Steve Jobs says Apple must 'think big' with $40 billion in cash
Apple co-founder Steve Jobs told investors at Thursday's shareholder meeting that his company's massive war chest of $40 billion gives it security and flexibility, but while a stock buy-back won't drive up AAPL shares, making big and bold moves will.
The CEO did not, however, indicate how Apple intends to use its stockpile of cash and securities. According to Reuters, Jobs told investors that he believed putting the money into a dividend or share buyback would not influence the price of AAPL stock. The meeting was held Thursday at Apple's corporate campus in Cupertino, Calif.
Instead, Jobs reportedly said Apple must "think big" in order to move its stock price higher.
In addition, Bloomberg reported that Jobs said Apple is holding on to its cash for "big, bold" risks. Apple revealed in its first quarter 2010 investor conference call that it had accrued $39.8 billion in cash by the end of the December quarter.
A year ago, Jobs was absent from the annual shareholder meeting due to health issues. He eventually returned to work at Apple in June, after a successful liver transplant.
Philip Elmer-DeWitt of Fortune Brainstorm Tech noted from Thursday's shareholder meeting that Jobs looked good, answered a majority of the shareholders' questions, and was "feisty" and funny. When one person asked what keeps Jobs awake at night, he responded: "Shareholder meetings."
A question regarding iPhone exclusivity with AT&T in the U.S. was also reportedly shot down without comment. Avon CEO Andrea Jung, the new co-lead director of the Apple Board of Directors, joked that Tipper Gore, wife of board member and former U.S. Vice President Al Gore, should join them on the board to expand the female presence.
Shareholders also voted down proposed environmental measures that were intended to make the company do more to analyze its impact on the environment. The two plans would have had Apple do thorough annual reports and form a committee to focus on environmental sustainability.
The CEO did not, however, indicate how Apple intends to use its stockpile of cash and securities. According to Reuters, Jobs told investors that he believed putting the money into a dividend or share buyback would not influence the price of AAPL stock. The meeting was held Thursday at Apple's corporate campus in Cupertino, Calif.
Instead, Jobs reportedly said Apple must "think big" in order to move its stock price higher.
In addition, Bloomberg reported that Jobs said Apple is holding on to its cash for "big, bold" risks. Apple revealed in its first quarter 2010 investor conference call that it had accrued $39.8 billion in cash by the end of the December quarter.
A year ago, Jobs was absent from the annual shareholder meeting due to health issues. He eventually returned to work at Apple in June, after a successful liver transplant.
Philip Elmer-DeWitt of Fortune Brainstorm Tech noted from Thursday's shareholder meeting that Jobs looked good, answered a majority of the shareholders' questions, and was "feisty" and funny. When one person asked what keeps Jobs awake at night, he responded: "Shareholder meetings."
A question regarding iPhone exclusivity with AT&T in the U.S. was also reportedly shot down without comment. Avon CEO Andrea Jung, the new co-lead director of the Apple Board of Directors, joked that Tipper Gore, wife of board member and former U.S. Vice President Al Gore, should join them on the board to expand the female presence.
Shareholders also voted down proposed environmental measures that were intended to make the company do more to analyze its impact on the environment. The two plans would have had Apple do thorough annual reports and form a committee to focus on environmental sustainability.
Comments
I'm thinking of buying a small developing nation and making myself god emperor....
Something like the Sudan, Luxembourg or Slovinia... [three random countires with a GDP LESS than 40 Billion...] :-)
Steve and Apple management, would you take a couple of years off and run the country?? Please
Right?
Luckily only a small minority of shareholders want a huge dividend, but it bothers me that anybody makes noise about it. Which would deliver more long-term profit: you or I investing our tiny share of that 40 billion in something other than Apple, or letting Apple invest it in itself?
With my tech stock I don't want dividends. This market segment is so fickle you need to have the cash on hand to but billion in NAND for the quarter or by a company when needed. $40B isn't that much money when you consider what a few bad quarters can do. That segment is too fickle.
Just don't keep all of the cash in a Bank of America checking account. You are only insured up to $250,000.
This being BoA, they probably have a $39 fee for every dollar you are over $250,000.
1. Buy Netflix. Netflix is worth less than $3.5B and is a profitable company. This is the way to turn AppleTV from a hobby to an industry leading product.
2. Get into content distribution business by buying one or more content distribution companies.
3. Buy Adobe, though Adobe is nearly worth $18B and has a very high P/E ratio. This would settle any problems with flash and mobile MacOS devices once and for all. Apple ends up with a set of duplicate products on the CS side, but that can be fixed over time...
4. Buy Palm to consolidate the smart phone market. Palm is worth pocket change ($1B)
5. Buy Disney? Or another large media corporation like Liberty?
One has to wonder: Why do others have such a tough time replicating this? There is so much talent with the money out there in the tech world that could be creating more value for their investors.
Ideas for Apple acquisitions:
1. Buy Netflix. Netflix is worth less than $3.5B and is a profitable company. This is the way to turn AppleTV from a hobby to an industry leading product.
2. Get into content distribution business by buying one or more content distribution companies.
3. Buy Adobe, though Adobe is nearly worht $18B and has a very high P/E ration. This would settle any problems with flash and mobile MacOS devices once and for all.
4. Buy Palm to consolidate the smart phone market. Palm is worth pocket change ($1B)
5. Buy Disney? Or another large media corporation like Liberty?
All unwise, unnecessary, or unfocused.
1. There is **nothing** that Netflix brings to the table that Apple couldn't replicate today, if it wanted to.
2. Attempts to marry content by hardware/software companies have invariably ended in disaster (e.g., Sony). Moreover, content is a slow-growth business.
3. See (1) above.
4. See (1) above. Also, could raise antitrust eyebrows.
5. See (2) above.
Just steadily plowing along, with their eyes clearly focused on the ball.
One has to wonder: Why do others have such a tough time replicating this? There is so much talent with the money out there in the tech world that could be creating more value for their investors.
Have you dealt with many C level people (CEO, CIO, etc)?
They all believe that they have the 'vision' and the ability to make something workable and want to leave their mark on the company.
Jobs has this trait in spades, but he is also focused enough to avoid some of the pitfalls [Dells PDAs and/or Phone? Gateway Computers 'Country Stores'? etc.]
Ideas for Apple acquisitions:
1. Buy Netflix. Netflix is worth less than $3.5B and is a profitable company. This is the way to turn AppleTV from a hobby to an industry leading product.
2. Get into content distribution business by buying one or more content distribution companies.
3. Buy Adobe, though Adobe is nearly worth $18B and has a very high P/E ratio. This would settle any problems with flash and mobile MacOS devices once and for all. Apple ends up with a set of duplicate products on the CS side, but that can be fixed over time...
4. Buy Palm to consolidate the smart phone market. Palm is worth pocket change ($1B)
5. Buy Disney? Or another large media corporation like Liberty?
Jobs is the largest disney share holder, he owns more than 7% of DIS. Buy Disney would allow Apple to re-invent the TV and media business. F**K the cable guys. Disney's market cap is about 60bn, Apple can buy with 50% cash (~30bn) and 50% in Apple stock.
Just steadily plowing along, with their eyes clearly focused on the ball.
One has to wonder: Why do others have such a tough time replicating this? There is so much talent with the money out there in the tech world that could be creating more value for their investors.
Why is it so tough? Because it require focus. Apple's entire line of products could fit on one table in the cafeteria. Name any other tech company of significant size that can say that! Apple could explode and offer a thousand different products, but they would then lose focus on what matters. Awesome products.
Luckily only a small minority of shareholders want a huge dividend, but it bothers me that anybody makes noise about it. Which would deliver more long-term profit: you or I investing our tiny share of that 40 billion in something other than Apple, or letting Apple invest it in itself?
So, Steve, what are you going to do with that $40 Billion war chest that Apple has...
I'm thinking of buying a small developing nation and making myself god emperor....
Something like the Sudan, Luxembourg or Slovinia... [three random countires with a GDP LESS than 40 Billion...] :-)
Lux for stability, the others for growth potential, if you clean up the place, you might really have something. Don't know how that would work though.
When you buy a company (or hypothetically, a country), you don't buy it for the amount they took in last year, you generally buy it for many times that. For example, Apple's market capitalization is roughly four times last year's revenue.
Just don't keep all of the cash in a Bank of America checking account. You are only insured up to $250,000.
I think it's all invested in some form or another. It's not like they'd keep it all in savings account, those can't hope to keep up with inflation.
Ideas for Apple acquisitions:
1. Buy Netflix. Netflix is worth less than $3.5B and is a profitable company. This is the way to turn AppleTV from a hobby to an industry leading product.
I was thinking about that, but the glory of Netflix is it's neutrality. Steve Jobs is Disney's largest shareholder and creates a lot of content, which conflicts with other content creators.
If Apple bought Netflix, I'm sure the other content creators would pull their content.
3. Buy Adobe, though Adobe is nearly worth $18B and has a very high P/E ratio. This would settle any problems with flash and mobile MacOS devices once and for all. Apple ends up with a set of duplicate products on the CS side, but that can be fixed over time...
Apple could create a better Photoshop and CS than Adobe ever could, but buying them would eliminate the competition. I don't think Apple cares so much about the business market, the consumer market is much bigger according to what Phil says.
4. Buy Palm to consolidate the smart phone market. Palm is worth pocket change ($1B)
Charity case is all it is.
5. Buy Disney? Or another large media corporation like Liberty?
Steve already owns more of Disney than anyone. What a conflict that would cause if Apple bought the rest.
Ha, $40 billion and they can't spend anything to see what Apple's impact on the environment is? That's not very green of them.
Apple already spends a lot on monitoring its environmental impact. They are the only company I've heard of that figures out its carbon footprint by including its manufacturing and its office and retail operations.
These latest shareholder resolutions were not well thought out, and didn't seem positive to me. I usually vote for environmentally-conscious shareholder resolutions, but I voted against these.
Ha, $40 billion and they can't spend anything to see what Apple's impact on the environment is? That's not very green of them.
Apple s spending a fair amount on this now. They've got programs in place for this, as well as making sure their products are environmentally sound.
What they don't want is a mandated situation in which they would be constrained to do certain things that might not be good for the long term. From my own experiences, I can say that management dislikes having restraints put on them which limits their flexibility.
Jobs is the largest disney share holder, he owns more than 7% of DIS. Buy Disney would allow Apple to re-invent the TV and media business. F**K the cable guys. Disney's market cap is about 60bn, Apple can buy with 50% cash (~30bn) and 50% in Apple stock.
Then there is no need to buy it. Jobs can make all the inroads he needs to benefit both companies without resorting to killing Apple's stock price, losing any cushion they had for future endeavors the decade after that, likely bullocking both companies in the process.
The reason Jobs is so effective is by having a keen focus, not trying to buy companies to prove a point or settle a vendetta.
PS: Recall what happened to Yahoo when it was rumoured MS was going to buy them. The stock price skyrockets, thus making the MarketCap even higher, which makes the projected cost even higher.