay that price.

Of course if you do it in your (self-directed) IRA then you would capture $508,750 a year or a yield of nearly 240%. If you have a broker that sells fractional shares you could even compound that monthly and earn well north of 400% annualized.

Here, let me spoon feed you.

Berkshire Hathaway
3555 Farnam St
OMAHA, NE 68131-3311

+1-402-346-1400 (Phone)

Attention: Warren

I encourage readers of this message to thank me with "tips" of gold bars to my PO Box.
The attached chart shows why it is sensible for them to buy back shares at a 20% premium. One year returns.

 

[MillieWales]

Buffett didn't do the investing. There was a deputy investment manager that did the investment. Buffett apparently did't know and wasn't consulted on it. Remember too, Buffett invested in IBM five years ago and lost a great deal of money in it.

The same stands, it's a sign of confidence, and IBM is hardly dead and buried.

 

[Muscle Master]

So says someone who's looking for a lower price, without regard to the consequences for the company as a whole. Clearly, you're not a shareholder. I guarantee you that Berkshire Hathaway would not have invested in Apple if it was just another high-volume/low-profit-margin electronics company.

Do you seriously think that Apple could double the number of Macs it sells by halving its profit margin? Halving profit margin doesn't halve the price. So, if the 40% gross profit on that $3000 MBP is $1200, and they cut that in half, it means they cut the price by $600 - a 20% price cut on the MBP itself (costs are unchanged when profit margin is the only variable). Is that enough of an incentive to more than double the number of Macs Apple sells? Do you think a 20% price cut would induce 10% (or more) of Windows users to switch to Mac? Not likely.

Apple is an enormously profitable company, based on their ability to get people to pay those prices. Apple is estimated to sell about 8% of the worlds PCs, but it's estimated they make 90% of the profits. Why, then, should Apple change its current strategy?

Speaking of current strategy... This has been Apple's strategy going all the way back to the beginning. This is Steve Jobs' strategy, not Tim Cook's.

Problem is... Those prices are hard to shallow in this economy... Have you tried Windows 10... It's no Mac OS but 10 runs smooths as a baby's ass

Either Apple comes down on their prices or the mass is not gonna buy them... Most of the sales comes from legacies

 

[ApfelKuchen]

Problem is... Those prices are hard to shallow in this economy... Have you tried Windows 10... It's no Mac OS but 10 runs smooths as a baby's ass

Either Apple comes down on their prices or the mass is not gonna buy them... Most of the sales comes from legacies

People have been complaining about Apple prices since the beginning, and it's still here. Economies have come and gone, and Apple is still here.

Many Mac sales don't come from legacies. The number of Macs sold annually is more than four times today what it was on the day iPhone was introduced. There's been a huge increase in the number of Macs sold - people who came to Apple as a result of iPhone, for the most part.

Apple's strategy is based on the masses not buying Macs. You don't need masses if you make a generous profit on each sale. One of the factors in permanently reducing the price of any product is that you're also cutting the price to customers who were willing to pay the higher price.

Based on all the financial figures, Apple does not have a Mac problem. The entire PC industry has a problem with shrinking sales, yet in recent years, Apple has been gaining share within that market, and often increasing both market share and unit sales. It ain't broke. There's nothing to fix.

 

[American Hero]

If stockholders are smart, Apple won't rebound until Tim Cook, Eddy Cue, and Jonny Ive are shown the door.

There is simply no reason for Apple to rebound. What is normally an exciting wait for the next iPhone generation is met with pure silence and boredom this year. The same thing can be said for this year's iPad release.

 

[Rocketman]

AAPL has several paths to increased stock price. PE expansion from 10. Increased earnings as they add installed users by making more iPhones and using trade-ins for price sensitive markets, the introduction of LTE to India, New products, and now services.

Apple is widely considered to be a no-brainer value by the financial press. Nobody is promising when these things might be recognised by investors.

The financial repression by the administration is certainly a major factor in stunted growth, so that is likely to change in the next administration no matter who wins. Possibly as early as 11-17.

 

[ApfelKuchen]

If stockholders are smart, Apple won't rebound until Tim Cook, Eddy Cue, and Jonny Ive are shown the door.

There is simply no reason for Apple to rebound. What is normally an exciting wait for the next iPhone generation is met with pure silence and boredom this year. The same thing can be said for this year's iPad release.

None of those are technical/financial-based reasons for a share price adjustment - they are all sentiment. Those with negative views of the future are capable of driving down share prices, and those with positive views are capable of driving prices up, independent of objective reality. It's just a matter of which sentiment predominates at any given time.

Since Apple projected gross profit margins in line with historical norms, there's no objective reason for the P/E ratio to be lower - the price should have simply declined to maintain the same P/E. Anything beyond that is investor sentiment. We may drape sentiment in the appearance of rationality, but in the end, it comes down to what we choose to believe, since the future is unknowable. Since investors are buying for the future, it's a matter of what future they believe in, and what future they don't.

Buffett/Berkshire Hathaway follows a Value investment strategy. One of the key components to Value investing is locating investments that are undervalued by the market; companies that have strong, measurable fundamentals that are selling at a discount.

 

[Nunyabinez]

Buffet is legendary and immensely successful because he is a strategic long-term investor. He invests in companies that sometimes takes years or even decades to show steady stock growth. Like Pepsi and other blue chips. It's been said that AAPL's fast-growth days are over, so it makes sense to categorize it closer to a long-term growth blue chip company like Pepsi or even McDonalds. They are globally familiar house-hold brands with huge loyal followings, so those brands will not die any time soon. Their stocks, on the other hand, are better for long-term growth like investing for your grandchildren's college fund. Not so great if you want to retire in 3 years. Even Microsoft has stopped being a fast-growth stock.

You are totally right. They look for companies that are well run and let the management continue to run them, even when they buy them outright.

Buffet knows that even with all the hand-wringing, Apple will continue to be successful for some time. Maybe not the crazy year-over-year growth, but still incredibly profitable.

 

[admob71]

Great news that Buffett is betting big on Apple. Hopefully this ends all the doom and gloom for awhile, and we can all get back to drooling over new Macs and iPhones coming later this year.

Drooling? Is this a wind up.. the 2016 iPhone is gearing up to be the lamest release yet, and that's saying something... let me guess, you will buy 3 on launch day... one in each colour..

 

[dumastudetto]

Drooling? Is this a wind up.. the 2016 iPhone is gearing up to be the lamest release yet, and that's saying something... let me guess, you will buy 3 on launch day... one in each colour..

There are some vocal critics on here who agree with you. But I bet the majority on here are very excited about the iPhone 7, and these people can't wait to get their hands on the new devices. Tim Cook says there will be many things in the new iPhones that we will want, so I'm expecting some incredible innovations this year contrary to all the doom and gloom forecasts. Let's wait and see though. It's far too early for you to be writing the new iPhone off.

 

[admob71]

Tim Cook says there will be many things in the new iPhones that we will want, so I'm expecting some incredible innovations this year contrary to all the doom and gloom forecasts.

Oh mate, you do know that it's Tim's job to keep you dangling so you don't go and buy from some one else . What would you class as incredible innovations? Because to be fair I can't remember the last time they had one. Buying soneone else's ideas isn't innovation.