Warren Buffett Says Apple Should Buy Back Stock, Ignore Einhorn's Calls for Preferred Stock

[samcraig]

Google knows the content of all of my emails. They know what I buy online. They know what I search for on the Web. They know what videos I watch on YouTube. They know where I'm driving, how fast I'm going, and where I stop to eat on the way. They know I have a doctor's appointment on my calendar Friday at 3 pm. They know I searched for "irritable bowel syndrome" today, so that's probably what ails me. They know what medications I've already tried because I've Googled the potential side-effects. They know who my friends and family are because they're on my contact lists and in my Google+ circles.

They know all of this and more about you too. Apparently you don't care. Good for you.

Well first you have to realize - Google doesn't give a crap about you. And I mean that they don't give a crap about who LagunaSol is. Get over yourself as if Google is actually READING your email and caring about the fact you googled IBS. At most - you're a quick blip to them as part of aggregated data so if wonderdrug x wants to advertise, Google can say - oh - we have x% of users who have googled that. We can target your ad.

And for someone that hates google so much - you sure use their applications a lot, don't you?

Lastly - Google is such a small fish to be concerned about. You want to lose sleep tonight? Go read up on Axciom. They make Google look like amateurs.

 

[Mystic386]

Apple needs to introduce something very quick in order to stop this continual slide of their stock. Everyday it seems they hit a new low including today.

Tim Cook said he was concerned about the stock price but did nothing more than say they had great stuff in the works.

Buffet is an amazing investor and Apple had all time sales increase but the market is looking for future growth and without a new product I just don't see it happening.

Google is at another all time high today for their stock and Apple is at another 52 week low today. Seems to be the norm for the last 6 months.

Not looking to invest in a tanking stock with nothing but rumors to look at for the future quarter.

Buffet says the time to buy stock is now.

I say it's always better to buy a stock when it's "tanking" and the company earnings are sound.

You'd rather wait till the stock was up before you buy. And buying while it's down isn't something you'd do.

I'd review that thinking.

 

[Dan--]

Apple needs to introduce something very quick in order to stop this continual slide of their stock. Everyday it seems they hit a new low including today.

Tim Cook said he was concerned about the stock price but did nothing more than say they had great stuff in the works.

Great companies cannot afford to let their shareholders run their companies. And although they need to provide lip service to their shareholders, they should not be concerned first and foremost with the current share price, especially with the market being as fickle as it is. They should be concerned with building long/mid term value. (aka, what Buffet said).

They don't really care about short term stock price and in particular short term investors.

They base their entire company around making a small number great products that will fly off the shelves. It's a simple plan and has been working very well for them.

And they will continue to do that the right way, as has been engrained in their culture in part via their Apple school.

I have to agree with him on this one. Buffet is right in saying here: "You can't run a business to push the stock price up on a daily basis."

Absolutely. It's usually the sign of a company that's about to start swirling the drain that undergoes things just to "make the stock price rise".

The flaw in this argument is the assumption that the company value is something different than the share price at that point in time, and that by buying back the stock the market cap will magically rise from the "discounted" value to the undiscounted value. ie, you have a company with a market cap of $360 bn that gives away $90bn and suddenly the market cap rises to $390 bn.

The stock rises after a buyback for 2 reasons: because more of the profits go to fewer people, and also it's a signal that the company feels that's its shares are undervalued. This latter psychological factor is much stronger than say a stock split. It can get people thinking that maybe their Price to Earnings Growth (PEG) ratio should be more than 0.4. Currently at 0.38. Some PEG ratios for a couple companies:

AMZN: 101
TXN: 14.4
GOOG: 2.9
INTC: 1.1
HP: 0.45
CSCO: 0.34​

http://ycharts.com/companies/AAPL/peg_ratio


For Apple, I would much rather a buyback program than dividends, because the buyback increases value without the shareholders having to pay taxes on the dividends.

 

[Mystic386]

I like that when the company had a bit of money Steve Jobs rings an astute investor for advice.

Steve was a smart guy. And that;s a valuable lesson.

If you want to know how to do something well do you go to a lawyer, accountant, or banker or do you go to someone who knows how to do it in practice.

 

[IJ Reilly]

Of course it alters the market cap. Market cap goes down, because there are fewer shares. And it _should_ alter the market cap, because the company is worth less after giving the cash away.

Okay, what I meant to say is that it doesn't alter the stock price in any direct or inherent way. As for the company being "worth less" because they spent some of their cash buying the shares, no. Not at least where stock valuations come from, since cash assets are not included in any valuation of the stock. In fact no assets (or debts) are part of this calculation.

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For Apple, I would much rather a buyback program than dividends, because the buyback increases value without the shareholders having to pay taxes on the dividends.

You prefer theoretical profits over guaranteed income? Hmm.

 

[phillipduran]

Actually, buying dollars for $.80 isn't a very good thing unless you get out of it immediately, like buy gold with it. The dollar isn't headed in a good direction.

 

[mdelvecchio]

"They don't really care about short term stock price and in particular short term investors.".

Not much incentive as an investor to put money in a stock that "doesn't care" about stock price.

Give me a break. Apple is worried big time about their current and future stock price. They are a company that wants to make money regardless of the BS they say during their magical announcements.

Apple is exactly like other large companies or any company. They want to make money. Face reality.

apple makes money hand over fist -- they can't make their products fast enough.

you're confusing making money with soothing jittery investors. that isn't apple's bag. profit is apple's bag. and they're doing it better than anyone.

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Doing Nothing hasn't helped much has it...

record profits. record sales. stock higher than most the last decade.

 

[4TheLoveOfTech]

Buffet says the time to buy stock is now.

I say it's always better to buy a stock when it's "tanking" and the company earnings are sound.

You'd rather wait till the stock was up before you buy. And buying while it's down isn't something you'd do.

I'd review that thinking.

If you purchase Apple stock anytime in the last 6 months then you'd currently be down about 38% at current price.

With no new product (others than rumors) to be announced anytime this current quarter and possible next quarter why should investors invest of no incentive of return. There may be a dead cat bounce every once in a while but I'll keep my finances in stock that show the incentive of future growth, not what they did for me two years ago.

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apple makes money hand over fist -- they can't make their products fast enough.

you're confusing making money with soothing jittery investors. that isn't apple's bag. profit is apple's bag. and they're doing it better than anyone.

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record profits. record sales. stock higher than most the last decade.

The stock has lost 22% over the last year.

What about that do you see as incentive to invest.

I don't care how much cash Apple has. Apples cash doesn't fund my retirement account.

You are confusing brand loyalty and incentive to invest in Apple's stock for future growth.

 

[Aragornii]

I think you didn't follow the maths at all.

Yes, I understand the math perfectly. All you've done in your example is increase your leverage. You can do that at any time in many different ways without needing Apple to do a stock buyback. The buyback is totally irrelevant.

 

[saturn88]

Bert Dohmen's new target price for AAPL is

$324

http://www.youtube.com/watch?v=XPyBFXpDvvQ

If he's wrong this time.....it will be the first time!

The cost of iPad Mini

 

[Dan--]

You prefer theoretical profits over guaranteed income? Hmm.

If I intend to stay invested in the company, and am willing to DRIP the dividends, then, absolutely.

If I wanted out, I could just sell. If I wanted income, I could sell pieces. The upside of a dividend versus selling for income would be if a lot of people were taking dividends instead of selling, it would tend to keep the share price higher.

At this point, I'm not looking for income, I'm looking for an investment.

http://www.wisestockbuyer.com/2012/11/dividends-vs-stock-repurchases/

There's a time and a place for each of them. As I feel that AAPL is undervalued, I think a buyback would be a good idea.

 

[Swift]

Good thing you are not in charge. Your answer is to "introduce something very quick."

Exactly. Ignore the Wall Street prattle. Who says they know anything about actual business, and not how rich this or that will make them?

 

[Muscle Master]

Google knows the content of all of my emails. They know what I buy online. They know what I search for on the Web. They know what videos I watch on YouTube. They know where I'm driving, how fast I'm going, and where I stop to eat on the way. They know I have a doctor's appointment on my calendar Friday at 3 pm. They know I searched for "irritable bowel syndrome" today, so that's probably what ails me. They know what medications I've already tried because I've Googled the potential side-effects. They know who my friends and family are because they're on my contact lists and in my Google+ circles.

They know all of this and more about you too. Apparently you don't care. Good for you.

And the US Government does't?? You think every phone call you make, every message you text.. etc isn't being routed from your carrier to the government.. GET REAL! there's worse crap out there

Get used to it?

 

[SeattleMoose]

It will be a sad day if Apple starts actually listening to a bunch of sharks who have never built or contributed ANYTHING to society. Steady on the tiller Mr. Cook, steady as she goes....

 

[codefuns]

Google knows the content of all of my emails. They know what I buy online. They know what I search for on the Web. They know what videos I watch on YouTube. They know where I'm driving, how fast I'm going, and where I stop to eat on the way. They know I have a doctor's appointment on my calendar Friday at 3 pm. They know I searched for "irritable bowel syndrome" today, so that's probably what ails me. They know what medications I've already tried because I've Googled the potential side-effects. They know who my friends and family are because they're on my contact lists and in my Google+ circles.

They know all of this and more about you too. Apparently you don't care. Good for you.

If like you said, Apple knows your everything also, they know your credit card, because it is needed when you register a apple id, they know your address, they know what apps, songs you bought, they know your contacts, they even know your apps' data if you enable iCloud, Apparently you don't care also. Good for you too.
IT DOESN'T MEAN THEY DON'T KNOW IF THEY DON'T SAY SO.
google shows you the ads you want, so you think google know your everything, apple don't do that, so you think apple don't know that? it is funny.

 

[LagunaSol]

google shows you the ads you want

Oddly enough, I don't want ads.

Enjoy your new Google world.

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If you purchase Apple stock anytime in the last 6 months then you'd currently be down about 38% at current price.

Some of us don't buy or sell stock in 6-month rotations.

Look at AAPL historically. It's had huge drops before. Only to regain ground and rise to new heights. If you're not a long-term investor, your loss.

but I'll keep my finances in stock that show the incentive of future growth

Good idea. I hear AMZN is a good deal right now.

I don't care how much cash Apple has. Apples cash doesn't fund my retirement account.

You know what else doesn't fund your retirement account? Short-term knee-jerk investing.

Had I listened to every know-all doomsayer like you, I would have sold AAPL at $60. Or $100. Or $250. Wow, that would have been dumb.

Good thing I'm a long-term investor uninterested in the opinions of anonymous Internet forum commenters.

You are confusing brand loyalty and incentive to invest in Apple's stock for future growth.

So go find something you feel motivated to invest in. Why whine about the ups and downs of AAPL if you aren't even an investor? What are you trying to accomplish here?

 

[codefuns]

Google and apple is not like water and fire. as a user, I use them both.

Oddly enough, I don't want ads.

Enjoy your new Google world.

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Some of us don't buy or sell stock in 6-month rotations.

Look at AAPL historically. It's had huge drops before. Only to regain ground and rise to new heights. If you're not a long-term investor, your loss.



Good idea. I hear AMZN is a good deal right now.



You know what else doesn't fund your retirement account? Short-term knee-jerk investing.

Had I listened to every know-all doomsayer like you, I would have sold AAPL at $60. Or $100. Or $250. Wow, that would have been dumb.

Good thing I'm a long-term investor uninterested in the opinions of anonymous Internet forum commenters.



So go find something you feel motivated to invest in. Why whine about the ups and downs of AAPL if you aren't even an investor? What are you trying to accomplish here?

 

[Mike Valmike]

Still reckon the obvious big money purchase for Apple is Nintendo. Currently at a 5 year low with a market cap of $14bn, they'd probably get it for no more than $20bn possibly even all in shares. Would be a good fit for both companies.

Plenty of money in the DS, Wii and Wii U still which they could milk over their remaining lifespan as they transition over to Apple platforms. License all the franchises to Disney for theme parks, movies, tv, merchandise and so on. Then make all the game franchises exclusive on Apple once the Nintendo hardware goes end of life.

Microsoft and Sony can't make a move for them at the moment, but they'll be fair game once they drop hardware. Move now and avoid the bidding war.

This idea is almost too awesome to contemplate. It's a shame that the Japanese cultural resistance to selling to a foreign company will probably prevent it. Yamauchi-san may be gone/retired/out-of-the-picture, but Nintendo has been in the hanafuda business for a century and a half and has no intention of rolling up stakes, even if it makes business sense to do so.

 

[TallManNY]

Unless of course they buy something like Yahoo.

Google has itself. Microsoft has Bing. And Apple?

Apple has Siri.

 

[SockRolid]

If someone told me to come up with the most laughably wrong description of Warren Buffet I could think of, I'd say that 'Wall Street parasite" is about the best answer I could give.

Good job, you clearly have no idea what you're talking about.

Here's what Wall Street Wizard and Towering Intellect Mr. Warren Buffet had to say:

But if you could buy dollar bills for 80 cents, it’s a very good thing to do.

Aha. Let me write that down so I won't forget.
Because he does, in fact, clearly know what he's talking about.

 

[lcmazza]

It`s just that... Actually Apple`s stock is not cheap at all. It has the correct value.
Apple would be overvaluing it`s stock if they buy it.

 

[osaga]

Apple please keep your money, i like that you have it.

I'd rather see a damn hot sexy iphone 6 this year than a share repurchase program, iwatch, or an itv.

Your customers are feeling let down. We're still with you but common man, the iphone is your bread and butter. Give something to feel special about when we slap it down on the table at lunch with our friends. That just isn't the feeling we get anymore. Forget about major innovation just give us sex, and the rest will take care of itself.

 

[Speedy2]

Apple can never, ever, in a million years buy back the company. It doesn't work. Here's the extreme scenario: Imagine Apple has bought back every share, except one. The guy who owns that share _owns Apple_.

You can squeeze out shareholders.

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Unless of course they buy something like Yahoo.

Google has itself. Microsoft has Bing. And Apple?

There's no money in the search engine business for anyone else but Google. You would have to break up their monopoly first. An attempt would cost billions of $$ with entirely uncertain outcome.

Why on earth would Apple want to do that?
We all know that Apple isn't really good at services. MobileMe, Apple Maps etc come into mind.

Yahoo is failing and has an entirely different corporate culture, why would Apple want to buy them?

 

[MrDc2]

Apple needs to introduce something very quick in order to stop this continual slide of their stock. Everyday it seems they hit a new low including today.

Tim Cook said he was concerned about the stock price but did nothing more than say they had great stuff in the works.

Buffet is an amazing investor and Apple had all time sales increase but the market is looking for future growth and without a new product I just don't see it happening.

Google is at another all time high today for their stock and Apple is at another 52 week low today. Seems to be the norm for the last 6 months.

Not looking to invest in a tanking stock with nothing but rumors to look at for the future quarter.

They are not hitting new lows. Apple used to be traded at under twenty dollars a share. Right now the stock is falling victim to analysts and investors who are tailoring stories so that they could sell their stock and then devalue the stock and rebut in at a lower price, making % profit. Its just game

 

[HenryDJP]

He also said that they need to make an acquisition,something like Netflix. Now that would interesting and show a sign of life from Apple.

A company with over $130 billion in the bank is not indicative of lacking life.

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He's probably a reliable source of advice considering he's one of the richest people in the world

The 4th Richest to be exact. I wish I had his financial position.