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Stocks A / Apple
|Subject: Re: say no to financial engineering distractions||Date: 11/1/2013 1:24 AM|
|Author: commoncents33||Number: 197695 of 199949|
Apple should be run a bit like Bloomberg: as a profitable company which pays well, which concentrates first and foremost on making its product as great as possible, and which doesn’t try to be something it’s not, or allow itself to be distracted with financial engineering
This is a straw man.
I don't think anyone is recommending that Apple not have its first priority being to develop and deliver the best prodcuts and services possible. Certainly Icahn isn't.
But the idea that it is too much for the management of a nearly half-a-trillion dollar business to walk and chew gum at the same time is absurd. They should be able to focus first on their core business, but also have time for sound financial management and capital allocation. To call it "financial engineering" is just to engage in a smear campaign rather than intelligent discussion. Capital allocation is part of running a business.
And it's not irrelevant to the core business activities themselves to have the stock price perform as well as possible. For its reality that much of the best and brightest talent to develop all the wonderful iStuff is attracted to having their stock options perform well. And if AAPL stock is perpetually in the doldrums, that will make it harder to attract and retain the best talent.
Maybe borrowing money to do a buyback isn't the best. Maybe just bringing some of the billions and billions and billions of dollars sitting overseas slowly wasting away in purchasing power, bringing some of that home and using that to buy some shares. Sure, they'll have to pay tax. But taxes are part of life; get over it. If the plan is to never bring the money home, then what good is it??
As far as Apple "first and foremost on making its product as great as possible, and which doesn’t try to be something it’s not", that brings up a very importand point. Almost by definition, if Apple were to spend the over $100,000,000,000 it has idling overseas, that would be something it's not. For to realistically use that outrageously huge stash, it would have to mean very large acquisitions (not the small stragetic ones they've been doing with a small fraction of their ongoing cash flows). And a very large acquistion is not the Apple way; likely one of the worst things they could do. As far as traditional R&D, there is simply no way to spend a $100,000,000,000. By all indications, Apple already has the pedal to the medal in R&D, yet they can't even come close to spending the torrent of cash that continually pours in.
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