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Comment by bydo | Hacker News Reader

Bad press, but good riddance. I can't imagine Apple has much use for out-of-touch "activist" investors clamoring for short term growth and dividends while complaining about their lack of "innovative" new products like … television sets.

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> out-of-touch "activist" investors clamoring for short term growth and dividends

The company has 230 billion in the bank, they can surely remunerate their investors. OR invest in their own company more, quality is down over the past 5 years, they can invest in more engineers. The hardware lives extremely lengthy update cycles (on average 3 years? MacBook?) There is a lot they can do with their capital that will provide them with long term growth. Products like the Apple Watch wont do it.

"Apple's board of directors authorized the buyback on "strong" results, setting a repurchase authorization at $175 billion, up from $140 billion announced last year. Combined with past returns, the company plans to dish out a total of $250 billion to shareholders by the end of March 2018." It sounds like they are remunerating their shareholders.

I would imagine investors would prefer dividends to having their shares bought back, no?

They also give those.

Dividends are taxed, stock buybacks are not, so if the company repurchases shares at reasonable prices (often not the case, imho) repurchases are more advantageous.

(Stock buybacks are not forced, the company purchased them from people wanting to sell)

> OR invest in their own company more, quality is down over the past 5 years, they can invest in more engineers.

And if you want a baby faster then get nine women so you can have a baby in a month

> OR invest in their own company more, quality is down over the past 5 years

Sure, and that would be a great use of their money, but that's not the kind of "reinvestment" Icahn is clamoring for.

This

"Activist investors" are essentially parasites, as they are only interested in short-term profit

They may be, but the stock price benefits of the activism persist after they leave. [0] The shareholders (many of whom are employees) do benefit from their activity.

For every case of an out-of-touch activist damaging a great company, I see many more companies where the management is looting the value at the expense of the owners.

[0] http://www.columbia.edu/~wj2006/HF_LTEffects.pdf

The paper looks interesting; thanks for sharing the link!

I think curious the headline reads like he just dumped his 53 million shares overnight. It's not like the company is dead, he just doesn't see growth.

Good riddance indeed. Icahn is the kind of guy who you throw a going away party for after he leaves.

Ultimately what is Apple going to do with that 230 billion? Sitting on a hoard of cash is no benefit to the company or investors.

It isn't generating cashflow, but it can still be benefiting the company as a risk buffer. Cash to live through downturns, or purchasing new companies, or financing capital outlays for the production logistics which would be impossible for other companies.

That last one can be huge - if none else can build certain components for the same cost/volume as Apple then that's a key competitive advantage.

I wonder what would happen if Apple opened a public venture capital company, that also offers help. Wouldn't any company in the relevant areas prefer to come to them first ?

Is there interest they could earn on that cash?

> Ultimately what is Apple going to do with that 230 billion?

Break into a capital intensive industry.

Apple bank.

I think this is more likely to happen than not. With all of their cards on Apple Pay I can see them turning the banking industry on its head, which wouldn't be a bad thing. Have you been to a "real" bank lately? My local PNC branch generally has 2 tellers and a 3rd "greeter", even when the line is 10 people deep.

Then there are things like charging for deposit slips and other necessary forms, and their online presence is terrible. I can't pay bills between 2AM - 7AM because: the system is down, or my loan balance is $0, or isn't in US funds anymore. WFT?! And the security is laughable (at least for a bank). When will they incorporate MFA? I think this is where Apple could really shake up the world, just like they did with cell phones and GUI computers before then.

Making cars is a capital intensive industry.

Not necessarily. Some part of car manufacturing is capital intensive but electric vehicles are far easier to make than gas ones and a lot of the parts that go into any car, no matter what brand, are usually bought to third party suppliers.

Go private.

That makes no sense. Apple management is going to buy out stockholders with their own money?

When you take a company private you have to bring in money from the outside, either using investor groups or borrowing.

Why not? If Apple's management and investors believe that the market is not pricing AAPL fairly, it makes perfect sense to go private.

Yes, but they can't do it with money that belongs to Apple, because the shareholders, i.e. the people that need to be bought out, already own that money.

They could just do buybacks until no one else has any shares left? http://seekingalpha.com/article/1725412-buyback-apple-could-...

Not true. A company can definitely take itself private by using its own money. It's already happening when a company is buying back its shares. i.e. reduction in equity by using cash, one on each side of the balance sheet. The shares are then entered on the books as treasury shares.

So the last guy to own a share owns the company?

That's not how it works.

Charlie Stross submitted[0] a link to a post on his blog[1] touching on this last month.

[0] https://news.ycombinator.com/item?id=11373605

[1] http://www.antipope.org/charlie/blog-static/2016/03/follow-t...

Despite their current dominance, Apple knows that downward swings of fate come fast and hard in the tech industry. Consider that 10 years ago, the biggest names in mobile were Palm, Nokia and Blackberry, and now they're either gone or hollow shells. You can think farther back and find plenty more examples of unassailable kings who went bust in a hurry. Then compare that to e.g. Microsoft, who at one point looked doomed but managed to get relevant again by using their huge cash pile to break into a capital-intensive business, which they wouldn't've been able to do without it.

I imagine in this sector more than most there's a strong temptation to amass a huge safety net so you can ride out getting "disrupted". As a leftist Keynesian I don't particularly like it-- seeing all that money sitting there doing nothing drives me crazy-- but I understand the motivation.

In the big scheme of things all that money are not "sitting there doing nothing". They are probably invested in some short term bonds and therefore they make some other capital expenditures possible somewhere in the overall economy.

Where exactly is it sitting? Most money which is "saved" finds way back into the economy via fractional reserve lending by banks where it is stored. It's very hard to just make money "sit" somewhere these days when financial institutions all compete to lend and invest money.

Seems like Apple's money is invested in a diverse portfolio of equity markets: http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b...

> so you can ride out getting "disrupted"

They do get disrupted. By themselves

If Apple manages to continue to do that, then they will go on

Why do you save money?

Their products are becoming commoditized, and other companies are selling similar products cheaper, and with faster turnaround than Apple.

This doesn't mean that Apple won't remain on or near the top of the heap when it comes to hardware, but it means that the era of explosive growth is likely over.

Over time, the price of all technology races toward zero. Unless APPL has a battery that can last for an entire week, or is first to market with an affordable car that can drive itself, it cannot sustain the levels of growth investors have gotten used to in the medium to long term.

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