Apple ‘cash machine’ puts profits ahead of innovation

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Apple cash machine
Chamath Palihapitiya is impressed with the Apple "cash machine."
Photo: CNBC

Apple to many seems to have lost its mojo for innovation. But it knows how to build a pile of cash.

This is the impression of Silicon Valley venture capitalist Chamath Palihapitiya, who told CNBC Wednesday the very thing that feeds the frustrations of Apple fans – innovation in Cupertino is slipping.

“I think Apple is a productive cash machine,” Palihapitiya said on CNBC’s Squawk Box. “Is it a font of innovation? Unclear, trending to probably not.”

Palihapitiya has unique insights into tech innovation. Before he became the founder and CEO of a fund that specializes in tech in education and healthcare, he was a software engineer and manager with companies like AOL and Facebook, which joined in its first year to help expand its user base.

The Apple cash machine

Apple made a name for itself under founder Steve Jobs, but since his passing in 2011, fans feared fresh ideas went with him.

Hand-picked successor Tim Cook said Jobs’ innovative spirit lives on. Apple stays mum on its future products so its Research and Development teams could have many surprises in the pipeline.

For now, Apple continues to surprise the investment community. Earlier this month, a jittery Wall Street got good news during Apple’s quarterly earnings call that the new flagship iPhone X was selling better than initially believed.

Cook also told investors Apple was currently working on its most impressive product ever, but as expected he offered nary a glimpse at those products.

Apple ended 2017 with a record cash value of $285.1 billion.

During his Squawk Box appearance Wednesday, Palihapitiya said it makes sense Warren Buffett would push Berkshire Hathaway to raise its Apple stake.

“They are famous buyers of value,” he said. “There’s tremendous value at Apple. There’s enormous cash flow in Apple.”

Buffett earlier in the week said his company bought 165.3 million shares in Apple to start the year, giving him about 5 percent of the company.

“I’d love to own 100 percent of it,” Buffett said.

Source: CNBC