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What would you have done? Saved $45B in cash in case a virus like this causes the world economy to stop? The job of management is to find a profitable way to d
by goatinaboat 7y ago
What would you have done? Saved $45B in cash in case a virus like this causes the world economy to stop?
The job of management is to find a profitable way to deploy capital. If management are returning capital to shareholders, outside of expected dividends of course, it’s because they are bereft of ideas. What would I have done? Invested a large portion of that money in long term R&D and careful strategic acquisitions. It’s the same over at IBM. The current generation of managers have inherited cash flows set up by their predecessors but have no idea what to do with them.
- lotsofpulp 7y agoWhat R&D would pay the airlines’ and hotels’ employees for the next few months?
- goatinaboat 7y agoOP’s question was about Boeing, but it’s true that the airlines also squandered their capital on share buybacks.
- lotsofpulp 7y agoSquandered means there was a better, evident option at the time. I have not yet been able to find a satisfactory answer to the question of what the companies should have done rather than buybacks, especially to mitigate the effects of a literal shutdown of basically entire lines of business resulting in no income. The businesses in years past made money, invested some of it, spent some on R&D, and distributed some to shareholders (via buybacks). What other option was there?