4 ms·

>“between 2013 and 2019, Boeing spent 43 billion dollars on stock buybacks (a hundred and four per cent of its profits) rather than spending resources to addres

>“between 2013 and 2019, Boeing spent 43 billion dollars on stock buybacks (a hundred and four per cent of its profits) rather than spending resources to address design flaws in some of its popular jet models,”

KennyBlanken 2y ago
Not excusing it, but it was very popular pre-pandemic and when the pandemic hit, many corps got caught with their cash reserve pants down. Of course we taxpayers (corporate share of tax revenue is miniscule compared to 50 years ago) bailed them out... https://www.nytimes.com/2020/04/24/business/coronavirus-bailouts-buybacks-cash.html https://www.nytimes.com/2020/04/24/business/coronavirus-bail...
- WalterBright 2y ago
  Coronavirus problems are not Boeing's fault.
  - DiggyJohnson 2y ago
    No, but Boeing was going this way before the pandemic. I left in 2021 for context.
  - mlyle 2y ago
    If companies voluntarily choose to operate with lower cash reserves and then end up unable to weather hard times or make necessary investments in their products, do they have any fault for what happens next?
    - WalterBright 2y ago
      You can't operate a successful company (i.e. with a decent ROI) if you're sitting on a Scrooge McDuck cash vault. It wasn't Boeing's fault that the governors shut down the economy, something that had never happened before in the US.
      - mlyle 2y ago
        Boeings choice to not sufficiently invest in its core products while pumping its stock through buybacks belongs solely to Boeing and Boeing’s board. The impact to their reputation was a predictable and ignored consequence. In Boeing’s case it has very little to do with coronavirus, which was just a related example: some businesses set aside enough seed corn to survive without help, and others didn’t.
      - lmm 2y ago
        > You can't operate a successful company (i.e. with a decent ROI) if you're sitting on a Scrooge McDuck cash vault. Of course you can. There are thousands of examples around the world - not least the great success story of the last decade or so, Apple. Minimising your cash holdings is a microoptimization. It might get you a fraction of a percent more return in good times, but that doesn't make it wise.
        WalterBright 2y ago
        Apple is a highly unusual story. The purpose of being in business is to make more money than you could by putting the money in an interest-bearing account. Another way of saying it is there is no point to operating a business if you cannot make more than the "opportunity cost". > Minimising your cash holdings is a microoptimization. What businesses are in business to do is put cash to work earning more than the opportunity cost, often meaning about 15% ROI. That certainly is not a microoptimization. In fact, what most businesses do is borrow money at, say, 5%, and then invest the money so it earns, say, 20%, and therefore make 15% overall. I do something similar with my investments. I borrow money and buy investments with the borrowed money. It's similar to borrowing money to buy a house, and then selling the house at an appreciated price to make many multiples of your down payment.
        mlyle 2y ago
        > I do something similar with my investments. I borrow money and buy investments with the borrowed money. Yes, minimizing uninvested capital --- or the extreme case of it, turning that negative through leverage --- is great, until it isn't.

KennyBlanken 2y ago

Not excusing it, but it was very popular pre-pandemic and when the pandemic hit, many corps got caught with their cash reserve pants down. Of course we taxpayers (corporate share of tax revenue is miniscule compared to 50 years ago) bailed them out... https://www.nytimes.com/2020/04/24/business/coronavirus-bailouts-buybacks-cash.html https://www.nytimes.com/2020/04/24/business/coronavirus-bail...

WalterBright 2y ago
Coronavirus problems are not Boeing's fault.
- DiggyJohnson 2y ago
  No, but Boeing was going this way before the pandemic. I left in 2021 for context.
- mlyle 2y ago
  If companies voluntarily choose to operate with lower cash reserves and then end up unable to weather hard times or make necessary investments in their products, do they have any fault for what happens next?
  - WalterBright 2y ago
    You can't operate a successful company (i.e. with a decent ROI) if you're sitting on a Scrooge McDuck cash vault. It wasn't Boeing's fault that the governors shut down the economy, something that had never happened before in the US.
    - mlyle 2y ago
      Boeings choice to not sufficiently invest in its core products while pumping its stock through buybacks belongs solely to Boeing and Boeing’s board. The impact to their reputation was a predictable and ignored consequence. In Boeing’s case it has very little to do with coronavirus, which was just a related example: some businesses set aside enough seed corn to survive without help, and others didn’t.
    - lmm 2y ago
      > You can't operate a successful company (i.e. with a decent ROI) if you're sitting on a Scrooge McDuck cash vault. Of course you can. There are thousands of examples around the world - not least the great success story of the last decade or so, Apple. Minimising your cash holdings is a microoptimization. It might get you a fraction of a percent more return in good times, but that doesn't make it wise.
      - WalterBright 2y ago
        Apple is a highly unusual story. The purpose of being in business is to make more money than you could by putting the money in an interest-bearing account. Another way of saying it is there is no point to operating a business if you cannot make more than the "opportunity cost". > Minimising your cash holdings is a microoptimization. What businesses are in business to do is put cash to work earning more than the opportunity cost, often meaning about 15% ROI. That certainly is not a microoptimization. In fact, what most businesses do is borrow money at, say, 5%, and then invest the money so it earns, say, 20%, and therefore make 15% overall. I do something similar with my investments. I borrow money and buy investments with the borrowed money. It's similar to borrowing money to buy a house, and then selling the house at an appreciated price to make many multiples of your down payment.
        mlyle 2y ago
        > I do something similar with my investments. I borrow money and buy investments with the borrowed money. Yes, minimizing uninvested capital --- or the extreme case of it, turning that negative through leverage --- is great, until it isn't.