There have been a lot of ideas suggested for what Apple could do with its nearly $100 billion in cash. Some have been serious suggestions like companies that Apple could buy while others are a little more absurd but illustrate just how much money Apple’s got.
Today, Warren Buffett revealed to viewers of CNBC’s Squawk Box that Steve Jobs wasn’t sure what to do with all the money Apple began raking in over recent years and asked for advice. He ultimately ignored that advice in his typical fashion while telling others that Buffett agreed with his decision for Apple to just sit on its money.
During his Ask Warren segment, Buffett recounted a phone conversation he had with Apple’s late CEO from a couple of years back. During the call Jobs asked his fellow billionaire about the options available to Apple. And while Buffett provided some advice, Jobs apparently decided not to take it.
It was an interesting conversation because I hadn’t talked to him in a long time. He said, ‘We’ve got all this cash. What should we do with it?’ So we went over the alternatives. It was kind of interesting.
Buffett’s advice boiled down to four possible options: buyback Apple stock, issue dividends, use it to acquire other companies, and “sitting with it.” Buffett told Jobs he thought the best option would be to buyback stock.
‘I would use it for buybacks if I thought my stock was undervalued.’ And I said, ‘How do you feel about that?’ The stock was 200-and-something. He said, ‘I think my stock is very undervalued.’ I said, ‘Well, what better to do with your money?’
Ultimately, Jobs and Apple ended up taking the last option that Buffett had mentioned, which was essentially nothing.
He just liked having the cash. It was very interesting to me because I later learned that he said I agreed with him to do nothing with the cash.