When and How to Return Capital to Shareholders

This is a good article on what to do with a big cash hoard with Apple as the example par excellence. I am with Felix. I don’t like financial engineering. I have seen too many good companies hollowed out just to juice the stock (often with little effect) only to leave them with financial risk that comes back to bite a few years down the line (ala Private Equity). And I don’t like roll-ups. I have seen too many companies raid the cookie jar either to keep the growth for growth sake game going (at a much lower quality level), or for ego purposes or because they don’t know what else to do with the money (because they have no vision). The underlying thought or dislike is that we mouth epithets to shareholder value creation and returning capital to shareholders but the reality is that management controls the show. It is not too far from the truth that management does most things to benefit management. Being disciplined with cash is just as important for a company as it is for an individual. From an investor/shareholder perspective I am quite happy with a firm accumulating cash and maintaining a strong, clean balance sheet. If the cash stock is beyond what is reasonable (as is the case with Apple...ironically) then it can be returned in the form of a dividend (drip it out), rather than buybacks that sound good in theory but I never seem to see any real effect (other than juicing EPS for management stock options).

http://blogs.reuters.com/felix-salmon/2013/10/29/apple-should-be-like-bloomberg/

Apple the new Microsoft

Apple has benefited greatly from peoples dislike of Microsoft's dominance and penchant for marginal upgrades. The seemingly constant need to update to new versions of the operating system or Office has hacked alot of people off.

Apple, in its present pursuit of monopolist profits, has now picked up the same playbook and will no doubt become persona non grata in a few years once people get sick and tired of paying more for the newest, latest, greatest, or even worse, getting stuck with some of their orphaned software and/or systems.

You've been warned!

Steve Jobs passing is a milestone and a chance for reflection

I was saddened to hear of Steve Jobs passing. I heard it at tennis last night, and it was the first thing I passed along to H when I got home. He has touched my life with his products and has left a mark upon modern society and culture. A modern day Thomas Edison. It is amazing to see the outpouring of emotion today. A milestone.

We had a discussion with the kids at breakfast this morning regarding his impact upon our lives and his legacy. In going through his history (Pong, founding Apple, getting fired, NEXT, Pixar, and then rejoining Apple and transforming the modern consumer technology landscape), he is a testimony to perserverance, dedication, vision, and giftedness.

It was somewhat appropo because Emma asked about Henry VIII, and that got us into a discussion about the reformation and how people leave their impact upon society and culture, oftimes with us not even knowing the source.