Warren Buffett: Steve Jobs Asked My Advice On Apple’s Cash But Didn’t Take It

Warren Buffett: Steve Jobs Asked My Advice On Apple’s Cash But Didn’t Take It

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.

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  • aramishero

    Apple should buy Google and Microsoft.

  • Tim Meesseman

    And say goodbye to their biggest competition? That would hurt only consumers.

  • chrlormil

    Buy Vimeo and compete with YouTube

  • Artis Falkner

    Apple should buy OnLive and make it part of iCloud/Gamecenter and destroy the xbox.

  • Mike Rathjen

    Apple should use the money to build a ring-shaped UFO in Cupertino.

  • Bob Forsberg

    Apple IP. Why be at the mercy of others when you have that cash?

  • baby_Twitty

    Holding it is the right choice as the world economy is so uncertain now. Just look at 2007 and now the Euro zone crisis.

    You never know when the next global financial crisis might hurt the big companies again and that horde of $100 billion is the best insurance ANY major corporation can have for the next 5-7 years.

    I’m pretty sure Apple are also into philanthropy, its just that they don’t publicize it much, and THATS the right way.

  • Roger Ramshit

     Was it advice or was it a opionion. Perhaps he was using Warren and others as a sounding board…you know…to get ideas. Askign advice and asking for peoples opinions are two different things because advice means you don’t know what to do and need someone to advise whereas suggestions means you may be after new ideas or even to sometimes justification of a decision you have already made.

  • Roger Ramshit

    I have my own suggestion. Since they are raking in more than what they apparently know what do with why don’t they just lower the price of their products so they are only making a minimal profit and sit on their cash for a rainy day. This will kick Samsung and their cohorts back to where they belong.

  • Roger Ramshit

    Another idea is to produce a decent internet search web site free of all ads, free of data scraping and free of secret deals that bump one persons results above others.

  • Ricardo Morgado Ferreira

    While I agree that that kind of service is inevitable, I don’t think Apple would buy a company that’s trying to put a remote Windows on the iPad. Apple can do Cloud streaming by itself. Besides, they want developers to work on Apple content, that means big name games mac/appleTV only. The gaming area, I think, is where Apple should invest. That means innovate the TV.

  • Jeremy Zipzer

    I’ve come up with a little theory. If SOPA and other acts come in to effect, this could harm apple. Therefore, it may be in their best interest to essentially reinvent the free internet, if the internet that we use right now, becomes unusable and quite boring, free of the “freedom” that we have now.

    Please pardon my ignorance, if this comment comes off as a little outlandish and preposterous. a

  • Floyd Style

     it wouldn’t pass though  the antitrust anyway

  • Terry Casey

    buy intel and vimeo.

  • aardman

    Kind of disappointing that Buffett would recommend a buyback.  Buybacks are just pure, short term gimmickry for artificially raising your stock price.  Does a buyback improve the way the company is run?  No.  Does a buyback have stock price effects that last long after the company stops buying back its stock?  No.  Does a buyback reward the worst kind of stockholder, the one  who’s in it for the short term?  Yes. 

    I thought Buffett was all about avoiding stock price gimmickry, focusing instead on real value.

  • NAlMulaifi

    Apple should by RIM. Imagine iPhones had BBM? Only it would be iMessage, with a pin. This way people could add one another if they didn’t want to exchange numbers or emails.

  • cleancutmedia

    Apple should buy a small country so they can vote in a president and they can build all their factories and manufacturing there under their own rules. solves a lot of problems.

About the author

Ryan FaasRyan Faas is a technology journalist and consultant living in upstate New York who has written extensively about Apple, business and enterprise IT, and the mobile industry. In addition to writing for Cult of Mac, he is a contributor to Computerworld, InformIT, and Peachpit Press. In a previous existence he was a healthcare IT director as well as a systems and network administrator. Follow Ryan on Twitter and Google +

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