Hedge fund manager David Einhorn sues Apple over $137B cash hoard

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  • Reply 81 of 169

    Quote:

    Originally Posted by jungmark View Post


    yes but I don't want Apple to spend money just to spend money. In addition, how may multi $billion companies are for sale?



    Agree wholeheartedly.


     


    There are even fewer -- perhaps zero -- multibillion dollar companies that are undervalued and from which Apple can create significant synergies.

  • Reply 82 of 169
    focherfocher Posts: 687member

    Quote:

    Originally Posted by sog35 View Post


     


    Apple has a fiduciary responsibility to protect the Apple brand and stock price.  When baseless 'reports' come out about crashing demand Apple needs to speak up.  Cook spoke about it in the earnings call but it was already to late.


     


    Apple has almost $150 Billion and are doing NOTHING with it.  The cost of doing nothing with the money is a 8-10% loss every year.  There is no reason Apple needs to hoard so much cash.  They need to return some of it to investors, make an acquisition, or at least tell investors what they plan to do in the future.



     


    Apple has NO fiduciary duty to "protect stock price". First, a fiduciary duty is a specific legal obligation and they would need to have control over the stock price before that duty could even start to arise. Second, there is a huge myth in this world that a company has a duty to focus on shareholder value. That claim only arose in the 1970s and has been a terrible change to business that create real goods and services. It is the root cause of the short term decision making that has destroyed many companies. The real obligation of a company is to obtain new customers and retain its existing ones by creating and selling a compelling product. That is the absolute best way to create long term shareholder value. Of course, for a hedge fund that is looking to increase the short term valuations of their funds, the long term approach doesn't match up. And that leads to the kind of crap that you and Einhorn focus on.


     


    One more thing, do you really think Apple just has that cash sitting in a bank account? It has short term investments that are liquid, but earn a return.

  • Reply 83 of 169
    " So if Einhorn can persuade the shareholder majority, or whatever the company rules of incorporation define, to do anything, then that's the way the ball will roll. Thats the capitalist system."

    That's all and good, but this young punk 1-percenter and his horde only showed up a couple of years ago, and this article makes it pretty clear that he's NOT trying to work with the shareholders as a whole but is instead trying to use our tax money to get the courts to do it for him. I know that his fund has a lot of money invested, but not so much in the larger scheme of Apple's total finances. If someone was to go out on the street, buy 1 share of Apple stock, then pursue an agenda through the courts because they cannot persuade the majority of stockholders, they would be met with snorts of derision. This doesn't sound very different.

    "Capital trolls" sounds like a pretty apt description.
  • Reply 84 of 169

    Quote:

    Originally Posted by Gatorguy View Post


    Apple themselves have one of largest ones, Braeburn Capital.



    Now, this is typical of the misinformation you post about Apple. (i) Braeburn is not a 'hedge fund' (look up what that phrase means); (ii) It is fundamentally an asset management business with a primary focus on managing tax savings from Apple's cash; (iii) Apple generated interest income of about a billion dollars for all of 2012, on an average cash base of about $100B, i.e., ~1% return -- does that look like a hedge fund to you?

  • Reply 85 of 169
    apple ][apple ][ Posts: 9,233member

    Quote:

    Originally Posted by jungmark View Post





    How would apple address these problems. They don't comment on rumors. Should they confirm or deny them? If so then the media will keep playing 20 Qs.


    I agree that Apple shouldn't be commenting on rumors. There are countless dumb rumors every day, and it would obviously be foolish for Apple to start getting involved in every dumb rumor about Apple.


     


    I was just thinking that Apple should try to figure out a way to change the narrative, to control it. Exactly how is the $20,000 question. 

  • Reply 86 of 169
    jungmarkjungmark Posts: 6,926member
    sog35 wrote: »
    The problem is this:

    $150 Billion in cash and short term investments.
    $40-$50 EACH YEAR from operations
    $15 Billion each year in buybacks and dividends

    So how much cash does Apple need?  Isn't $150B enought?  At this rate they will increasing their cash pile by 25-35 billion each year.  And why?  To earn 1% interest? They need to either increase the dividend or make it clear that acquisitions are coming (they don't need to say who or what).  If not it makes Apple look like they don't give a crap about the investors.  And that's one reason why the stock is stalling.

    You must be naive if you think it's all cash in a saving account. They invest it or Tim Cook swims in a vault of gold coins.

    No company announces it is acquiring companies until the deal is made. Why should Apple be any different?

    If you can't handle Apple's secrecy, get out and stop whining.
  • Reply 87 of 169

    Quote:

    Originally Posted by focher View Post


     


    Second, there is a huge myth in this world that a company has a duty to focus on shareholder value. That claim only arose in the 1970s and has been a terrible change to business ..... etc etc.



    You need to brush up a bit about the history of corporate governance in the US.


     


    For starters, please do a search for the following three phrases: (i) Michigan Supreme Court Dodge v. Ford; (ii) MBCA; (iii) ALI Principles of Corporate Governance Section 2.01.

  • Reply 88 of 169
    jungmarkjungmark Posts: 6,926member
    sog35 wrote: »

    1% return on $100 Billion is a disgrace.  Apple shareholders should be appauled at this lack of capital management.

    Apple needs to do something in Feb meeting. Increase the dividend, buyback, or at least make it know they are looking for major acquisitions.  Doing nothing is losing money.  It sucks to have a 1% return on capital.

    Also just from free cash flow Apple gets $35-$40 billion a year.  A big chunk of that money should be returned to the investor.  $150B is enough for an emergency. PERIOD.

    How dare Apple have the most profitable calendar year in human history. How dare Apple keeps selling record amounts if iDevices. How is a larger dividend going to make Apple better?
  • Reply 89 of 169

    Quote:

    Originally Posted by sog35 View Post




    Make threats in private or totally humilate writers who are spreading lies.  Other companies do it all the time.  It's business and its ugly.  Its the game, Apple needs to play it.



    Not in a million years. Companies get badly burnt by silly strategies like this.


     


    Arguably, something like this was beginning of the end for HP (see, e.g., http://www.nbcnews.com/id/14721854/ns/business-us_business/t/hp-investigators-hacked-reporters-phone-data/#.URP60qV3yfQ).

  • Reply 90 of 169
    dasanman69dasanman69 Posts: 13,002member
    sog35 wrote: »
    You are naive.  The $130 billion is in cash and very liquid investments which can easily be converted to cash.  They are only making a 1% return on that huge cash pile which is a joke.

    Apple does not need to say who/what they are acquiring.  They just need to make it clear that that's what they are reserving the cash pile for.

    I have a right to whine because I'm an owner of Apple.  So you are telling me when you own a business and things are not going the way you want it you just quit?

    1% on $130 billion is $1.3 billion which is not a joke in anyone's book.
  • Reply 90 of 169
    jungmarkjungmark Posts: 6,926member
    sog35 wrote: »


    The biggest problem to me is this:  All the negative talk on the news about Apple dying can have a negative impact on the brand image.  When people on CNBC say Apple is struggling don't you think the consumer may think the brand is hurting to? 

    You can fight stupid analysts with facts. That's what they do when they release earnings. They don't control the media.
    sog35 wrote: »
    You are naive.  The $130 billion is in cash and very liquid investments which can easily be converted to cash.  They are only making a 1% return on that huge cash pile which is a joke.

    Apple does not need to say who/what they are acquiring.  They just need to make it clear that that's what they are reserving the cash pile for.

    I have a right to whine because I'm an owner of Apple.  So you are telling me when you own a business and things are not going the way you want it you just quit?
    Apple doesn't need to announce anything until the deals are done. How much do you have in your bank account. I think you should announce specifics of what you're going to do with your money.

    You don't own Apple. You own stock. You didn't put any hard work into the biz. You probably have less than 0.000001% as a stakeholder.
  • Reply 92 of 169
    gatorguygatorguy Posts: 23,945member

    Quote:

    Originally Posted by anantksundaram View Post


    Now, this is typical of the misinformation you post about Apple. (i) Braeburn is not a 'hedge fund' (look up what that phrase means); (ii) It is fundamentally an asset management business with a primary focus on managing tax savings from Apple's cash; (iii) Apple generated interest income of about a billion dollars for all of 2012, on an average cash base of about $100B, i.e., ~1% return -- does that look like a hedge fund to you?



    It looks like a hedge fund to the article's author. (No relationship by the way before you ask if he's my cousinimage)


     


    There's some additional background on Braeburn here for those curious:


    http://www.zerohedge.com/news/2012-09-30/presenting-worlds-biggest-hedge-fund-you-have-never-heard

  • Reply 93 of 169
    apple ][apple ][ Posts: 9,233member

    Quote:

    Originally Posted by dasanman69 View Post





    1% on $130 billion is $1.3 billion which is not a joke in anyone's book.


    I think that a 1% return is a joke. And investors obviously aren't impressed by $1.3 Billion. I'm not. If a more than $130 Billion cash pile is not doing the stock any good, then what's another Billion or so?


     


    Any bum can sign up for Ally bank and deposit a buck and get almost a 1% return.

  • Reply 94 of 169
    jeffdmjeffdm Posts: 12,951member
    sog35 wrote: »
    You are naive.  The $130 billion is in cash and very liquid investments which can easily be converted to cash.  They are only making a 1% return on that huge cash pile which is a joke.

    No.

    Be realistic.

    http://usatoday30.usatoday.com/money/perfi/columnist/krantz/2011-08-09-apple-cash_n.htm

    The cash and cash equivalents is roughly 10% of the publicly claimed cash numbers.
  • Reply 95 of 169
    Apple wouldn't have this "cash problem" if it spent some of that money on US production facilities and other investments in the US.
  • Reply 96 of 169


    Originally Posted by sog35 View Post

    The problem is this:


     


    $150 Billion in cash and short term investments.


    $40-$50 EACH YEAR from operations


    $15 Billion each year in buybacks and dividends


     


    So how much cash does Apple need?  Isn't $150B enought?  At this rate they will increasing their cash pile by 25-35 billion each year.  And why?  To earn 1% interest?



     


    People complaining about a for-profit company having "enough" cash. Claiming this is a "problem". That's hilarious.


     


    You want to know their plan for it? Their plan is to never be anywhere near bankruptcy again, ever, until society changes enough to no longer require money. Their plan is to have multiple centuries worth of financial security for their company and its employees. Their plan is to always have on hand enough money to do whatever they want to do whenever they want to do it. To be able to respond to any change in the market, and to have the financial security to return to not only their feet, but a running pace, if they ever screw up. To be able to purchase any patents, companies, or other resources when opportune. To be able to invest in manufacturing plants and third-party companies for components.






    Originally Posted by Apple IIc

    Apple wouldn't have this "cash problem" if it spent some of that money on US production facilities and other investments in the US.


     



    http://appleinsider.com/articles/12/07/19/made_in_america_apples_supply_chain_increasing_us_production


    http://appleinsider.com/articles/12/12/06/foxconn-seeks-expansion-to-us-as-apple-gears-up-for-made-in-america-macs


    http://appleinsider.com/articles/12/12/26/rumor-apple-to-build-mac-mini-in-us-starting-next-year

  • Reply 97 of 169
    gatorguygatorguy Posts: 23,945member

    Quote:

    Originally Posted by JeffDM View Post





    No.



    Be realistic.



    http://usatoday30.usatoday.com/money/perfi/columnist/krantz/2011-08-09-apple-cash_n.htm



    The cash and cash equivalents is roughly 10% of the publicly claimed cash numbers.


    The latest breakdown is here:


    http://seekingalpha.com/article/1159991-is-apple-s-secret-hedge-fund-prepping-for-a-dividend-boost?source=google_news

  • Reply 98 of 169

    Quote:

    Originally Posted by RS9 View Post



    Not too long ago Bill Gates and Steve Jobs told Congress, we need to allow more immigration because Americans lacked technology skills. Why not use some of this "cash horde" and offer scholarships and internships so we can teach these important skills?


     


    Well, there are already plenty of scholarship/grants (jobs upon graduation) for those who want to study math/science/engineering now, but many Americans still shy away from hard subjects.

  • Reply 99 of 169

    Quote:

    Originally Posted by sog35 View Post


     


    Apple has a fiduciary responsibility to protect the Apple brand and stock price.  When baseless 'reports' come out about crashing demand Apple needs to speak up.  Cook spoke about it in the earnings call but it was already to late.


     


    Apple has almost $150 Billion and are doing NOTHING with it.  The cost of doing nothing with the money is a 8-10% loss every year.  There is no reason Apple needs to hoard so much cash.  They need to return some of it to investors, make an acquisition, or at least tell investors what they plan to do in the future.



     


    Apple has no obligation to carry out any actions as you've described.


     


    Frankly, I'd buy back Einhorn's shares at the current market value and "fire" him as a stockholder.

  • Reply 100 of 169
    frankiefrankie Posts: 381member
    Sounds like another wall street douchabag to me.

    By the way apple pay your taxes like the rest of us.
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