Warren Buffett buys 'just a little' more Apple stock, warns against entering auto business...

Posted:
in AAPL Investors edited August 30
Thursday is Warren Buffett's 88th birthday, and to celebrate, the legendary investor sat down with media outlets to discuss investment strategy, including his position on Apple.

Warren Buffett


In an interview with CNBC, the "Oracle of Omaha" was asked about his recent interest in Apple, now Berkshire Hathaway's largest holding. A regulatory filing earlier this month revealed Buffett's investment firm owned nearly 252 million shares of Apple at the end of the second quarter, a sum that equates to five percent of the tech giant's shares outstanding.

About 6 million of Berkshire's Apple shares are attributable to "another fellow" in the firm, though most of the cache is in Buffett's portfolio, the investor said. And that position continues to grow.

"We bought just a little," Buffett said when asked if he bolstered his stake since the filing. "I bought just a little bit. I like to buy 'em cheaper."

He went on to detail why Apple and its flagship iPhone represent a solid investment that no longer ebbs and flows as part of a "boom and bust" cycle, a trajectory the company's stock once followed.

"I do not focus on the sales in the next quarter or the next year," Buffett said of iPhone. "I focus on the -- they won't tell you exactly how many -- but hundreds and hundreds and hundreds of millions of people who practically live their lives by it. And if you look at that little...piece of whatever it is, it's some the most valuable real estate in the world."

Speaking on iPhone pricing, specifically the $1,000 iPhone X, Buffett offered the example of his personal jet that costs him "maybe a million dollars a year." If Buffett used an iPhone, he would rather give up the plane than the Apple device due to the latter's inherent utility.

Buffett also let slip that he uses an iPad "a lot," a change in behavior for the investor that famously steered clear of Apple's -- and indeed most tech -- products. In May, for example, Buffett ">was gifted an iPhone X but failed to build up the courage to use it.

In a separate interview with Fox Business that also aired on Thursday, Buffett touched on analyst calls for Apple to buy electric car maker Tesla. The iPhone maker is known to be working on its own automotive initiative, "Project Titan," though a slew of roadblocks has slowed the secret program's pace significantly since its discovery in 2014.

Some analysts and investors have suggested that a Tesla acquisition would get Titan back on track. Buffett, however, said it would be a "very poor idea" to enter the automotive business.

"It's not an easy business," Buffett said. "You can win in auto one year and lose the next. You've got a dozen big companies out there with resources. They're going to keep coming. They're going to copy what you do."

Berkshire is familiar with the market, owning about 8 percent of Chinese electric car maker BYD. Coincidentally, BYD was among the many companies Apple approached when seeking manufacturing partnerships for its branded car project.

The financially embattled Tesla would appear a ripe target for Apple, at least on paper. The companies overlap in a number of areas and often vie for engineers. A report this month claims Apple has poached "scores" of Tesla employees in recent months, and not all went to Cupertino's car team.

Whether Apple plans to field its own consumer vehicle is unknown, though Project Titan's ranks are beginning to swell once again after a culling in 2016. Most recently, former hardware executive Doug Field returned from Tesla to reportedly work on the Titan team, now headed by Apple veteran Bob Mansfield.

Comments

  • Reply 1 of 17
    Apple would never buy Tesla. They have literally nothing technology wise that all other automakers have access to.

    Apple won’t enter the automotive business like Tesla (set up factories and built the cars themselves). They’ll partner with someone to build the car to their specifications. Just like Apple won’t build a semiconductor fab or make their own display panels.
    bshankRayz2016tmay
  • Reply 2 of 17
      
    There are probably a number of us who might buy an AppleMobile, just because we're into Apple and its quality.

    But I know car manufacturing is a difficult business. (Ask 'poor' and sleepy Elon.)

    I hope Tim keeps focused on what Apple does best.

     
  • Reply 3 of 17
    LukeCageLukeCage Posts: 159member
    Hmm it almost seems like The “Oracle of Omaha” has confidence in AAPL. Maybe Apple is not doomed. 
    edited August 30 JaiOh81
  • Reply 4 of 17
    dewmedewme Posts: 1,602member
    I’m with Buffett on this. Apple brings nothing to the table as long as Americans are perfectly happy buying massive SUVs and pickup trucks based on relatively crude 50 year old technology slathered with tens of thousands of infotainment amenities and luxury appointments. And massive grills. The current makers of these vehicles are filling the need quite nicely. Apple simply doesn’t have any domain expertise and knows nothing about massive grills, or 3 ton minimum vehicle weight, or passenger compartments that require a stepladder to access, or really huge dual exhaust pipes, or 10 speed automatic transmissions, 4 wheel drive, or dual 30 gallon fuel tanks. I won’t even mentionApple not knowing anything about dual turbochargers or 800 ft lb turbo diesels. 

    I’m only half joking here because I do question whether Apple is (potentially) looking to get into the automotive market because it feels the market is ripe for disruption or they are arrogantly deluding themselves into thinking they can translate their success with gadgets and software across a huge chasm to the automotive sector. Is it the electric vehicle angle that is enticing them? Trying to one-up Tesla?  Do they really want to burn down that cash hoard as quickly as humanly possible?

    I think Apple should double down on personal healthcare related hardware/software products and services and leave the automotive fantasies to the players with 100 years of experience. If they have an itch to move people around maybe start much much lower and at a personal scope of benefits to develop technology and products that addresses the wide range of mobility needs of people with motor disabilities. Disruption typically takes place from the bottom up and with modest first-steps, not with grand visions in huge spaces where the required breadth of domain expertise is immense. 
    edited August 30 dysamoriastevenoz
  • Reply 5 of 17
    nunzynunzy Posts: 654member
    Just like Apple, he knows how to rake in the moolah. He's a hero for people who want to be rich. Just like Apple.
    dysamoria
  • Reply 6 of 17
    Rayz2016Rayz2016 Posts: 4,017member
    dewme said:
    I’m with Buffett on this. Apple brings nothing to the table as long as Americans are perfectly happy buying massive SUVs and pickup trucks based on relatively crude 50 year old technology slathered with tens of thousands of infotainment amenities and luxury appointments. And massive grills. The current makers of these vehicles are filling the need quite nicely. Apple simply doesn’t have any domain expertise and knows nothing about massive grills, or 3 ton minimum vehicle weight, or passenger compartments that require a stepladder to access, or really huge dual exhaust pipes, or 10 speed automatic transmissions, 4 wheel drive, or dual 30 gallon fuel tanks. I won’t even mentionApple not knowing anything about dual turbochargers or 800 ft lb turbo diesels. 

    I’m only half joking here because I do question whether Apple is (potentially) looking to get into the automotive market because it feels the market is ripe for disruption or they are arrogantly deluding themselves into thinking they can translate their success with gadgets and software across a huge chasm to the automotive sector. Is it the electric vehicle angle that is enticing them? Trying to one-up Tesla?  Do they really want to burn down that cash hoard as quickly as humanly possible?

    I think Apple should double down on personal healthcare related hardware/software products and services and leave the automotive fantasies to the players with 100 years of experience. If they have an itch to move people around maybe start much much lower and at a personal scope of benefits to develop technology and products that addresses the wide range of mobility needs of people with motor disabilities. Disruption typically takes place from the bottom up and with modest first-steps, not with grand visions in huge spaces where the required breadth of domain expertise is immense. 
    If Apple had displayed this lack of courage and vision then they would never have come up with the iPhone. 

    Hell, if Apple had displayed this lack of courage and vision then they would have gone bust long ago. 


  • Reply 7 of 17
    SpamSandwichSpamSandwich Posts: 29,753member
    Do people realize Warren Buffet has a clear cut conflict of interest here?

    He should’ve kept his pie hole shut instead of trying to talk down Apple and cars when his large stake in BYD in China (which already makes electric cars) should tip off people his intentions aren’t exactly to “help” Apple steer clear of treading on his toes.

    In a related note, people may or may not be aware James Dyson, of Dyson vacuums, is also currently developing Dyson electric cars! Hopefully for him and for Dyson... they won’t suck.

    https://www.bloomberg.com/news/articles/2017-09-26/dyson-will-build-radically-different-electric-car-by-2020
    edited August 31 johnny mozzarellapatchythepiratetmay
  • Reply 8 of 17
    asciiascii Posts: 5,813member
    I love watching his interviews, and Charlie Munger too.  Car business is super competitive, but if Apple does their usual trick of sticking to the high end of the market where price isn't as much of a factor they should be ok.
  • Reply 9 of 17
    irelandireland Posts: 17,383member
    Buffet may own 5% of Apple, but he’s not going to stop them producing cars. He doesn’t use a smartphone and he’s trying to advise us on the future of the smart car market? He must be an oracle because no one can predict that one. Guess he’s only interested in buying stock in businesses who are clearly going to maintain their decent position in said market segment. Sometimes I wish all companies were private so the conversation could move on to interesting topics such as design. Either way, Apple and Tesla cultures are too different and it appears Apple have the sense to steer clear of an acquisition. Elon at Apple—no thanks.
    edited August 31
  • Reply 10 of 17
    MacProMacPro Posts: 17,512member
    I'm still feeling Apple is looking at a system they sell to car makers not being one ... I could be wrong, we'll see.  Meanwhile, I am glad Warren bought into APPL I am pretty sure he along with the buybacks are why we are looking at $225 at the moment.
    radarthekat
  • Reply 11 of 17
    dewmedewme Posts: 1,602member
    Rayz2016 said:
    dewme said:
    I’m with Buffett on this. Apple brings nothing to the table as long as Americans are perfectly happy buying massive SUVs and pickup trucks based on relatively crude 50 year old technology slathered with tens of thousands of infotainment amenities and luxury appointments. And massive grills. The current makers of these vehicles are filling the need quite nicely. Apple simply doesn’t have any domain expertise and knows nothing about massive grills, or 3 ton minimum vehicle weight, or passenger compartments that require a stepladder to access, or really huge dual exhaust pipes, or 10 speed automatic transmissions, 4 wheel drive, or dual 30 gallon fuel tanks. I won’t even mentionApple not knowing anything about dual turbochargers or 800 ft lb turbo diesels. 

    I’m only half joking here because I do question whether Apple is (potentially) looking to get into the automotive market because it feels the market is ripe for disruption or they are arrogantly deluding themselves into thinking they can translate their success with gadgets and software across a huge chasm to the automotive sector. Is it the electric vehicle angle that is enticing them? Trying to one-up Tesla?  Do they really want to burn down that cash hoard as quickly as humanly possible?

    I think Apple should double down on personal healthcare related hardware/software products and services and leave the automotive fantasies to the players with 100 years of experience. If they have an itch to move people around maybe start much much lower and at a personal scope of benefits to develop technology and products that addresses the wide range of mobility needs of people with motor disabilities. Disruption typically takes place from the bottom up and with modest first-steps, not with grand visions in huge spaces where the required breadth of domain expertise is immense. 
    If Apple had displayed this lack of courage and vision then they would never have come up with the iPhone. 

    Hell, if Apple had displayed this lack of courage and vision then they would have gone bust long ago. 


    This has nothing to do with courage. Apple's resurgence and success has largely been based on exploiting their core domain expertise in hardware, software, and the integration of their hardware/software with services. Apple has evolved in scope and grown by capturing more of the hardware, software, and services that are adjacent to and feed their core domain expertise, like content delivery devices, e.g., Apple TV, headphones, speakers, peripheral devices, home automation (weak effort so far), and so on. In the process of capturing adjacencies they expand their core. So everything Apple has done, or at least what I can think of in short order, involves adjacencies. What are the adjacencies for Apple to exploit with cars? Car Play? I guess if the primary function of cars was infotainment then their foray into that domain would be much more clear to me. The lack of a clear adjacency is what troubles me.  Instead it looks like they are simply chasing money rather than chasing a vision that has a clear path from where they are to where they want to be.    
  • Reply 12 of 17
    "It's not an easy business," Buffett said. "You can win in auto one year and lose the next. You've got a dozen big companies out there with resources. They're going to keep coming. They're going to copy what you do."


    Have we heard this on other products before?
    retrogustoradarthekat
  • Reply 13 of 17
    tmaytmay Posts: 2,994member
    dewme said:
    Rayz2016 said:
    dewme said:
    I’m with Buffett on this. Apple brings nothing to the table as long as Americans are perfectly happy buying massive SUVs and pickup trucks based on relatively crude 50 year old technology slathered with tens of thousands of infotainment amenities and luxury appointments. And massive grills. The current makers of these vehicles are filling the need quite nicely. Apple simply doesn’t have any domain expertise and knows nothing about massive grills, or 3 ton minimum vehicle weight, or passenger compartments that require a stepladder to access, or really huge dual exhaust pipes, or 10 speed automatic transmissions, 4 wheel drive, or dual 30 gallon fuel tanks. I won’t even mentionApple not knowing anything about dual turbochargers or 800 ft lb turbo diesels. 

    I’m only half joking here because I do question whether Apple is (potentially) looking to get into the automotive market because it feels the market is ripe for disruption or they are arrogantly deluding themselves into thinking they can translate their success with gadgets and software across a huge chasm to the automotive sector. Is it the electric vehicle angle that is enticing them? Trying to one-up Tesla?  Do they really want to burn down that cash hoard as quickly as humanly possible?

    I think Apple should double down on personal healthcare related hardware/software products and services and leave the automotive fantasies to the players with 100 years of experience. If they have an itch to move people around maybe start much much lower and at a personal scope of benefits to develop technology and products that addresses the wide range of mobility needs of people with motor disabilities. Disruption typically takes place from the bottom up and with modest first-steps, not with grand visions in huge spaces where the required breadth of domain expertise is immense. 
    If Apple had displayed this lack of courage and vision then they would never have come up with the iPhone. 

    Hell, if Apple had displayed this lack of courage and vision then they would have gone bust long ago. 


    This has nothing to do with courage. Apple's resurgence and success has largely been based on exploiting their core domain expertise in hardware, software, and the integration of their hardware/software with services. Apple has evolved in scope and grown by capturing more of the hardware, software, and services that are adjacent to and feed their core domain expertise, like content delivery devices, e.g., Apple TV, headphones, speakers, peripheral devices, home automation (weak effort so far), and so on. In the process of capturing adjacencies they expand their core. So everything Apple has done, or at least what I can think of in short order, involves adjacencies. What are the adjacencies for Apple to exploit with cars? Car Play? I guess if the primary function of cars was infotainment then their foray into that domain would be much more clear to me. The lack of a clear adjacency is what troubles me.  Instead it looks like they are simply chasing money rather than chasing a vision that has a clear path from where they are to where they want to be.    
    Your opinion is noted, but neither you, nor I, have a clue about "chasing a vision that has a clear path from where they are to where they want to be".

    I do suspect that Apple has a puck that they will be meeting at some point in the future with respect to transportation. I suspect it won't be vehicles targeted at consumers, even assuming that it will be a vehicle.

    My own opinion is that this is a great exercise in repurposing technologies that Apple is already developing for consumer products. Maybe it will fail, but either way, it isn't a BFD to lose a week's worth of its yearly cash pile even as an exercise in futility.

    edited September 1
  • Reply 14 of 17
    tmaytmay Posts: 2,994member

    dewme said:
    Rayz2016 said:
    dewme said:
    I’m with Buffett on this. Apple brings nothing to the table as long as Americans are perfectly happy buying massive SUVs and pickup trucks based on relatively crude 50 year old technology slathered with tens of thousands of infotainment amenities and luxury appointments. And massive grills. The current makers of these vehicles are filling the need quite nicely. Apple simply doesn’t have any domain expertise and knows nothing about massive grills, or 3 ton minimum vehicle weight, or passenger compartments that require a stepladder to access, or really huge dual exhaust pipes, or 10 speed automatic transmissions, 4 wheel drive, or dual 30 gallon fuel tanks. I won’t even mentionApple not knowing anything about dual turbochargers or 800 ft lb turbo diesels. 

    I’m only half joking here because I do question whether Apple is (potentially) looking to get into the automotive market because it feels the market is ripe for disruption or they are arrogantly deluding themselves into thinking they can translate their success with gadgets and software across a huge chasm to the automotive sector. Is it the electric vehicle angle that is enticing them? Trying to one-up Tesla?  Do they really want to burn down that cash hoard as quickly as humanly possible?

    I think Apple should double down on personal healthcare related hardware/software products and services and leave the automotive fantasies to the players with 100 years of experience. If they have an itch to move people around maybe start much much lower and at a personal scope of benefits to develop technology and products that addresses the wide range of mobility needs of people with motor disabilities. Disruption typically takes place from the bottom up and with modest first-steps, not with grand visions in huge spaces where the required breadth of domain expertise is immense. 
    If Apple had displayed this lack of courage and vision then they would never have come up with the iPhone. 

    Hell, if Apple had displayed this lack of courage and vision then they would have gone bust long ago. 


    This has nothing to do with courage. Apple's resurgence and success has largely been based on exploiting their core domain expertise in hardware, software, and the integration of their hardware/software with services. Apple has evolved in scope and grown by capturing more of the hardware, software, and services that are adjacent to and feed their core domain expertise, like content delivery devices, e.g., Apple TV, headphones, speakers, peripheral devices, home automation (weak effort so far), and so on. In the process of capturing adjacencies they expand their core. So everything Apple has done, or at least what I can think of in short order, involves adjacencies. What are the adjacencies for Apple to exploit with cars? Car Play? I guess if the primary function of cars was infotainment then their foray into that domain would be much more clear to me. The lack of a clear adjacency is what troubles me.  Instead it looks like they are simply chasing money rather than chasing a vision that has a clear path from where they are to where they want to be.    
    I'm good with "expanding their core domains"; something that has been going on since the creation of Apple. 
  • Reply 15 of 17
    asciiascii Posts: 5,813member
    ireland said:
    Elon at Apple—no thanks.
    Elon wouldn't want to work at Apple. His opinion is that there is already too high of a percentage of smart people working in IT, and more need to be working in manufacturing, space, autos etc. These things have now become the low hanging fruit.
  • Reply 16 of 17
    radarthekatradarthekat Posts: 2,525moderator
    dewme said:
    I’m with Buffett on this. Apple brings nothing to the table as long as Americans are perfectly happy buying massive SUVs and pickup trucks based on relatively crude 50 year old technology slathered with tens of thousands of infotainment amenities and luxury appointments. And massive grills. The current makers of these vehicles are filling the need quite nicely. Apple simply doesn’t have any domain expertise and knows nothing about massive grills, or 3 ton minimum vehicle weight, or passenger compartments that require a stepladder to access, or really huge dual exhaust pipes, or 10 speed automatic transmissions, 4 wheel drive, or dual 30 gallon fuel tanks. I won’t even mentionApple not knowing anything about dual turbochargers or 800 ft lb turbo diesels. 

    I’m only half joking here because I do question whether Apple is (potentially) looking to get into the automotive market because it feels the market is ripe for disruption or they are arrogantly deluding themselves into thinking they can translate their success with gadgets and software across a huge chasm to the automotive sector. Is it the electric vehicle angle that is enticing them? Trying to one-up Tesla?  Do they really want to burn down that cash hoard as quickly as humanly possible?

    I think Apple should double down on personal healthcare related hardware/software products and services and leave the automotive fantasies to the players with 100 years of experience. If they have an itch to move people around maybe start much much lower and at a personal scope of benefits to develop technology and products that addresses the wide range of mobility needs of people with motor disabilities. Disruption typically takes place from the bottom up and with modest first-steps, not with grand visions in huge spaces where the required breadth of domain expertise is immense. 
    It’s not the automobile that will be disrupted, with some new way to design the experience we get from current vehicles.   It’s the whole notion of transportation that Apple, or someone, will rethink.  Easy access to transportation as a utility, with some company (I hope Apple) tying it all together to dispatch the right vehicle to efficiently and swiftly meet each request, with us all using our phones or watches to do the requesting or scheduling of our transportation needs, effortlessly, while Apple’s servers and software handle match those requests to a dynamic and ever on the go fleet of vehicles owned by any number of agents.  A super-Uber, with each vehicle needing only to plug into the Apple dispatch system with a host of parameters and attributes (location, fuel/charge level remaining, current duty status, distance to nearest depot for servicing/recharging, etc.) then the global dispatch system can allocate vehicles to requests, allowing each vehicle to manage mapping and driving (human or automated) to collect and deliver passengers.  Accidents are the problem of the vehicles, not the dispatch system.  Let Apple tie it all together without having to deal with the liabilities.  That’s my vision, anyway.  CarPlay is the Trojan horse to get Apple plugged in with all the car manufacturers.  
    edited September 1
  • Reply 17 of 17
    herbapouherbapou Posts: 2,207member
    From my understanding,  Apple is focussing on making chips for the cars, I dont think they will go into making actual cars.
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