Buffett to Tim Cook: Ignore Einhorn

The legendary investor says Apple should avoid listening to Greenlight Capital's founder, and work to create value for the long term.

By TheStreet Staff Mar 5, 2013 1:56PM

thestreet logoBy Chris Ciaccia

 

When Warren Buffett speaks, the markets listen. Perhaps it's time for Apple (AAPL) to listen as well.

 

Appearing on CNBC Tuesday morning, Berkshire Hathaway's (BRK.A) Buffett had some advice for Apple on managing the company.

 

The Cupertino, Calif., company has come under attack from David Einhorn in recent weeks with regard to Apple's $137 billion cash hoard and what to do with it. "I would ignore him," Buffett told Becky Quick, talking about Greenlight Capital's Einhorn. "I would run the business in such a manner as to create the most value over the next five to 10 years. You can't run a business to push the stock price up on a daily basis. Berkshire has gone down 50% four times in its history. When that happens, if you've got money you buy it. You just keep working on building the value."


In order to boost Apple's share price, Einhorn has suggested Apple issue preferred stock, dubbed "iPrefs," to unlock the value of the company's foreign cash, which he believes the market is not giving credit to. Apple would offer perpetual preferred stock at a dividend rate of 4% to 6%, and not use any of its existing cash. Apple has responded to this, saying it would "thoroughly evaluate Greenlight Capital's current proposal to issue some form of preferred stock" (see TheStreet).

 

Speaking at a Goldman Sachs conference last month, Apple CEO Tim Cook echoed Buffett's thoughts. "We're managing Apple for the long-term," he said, when asked about Apple's direction. "I know people care about quarters and so forth and we care, but the decisions we make, the profound decisions we make, are for Apple's long-term health. Not for the short-term 90-day clock."

 

The Apple Inc. logo is displayed on the back of the new MacBook Pro David Paul Morris/Bloomberg via Getty ImagesApple has discussed returning cash to shareholders in recent weeks, and Buffett suggested that perhaps buying back stock would be the best course of action. He gave Steve Jobs this advice when he was running the company and asked what to do with Apple's growing cash hoard. "When Steve called me, I said, 'Is your stock cheap?' He said, 'yes.' I said, 'Do you have more cash than you need?' He said, 'a little.' [laughs] I said, 'then buy back your stock.' He didn't ... But if you could buy dollar bills for 80 cents, it's a very good thing to do."

 

At its recent shareholder meeting, Cook said he and the board are not happy with Apple's share price compared to a few months ago (see TheStreet). He reiterated, however, that the iPhone maker is focused on the long term. Cook mentioned that Apple's actively thinking about returning cash to shareholders. Apple's $137 billion cash hoard has attracted a lot of attention and Cook said Apple is in "very, very active" discussions on what to do with it.

 

On Monday Buffett revealed that Real Money's Doug Kass has been appointed to represent the bearish view of Berkshire Hathaway at the company's shareholder meeting scheduled for May 4 (see TheStreet).

  

 

More from TheStreet.com

11Comments
Mar 5, 2013 4:14PM
avatar
How about paying a living wage to it's workers and do some manufacturing here in the united states of america, geez corporations are thick
Mar 5, 2013 5:15PM
avatar
Einhorn is an idiot and has ruined thousands of lives with his unfounded innuendoes.  Great for Buffet.
Mar 5, 2013 4:26PM
avatar
leeinpdx.   Steve Jobs said that was impossible.  He is a liar.


Mar 7, 2013 8:50PM
avatar

OUR PRESIDENT IS PURPOSELY DESTROYING OUR ECONOMY. EVERYBODY TALKS ABOUT SPENDING CUTS, HAH. IS IS VERY SIMPLE TO FIX OUR ECONOMY. ONE DON'T PRINT ANY MORE MONEY. THE GOV'T DOESN'T MAKE MONEY IT TAKES MONEY. FIRST OF ALL ELIMINATE THE I.R.S. PUT A 10% SALES TAX ON ITEMS BOUGHT. SECOND TAKE ALL THE LIBERALS THAT ARE E.P.A. MINDED AND DON'T WANT US TO DRILL OUR OWN OIL AND PUT THEM IN MILITARY UNIFORMS AND SEND THEM TO THE MIDDLE EAST. SECOND MAKE DRUGS LEGAL ELIMINATING THE D.E.A.THEN SECURE OUR BORDERS. BY LEGALIZING DRUGS & DRILLING OUR OWN OIL WE WOULD REDUCE PRISON POPULATION (AVERAGE INMATE IN US PRISONS COST $53,000 PER YEAR], ALSO THE DRUG CARTELS WOULD GO BROKE, AND THE MIDDLE EAST OIL COUNTRIES WOULD ALSO GO BROKE. FINALLY ANY ELECTED OFFICIAL OF CONGRESS IF THE DON'T BALANCE THE BUDGET THE DON'T GET PAID. ON LAST THING THE PRESIDENT NEEDS TO PAY FOR HIS OWN GOLFING!

Mar 5, 2013 5:58PM
avatar
the economy sucks its at a crawl what the phuck obama it aint workin   SMOKE AND MIRRORS
Mar 5, 2013 5:48PM
avatar

EVERYBODIES ALL EXCITED ABOUTH THE DOW. IST OF ALL, THE DOW REACTS MOST FROM THE EUROPEAN ECONOMY. ALSO US CORPERATIONS ARE HOARDING CASH BECAUSE THEY CANT AFFORD UNION LABOR & US TAXES, SO THE OPEN UP OVERSEAS COMPANIES TO EVADE THESE PROBLEMS! LOOK AT A PAIR OF LEVI JEANS & READ THE LABEL INSIDE. YOU'LL BE SUPRISE TO SEE MAN IN INDONISHA, TIALAND OR PERU. AND HAVE YOU NOTICED THAT THE JEANS WEAR OUT WAY FASTER. DO THE MATH!

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

118
118 rated 1
270
270 rated 2
472
472 rated 3
714
714 rated 4
624
624 rated 5
608
608 rated 6
623
623 rated 7
445
445 rated 8
319
319 rated 9
125
125 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
BIDUBAIDU Inc10
BMYBRISTOL-MYERS SQUIBB CO.10
CELGCELGENE CORP10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.