- Apr 12, 2001
Barron's reports on a couple of Apple-related comments made by Berkshire Hathaway chairman Warren Buffett during a three-hour appearance on CNBC's Squawk Box show this morning. Buffett, known as America's most famous investor, suggests that Apple ignore all of the recent controversy surrounding a recent proposal from Greenlight Capital's David Einhorn to issue new dividend-paying preferred stock and instead simply continue focusing on creating value for the company's existing stock.
I would ignore him. I would run the business in such a manner as to create the most value over the next five to ten 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.
Apple last year initiated a relatively small share repurchase program primarily designed to offset the issuance of new stock as employee compensation. The program was authorized to buy back approximately $10 billion in stock over three years and accompanied a dividend program to distribute cash back to investors.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. [...]
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.
But with Apple's share price having moved from approximately $600 at the time of the program's announcement to a peak of $700 and now back down to roughly $425, many are calling for Apple to accelerate its share repurchasing plans while the stock is at its lowest levels in 15 months.
Article Link: Warren Buffett Says Apple Should Buy Back Stock, Ignore Einhorn's Calls for Preferred Stock