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Comment by lkrubner | Hacker News Reader

Nothing says "We are out of ideas" quite as powerfully as a company that announces a big share repurchase program.

Do you believe there are untold, unimagined technologies waiting to be invented? Do you believe that the future will be radically different than the present? Then you should be investing, heavily, in the future.

Do you want to be ambushed by the new kid on the block? Do you want to be the overly-confident behemoth who is cut down by the upstart, just as IBM was cut down by Microsoft? Well, then don't invest in the future, just buy lots of your own shares.

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Apple has 140 billion dollars in cash.

Pray tell what you think they should do with it? Hire 70,000 engineers for ten years? Start an airline? Buy Wyoming?

Before Steve Jobs took over they were doing what you think they should do--supporting every futuristic project that caught some executive's fancy. Spoiler alert: this was a bad strategy. Wasting excess cash is a common anti-pattern for big companies, such that it's a positive sign when they don't spend money.

Your buy Wyoming idea is genius.

They could start with making maps work or, really, any of their cloud services.

Actually maps is getting better organically. It surpasses Google Maps in a number of cities and being vector has a much better overall experience.

The cloud services should be split. iTunes Music Store has been pretty rock solid since its inception. It's really iCloud Sync and the Mail features that need work.

ITMS kind of sucks, actually, and always has. The big issue is that the model of "device tethered to a single laptop" is confusing now that the device is wifi/4g enabled. But even in the iPod/iTunes days, iTunes was always kind of shakey.

Maybe they should build a superhuman army to take over the world, but then they'd have competition with Google! ;-)

Is it just me or are those some expensive engineers?

$200k/year?

Oh...fudge. I'm a moron who can't math.

Philanthropy?

It's not their money to throw away (even to the noblest of causes), it's shareholders' money and should be used to further shareholders' interests.

It would be absolutely unethical and wrong of them to donate more than the normal amount to charitable causes. Now, should those +$100M executives pay more to charity? I think absolutely yes. But Apple the company (or Google, or Microsoft, or any other company) is there to serve it's shareholders not the whole human race.

Apple intentionally set up a management bottleneck where the CEO tracks all product development pretty closely to ensure everything is "insanely great". The downside is that they can only develop a few products at a time. At least they're now admitting that they'll never have time to spend the money so they might as well pay it out.

If you assume Tim Cook is a smart and competent CEO, jacking up a share repurchase program signals one thing: him and his advisors think that the most effective deployment of that capital for shareholders is to repurchase Apple shares. This could mean they are just shrugging and have no ideas of what they could possibly work on next, or it could mean that they see the market price of Apple stock as attractive enough to warrant a $100 billion purchase of it. One of these is an absurd proposition, one is backed by countless evidence. What do you think? :)

Compared to a buy back a few months ago, and with Tim's shrewd ways, I'll back the latter - I'd bet that he sees now as a good time to buy, later as a bad time.

What would you do if you were sitting on an enormous cash pile and one of the most ridiculous undervaluations ever?

Share buy back programmes are equivalent to dividends in all but tax treatment. Why should the market capitalization / valuation of the company factor into a decision to pay out to shareholders?

Because when you repurchase shares beneath its intrinsic value it's accretive to shareholder value.

Yes, but judging intrinsic value is something for investors to do. I want my companies to concentrate on what they are good at---and random companies are not good at playing the stock market. (See the other current discussion about Cooper Union (https://news.ycombinator.com/item?id=5599385).)

I think Warren Buffett supports the move:

http://blogs.barrons.com/techtraderdaily/2013/03/04/aapl-whe...

Warren Buffett recommended to buy it several years ago if Steve Jobs believed that the stock was underpriced at the time. Buffett was describing to Jobs the advantages and disadvantages of potential ways to spend extra cash.

I'm re-iterating that this was several years ago!

Warren Buffett also never said anything himself about the stock being underpriced. It was all contingent on Jobs's opinion.

[Edit] Original transcript. Unfortunately pdf. Starts at "No, I've never bought Apple.". Stock was around 200 when Jobs talked to Buffett. http://fm.cnbc.com/applications/cnbc.com/resources/editorial...

Absolutely, and the best thing that can happen when a company is repurchasing its shares is for the shares to be as cheap as possible, so as to create the most value for shareholders.

Many great companies have purchased their own stock when it has become cheap. A stock buyback often signals that a company thinks that the best investment there is for its cash is its own stock.

That's what they want you to think but the data doesn't support this. Its usually used to offset stock compensation.

Certainly companies may often do things for appearance, rather than for the right reasons, but both Warren Buffet and Peter Lynch have written that one of the best things that a corporation can do with its excess cash is to buy back its own stock when the company is undervalued in the market.

IBM is pretty much still as big as MSFT FWIW: http://finance.yahoo.com/quotes/MSFT,IBM

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