Warren Buffet: Apple Should Buy Stock Back For Eighty Cents On The Dollar

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Famed investor and philanthropist Warren Buffet stopped by CNBC’s Squawk Box this morning, and the Berkshire Hathaway head had some interesting thoughts on what Apple should do with its cash: by back all of its stock from investors, just like Warren Buffett told Steve Jobs to do years ago.

Asked about what do with Apple’s $137 billion in cash, and AAPL’s depressed stock price, Warren Buffett said the last thing Apple should do is cave to David Einhorn’s push for ‘iPref’ shares:

I would ignore him. 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.

I heard from people each time [Berkshire shares went down], saying why don’t you do this or that. Pay a dividend. I think Apple’s done a good job of building value. They may have too much cash. Now one reason they have so much cash is two thirds of it has not yet been taxed.

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. Now, when our stock went from $90,000 to $40,000 to $45,000, I wrote about, we wanted to buy the stock. We didn’t quite manage to.

But if you could buy dollar bills for 80 cents, it’s a very good thing to do.

This isn’t the first time Buffett has claimed to have given Jobs advice on what to do with Apple’s cash. Last year around this time, Buffett made similar remarks on the same show.

Still, it sounds like sage advice to me: build a business for the long haul, and ignore the whines of investors who want to abandon ship the second the market gets cold feet. My guess is that this is exactly what Apple is doing saving its $137 billion cash hoard.

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John BrownleeJohn Brownlee is a Contributing Editor. He has also written for Wired, Playboy, Boing Boing, Popular Mechanics, VentureBeat, and Gizmodo. He lives in Boston with his wife and two parakeets. You can follow him here on Twitter.

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