Although he is not an Apple shareholder, investment guru Warren Buffett has some unsolicited advice to the giant tech company amid a hedge fund manager call for Apple to issue preferred shares to deal with the excess cash hoard of the company.
Reuters Warren Buffett is the co-founder of The Giving Pledge. He was ranked the world’s wealthiest person in 2008 and his current net worth is US$46 billion. He had promised to give most of his wealth to the Bill & Melinda Gates Foundation.
"I would ignore him [Einhorn]. I would run the business in such a manner as to create the most value over the next five to 10 years," Mr Buffett was quoted by BRW.
He pointed out that Apple can't run a business to boost stock prices on a daily basis. He shared that share prices of his investment company, Berkshire Hathaway, had plummeted 50 per cent four times. For companies in similar situations, they should instead buy back the shares if they have funds and then keep on building the stock's value.
It was the same advice he gave to former Apple founder Steve Jobs who called him to seek guide on what to do with the company's growing cash hoard. Unfortunately, Mr Jobs didn't follow his advice.
While hedge fund manager David Einhorn dropped on Friday the lawsuit he filed against Apple in February, he said he would continue to pressure the maker of iPhones and iPads for higher dividends for stockholders.
Apple CEO Tim Cook, at the annual stockholders' meeting said he understood the disappointment of shareholders over the significant drop in Apple shares from a high of $705.07 in September 2012. The drop continued on Monday when Apple's value went down below $400 billion for the first time in 12 months.
The drop in share value came amid a court ruling that reduced the damage that South Korean tech firm Samsung has to pay Apple to $450 million from $1.05 billion. The decision was issued on Friday by U.S. Judge Lucy Koh.
Another recipient of Mr Buffett's unsolicited advice is the federal government. He said the automatic federal budget cuts should help cut the national deficit and would likely not hurt the American economy too much.
The across-the-board budget cuts would reduce federal spending in 2013 by $85 billion, but the federal government would still have a deficit equivalent to about 6 per cent of the country's gross domestic product. Besides the budget cut, the government also hiked the payroll tax.
"We're going to bring down spending and we're going to bring up revenues and we may get there in fits and starts and everybody may scream each time we do it. But the deficit is going to come down," the LA Times quoted Mr Buffett.
Mr Buffett bought into food manufacturing Heinz which he said he plans to keep long term.
Mr Buffett, who also issued on Friday his annual letter to Berkshire shareholders in this video, said he plans to look for more companies to buy in 2013 after a weak yield in 2012.
Warren Buffett is the co-founder of The Giving Pledge. He was ranked the world’s wealthiest person in 2008 and his current net worth is US$46 billion. He had promised to give most of his wealth to the Bill & Melinda Gates Foundation.