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They actually are doing pretty large buybacks though:

https://www.barrons.com/articles/tech-giants-have-ramped-up-...

Apple recently $77B in buybacks, Alphabet $8.5B, Facebook $3.9B

True, but I don't think buybacks are likely to be scaled sufficiently to solve the "problem." Apple, maybe. They do have a dividend paying history and they don't like to spread.

The Alphabet & FB buybacks represent about 5% of those companies' cash reserves... not enough to change anything. Apple have $200bn, though I'm not sure if this is net or gross of the buyback.

I think of these buybacks more as supporting evidence to what I said previously. There is a hell of a lot of "what are you going to do with all this cash" pressure on these companies.

That said $77bn (I've seen $90bn reported) is a truly stupendous sum. Has there ever been a buyback at this scale?

Apple does the largest buyback in the equity markets. Their derivative-based ASR is larger than the entire buyback program of many major companies.

https://s2.q4cdn.com/470004039/files/doc_financials/2021/q2/...

At $77B, that buyback program amounts to a $300m bid for Apple stock every trading day....much to the delight of executives whose compensation is tied to share price performance.

https://www.cnbc.com/2020/09/29/apple-ceo-tim-cook-receives-...

They could have used that $77B to fund fusion research, carbon capture research, build private space stations and put man on Mars, but no they wanted to make their already high share price even higher.

In fairness, it is impressively large.

the investors who get the money back through share buybacks can do that with the 77B. There is no reason for Tim Cook to be leading fusion research and everything else you listed.

The $77B didn't vanish, it went back to shareholders. Indeed Apple could have used it to fund fusion research, but this seems like a complete stretch of their expertise and capacity to execute on a project like that, the money could just have ended up being wasted on projects that went nowhere. Shareholders can cash out, the government tax the capital gains, and both entities can use the cash in the investments that seems worthy to them

It went to ex-shareholders.

Actually a better way to think about it is that they are compensating their shareholders...

That $77B that is now returned to shareholders can be spent on whatever those shareholders want. It isn't really Apple's money to begin with... kind of the issue with being a public company. Unless of course its shareholders would look at that investment as sound, which might be a stretch given Apple's lack of background in any of those fields (maybe carbon capture given they have a great understanding of their supply chain and could already be thinking of ways to reduce their energy impact)

>That $77B that is now returned to shareholders can be spent on whatever those shareholders want

Well, 85% of the $77 billion, anyway.

> That $77B that is now returned to shareholders can be spent on whatever those shareholders want. It isn't really Apple's money to begin with... kind of the issue with being a public company.

Apple and its shareholders are the same entity when discussing “whose” money it is. If shareholders want it used to do buybacks, they vote for company leadership to do that. If they want dividends, they vote for company leadership to do that. If they want to invest in travel to Mars, they vote for leadership to do that.

Saying Apple’s money belongs to shareholders is a meaningless statement. It belongs to the collection of shareholders as a whole, who have opted to elect in leaders to decide how to spend it.

Well. With such large firms, shareholders are quite a stretch of distribution. Voting proxies and the complexity of introducing a shareholder vote proposal quite drastically restricts the number of shareholders who can make stuff happen at these firms.

That is how ownership in a public company works. The more you own, the more control you have. Before you purchase, you will know what percentage you will own and you have to predict if it will be enough to enable you to accomplish your goals. Or you have to make friends with other shareholders.

> If shareholders want it used to do buybacks, they vote for company leadership to do that.

Only if there is an option to do that.

Why not use dividends then?

It's a decision someone can make with their own money. Not money of their shareholders.

One of these things is not like the others.

> they have no way to put cash they have to work

Apple could have built the most incredible semiconductor mega-hub in the world with the money it spent on dividends and buybacks in the past decade.

In-house R&D is still a thing. Capital expenditure is still a thing. Pay raises for rank-and-file staff are still a thing. Please don't suggest that acquisitions, buybacks, and dividends are the only ways for Apple and Google to put their free cash flow to work.

Not to mention that both companies carry debt.

Waymo is Google's big, speculative in-house R&D project. It's pretty big. They're in for $20-$25bn so far, and it'll require that much again before viability^. That's over a decade, and it is pretty risky.

Meanwhile, besides search, most of their big successes were acquisitions: adwords, youtube, android, docs... all acquisitions at core. All extremely cheap, in retrospect.

Tesla joining the elite "tech company" ranks has made for some good juxtaposition. They are a "textbook" company, because the textbook more or less assumes that firm = manufacturing. The way they were financed (pre-insanity equity markets), the way they consume capital, etc. Apple, Alphabet, FB, etc aren't like this.

^if

They could increase wages for their non-tech workers to start

Technically, that'd be increasing their expenses rather than capital investment.

They could also, in theory, build schools in central africa. They could even pay their taxes. I think acquisitions are more likely though.

What's the most appropriate word for this? There could be many, but I am a bit tired of justifications. For me it's greediness, distillated.

Capitalism?

Greed is a very human emotion, corporations are like very powerful sociopaths. No-emotion machines that optimize for a single end goal (shareholder money) within the given ruleset: the law.

(Or more realistically whatever they can get away with while still turning profit, ie profit is greater than whatever the repercussions cost).

In many ways, Capitalism is fueled by greed.

That’s the genius of it. Why fight human nature?

As parent said, corporations are restricted only by the market and by the legal system, so it’s up to the voters to implement effective taxes and rules as needed

'voters' in America = gerrymandered district super pac funded politicians

The actual people have no say whatsoever.

I wouldn’t agree with “no say whatsoever” but of course constant reform is needed in any society.

How about “a miniscule, near-zero, statistically non-significant impact upon public policy.”

Because that's what this Princeton study found: https://act.represent.us/sign/the-problem

We live in a plutarchy disguised as a constitutional democracy sold to its employee-citizens as a democracy.

That's the same honourable pursuit of self-interest that have built the modern world of abundance that we live in.

"lol" -Google/Apple/Amazon/etc CEOs

In this vein, $8.45B seems a bargain for the likes of Apple to instantly booster their very limited TV+ offerings. Was this an exclusive, closed door negotiation between owners of MGM and Amazon?

I'm perplexed how the final price isn't a lot higher due to a potential bidding war between all the streaming giants. Even Netflix would benefit - if anything to force competitors to pay more.

What about MGM’s back catalog makes Apple TV+ qualitatively more compelling to your marginal subscriber? Versus say spending that same $8.5B on new content?

There’s not much “forward looking” IP of value tied to MGM except the Bond franchise, and it sounds like the Broccoli’s aren’t giving up control of that in this deal.

Not yet. The key is to keep adding properties and unlock other deals, eventually Amazon/Apple could convince broccoli in ways MGM never can try. Deeper pockets, way better distribution etc.

It took several deals for Disney to line up MCU fully. They spent a lot on Pixar, star wars and MCU , fox acquisitions to become the force they are today.

Without these acquisitions, Disney would also be largely a back catalog like MGM being sold today .

The theory is that sum of the properties are worth more than each individually.

Very easily are a few million people who'd be willing to have access to the Stargate library as part of a subscription + hopefully they start production again of at least Stargate Universe; it's premise would make for an awesome game too.

For all the green energy virtue signaling, Bezos & co. could achieve the greening of the US with their own money (and also turn a small profit).

>The price is about 37 times MGM’s 2021 estimated EBITDA - or almost triple the enterprise value-to-EBITDA multiple that Discovery’s deal implied for AT&T’s content assets - according to Reuters Breakingviews.

Was there another offer for slightly less than $8.45B? What kind of thinking would lead them to that figure, rather than a different one?

Worth noting that based on AAPL's latest 10-Q, the vast majority of their cash is invested in corporate bonds, which have a nominal annualized return of ~6%. I'm sure the financial value of any acquisition is pitted against this alternative.

In theory, sure.

In real business culture, there is an imputis (especially for tech companies) to "maKe money work." If their best investment is other companies' bonds, they should (again, in theory) just return cash to investors who can buy the bonds themselves.

More importantly, The ability to reinvest profitably is a sign of horizon, at least traditionally.

I stress "in theory," because theory is a long way from practice when it comes to modern tech giants. The theory is financial theory... how companies are financed. In theory, equity investment is a way of financing companies. Google and Facebook did not need to be financed by the time they became publicly traded. They never had debt. Software companies don't require capital investment to expand, like a theoretical "firm" does. In practice, public markets have no role in financing companies per se, they're only there to provide liquidity.

> If their best investment is other companies' bonds, they should (again, in theory) just return cash to investors who can buy the bonds themselves.

This is what they're effectively doing, in practice. AAPL has conducted ~$500B in share buybacks since the commencement of their buyback program in 2013. Their current cash and cash equivalents sits at ~$200B.

So, one could say that of the $700B AAPl could have returned to shareholders, it returned $500B (or most of it).

I'm not sure we should accept "returned to shareholders" at face value.

Nothing is really returned to shareholders. Shareholders own that money (as they own all Apple's assets) before the buyback. After the buyback, they no longer own the money... but share value has (in theory) not changed because it now represents a larger portion of this smaller asset.

In the case of a buyback, cash is literally returned to the shareholders who participate in the tender offer by selling their shares back to the company.

They're no longer shareholders. And, since buybacks are value neutral... they're not getting a premium when they sell.

> The meaninglessness of $8.45b relative to amazon's scale is mind boggling.

My coworked compared it to the Dogecoin marketcap of $44b... kinda puts things in perspective.

You know, at least crypto is obviously/intentionally arbitrary. The current market cap of GME is exactly 2X this acquisition.

Crypto "market cap" isn't really comparable to the market cap of companies. Nobody would (or could) ever buy Dogecoin for 44b. But companies are usually purchased for more than market cap.

Er, yes they would. Thousands of people already have, that's why its 44bn. It's a market cap not a paper valuation. Are you suggesting that if someone wanted to buy Doge outright they could pay less than it's market cap?

There is no mechanism to buy all Doge and the "market cap" of Doge includes lost coins. If you bought all of Doge, its value would be gone since it would be like it didn't exist.

You might as well calculate the market cap of baseball cards.

It's just not the right way to measure the worth of a crypto.

Put another way, if Doge owners decided to collectively sell it would be worth 0.

Hypothetically if some whale wanted to 'buy' Doge say to shut it down or something, they would probably have to spend a lot more than the market cap and as you yourself point out they still wouldn't have bought all the Doge that existed. OP was comparing amounts i.e $8bn seems like peanuts when 'joke' coins are hypothetically worth more than $44bn, and not really comparing market caps (which doesn't really make sense, again as you yourself pointed out).

True, but the flipside is also the case, if someone wanted to sell a significant fraction of a cryptocurrency or high-value stock, they wouldn't necessarily get close to the current market cap either.

On the other hand a surge in demand would likely raise the prices as you tried to buy it all up.

Think about the total basis in Dogecoin. Compare that number to the takeout valuation for a public company, which would be the basis of the acquirer. That's the point GP is trying to make, in a roundabout way.

No one can buy Amazon or Tesla at their market cap today either.

Sure companies valuation are backed by revenue and profit numbers unlike crypto.

However the multiples both these companies trade at along with the way Amazon treats "profit" their dividend habits means no buyer can actually recoup the investment by means of profits generated in a reasonable investment window.

The only way to make actual money with these stock is to sell it even higher not that different from crypto.

Look at last 2 years of the stock market even ignoring GME/AMC there seem to very little correlation with the actual numbers for these companies.