6 ms·

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 compl

by bydo 10y ago

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.

wvenable 10y ago
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.
- dv_dt 10y ago
  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.
  - petra 10y ago
    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 ?
- calgoo 10y ago
  Is there interest they could earn on that cash?
  - pg_is_a_butt 10y ago
    you'll be able to read all about the numerous off shore companies they use in the next panama papers release.
- brandonmenc 10y ago
  > Ultimately what is Apple going to do with that 230 billion? Break into a capital intensive industry.
  - JustSomeNobody 10y ago
    Apple bank.
    - Corrado 10y ago
      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.
  - ridgeguy 10y ago
    Making cars is a capital intensive industry.
    - wklauss 10y ago
      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.
- uptown 10y ago
  Go private.
  - gozur88 10y ago
    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.
    - brisance 10y ago
      Why not? If Apple's management and investors believe that the market is not pricing AAPL fairly, it makes perfect sense to go private.
      - gozur88 10y ago
        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.
        dazmax 10y ago
        They could just do buybacks until no one else has any shares left? http://seekingalpha.com/article/1725412-buyback-apple-could-go-private-by-2020 http://seekingalpha.com/article/1725412-buyback-apple-could-...
        brisance 10y ago
        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.
        gozur88 10y ago
        So the last guy to own a share owns the company?
- gnoway 10y ago
  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 https://news.ycombinator.com/item?id=11373605 [1] http://www.antipope.org/charlie/blog-static/2016/03/follow-the-money-apple-vs-the-.html http://www.antipope.org/charlie/blog-static/2016/03/follow-t...
- Analemma_ 10y ago
  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.
  - apr 10y ago
    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.
  - EGreg 10y ago
    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-biggest-hedge-fund-you-have-never-heard http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b...
  - raverbashing 10y ago
    > 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
- iQuercus 10y ago
  Why do you save money?
raverbashing 10y ago
This "Activist investors" are essentially parasites, as they are only interested in short-term profit
- mathattack 10y ago
  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 http://www.columbia.edu/~wj2006/HF_LTEffects.pdf
  - shmulkey18 10y ago
    The paper looks interesting; thanks for sharing the link!
- adventurer 10y ago
  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.
ProAm 10y ago
> 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.
- sib 10y ago
  "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.
  - jsmeaton 10y ago
    I would imagine investors would prefer dividends to having their shares bought back, no?
    - wklauss 10y ago
      They also give those.
    - prewett 10y ago
      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)
- pg_is_a_butt 10y ago
  so... the current engineers are producing at lower and lower quality, so your solution is to "invest in more engineers"... and who will train them? what will they do? more of what the old engineers did to tank quality? they should invest in far less engineers. they only need 1. he's dead. #SELL
Esau 10y ago
Good riddance indeed. Icahn is the kind of guy who you throw a going away party for after he leaves.
bparsons 10y ago
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.

by bydo 10y ago

wvenable 10y ago

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.

dv_dt 10y ago
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.
- petra 10y ago
  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 ?
calgoo 10y ago
Is there interest they could earn on that cash?
- pg_is_a_butt 10y ago
  you'll be able to read all about the numerous off shore companies they use in the next panama papers release.
brandonmenc 10y ago
> Ultimately what is Apple going to do with that 230 billion? Break into a capital intensive industry.
- JustSomeNobody 10y ago
  Apple bank.
  - Corrado 10y ago
    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.
- ridgeguy 10y ago
  Making cars is a capital intensive industry.
  - wklauss 10y ago
    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.
uptown 10y ago
Go private.
- gozur88 10y ago
  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.
  - brisance 10y ago
    Why not? If Apple's management and investors believe that the market is not pricing AAPL fairly, it makes perfect sense to go private.
    - gozur88 10y ago
      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.
      - dazmax 10y ago
        They could just do buybacks until no one else has any shares left? http://seekingalpha.com/article/1725412-buyback-apple-could-go-private-by-2020 http://seekingalpha.com/article/1725412-buyback-apple-could-...
      - brisance 10y ago
        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.
        gozur88 10y ago
        So the last guy to own a share owns the company?
gnoway 10y ago
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 https://news.ycombinator.com/item?id=11373605 [1] http://www.antipope.org/charlie/blog-static/2016/03/follow-the-money-apple-vs-the-.html http://www.antipope.org/charlie/blog-static/2016/03/follow-t...
Analemma_ 10y ago
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.
- apr 10y ago
  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.
- EGreg 10y ago
  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-biggest-hedge-fund-you-have-never-heard http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b...
- raverbashing 10y ago
  > 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
iQuercus 10y ago
Why do you save money?

raverbashing 10y ago

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

mathattack 10y ago
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 http://www.columbia.edu/~wj2006/HF_LTEffects.pdf
- shmulkey18 10y ago
  The paper looks interesting; thanks for sharing the link!
adventurer 10y ago
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.

ProAm 10y ago

> 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.

sib 10y ago
"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.
- jsmeaton 10y ago
  I would imagine investors would prefer dividends to having their shares bought back, no?
  - wklauss 10y ago
    They also give those.
  - prewett 10y ago
    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)
pg_is_a_butt 10y ago
so... the current engineers are producing at lower and lower quality, so your solution is to "invest in more engineers"... and who will train them? what will they do? more of what the old engineers did to tank quality? they should invest in far less engineers. they only need 1. he's dead. #SELL

Esau 10y ago

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

bparsons 10y ago

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.