Tech Check

Apple Stock Buyback Post: Your Replies To My Suggestion

As you might expect, my earlier postcalling on Steve Jobs to announce a shareholder buyback at tomorrow's Apple annual shareholder meeting, generated quite a bit of reader reaction.

As we prepare to cover the meeting, I'm curious how many of you plan to attend, how many plan to listen to the web cast, how many of you are frustrated, and how many of you longer term Apple investors are satisfied thus far with how things are going at the company.

In the meantime, here's a sample of some of the feedback so far:

From Jeff Pritchard, a regular reader:
"Can't a stock have an overdue correction without all the complaining from shareholders? You're acting like Apple stock should be invincible and ignore all of the happenings in the market. iPods and iPhones are all luxury items and when the market turns south, those are the first items people stop buying. Instead of yelling at Jobs to buy back some stock, why not tell him to make a lower-end phone that people would still buy even if they were strapped for cash?"

I think this misses the point: Apple business isn't slowing; sales continue strong; the company is sitting on a mountain of cash; continues to generate more than a $1 billion a quarter. DURING what seems like a recession.

Robert Geist writes:
"Apple has zero, yes read it, ZERO obligation to spend $8.5 billion buying back stock at this point." He adds that "late-to-the-party" investors have no one to blame but themselves. "Too bad, so sad," he says. It's an exceptionally long letter,but he concludes with: "As for me, I'm ecstatic about the share price drop. I plan on putting some more money into Apple when I am sure it's the very best time."

Dave Tobias calls my post "flawed due to its short term nature." He adds:
"Let the shares fall in the short term - long term longs should not care because they will understand that, with that pile of cash, Apple could institute a meaningful dividend or share buyback at any time. Apple is a great company but one that has benefited from a bubble economy." Cash is king, he says and Apple should "hoard" it.

John Randolph takes issue with my "gift" reference to the $150 million (not $100 million that I had written) from Microsoft. He says Apple had a half billion in the bank at the time and that the money was a Microsoft lifeline to avoid criminal penalties because it allegedly stole QuickTime from Apple. He says Apple is always making meaningful acquisitions, but that I just don't realize it because I have "no understanding of Apple's business." He concludes: "Have you ever been in charge of a public company, and had shareholders to answer to? I'm guessing you haven't, since you're awfully cavalier about tossing $10 billion dollars at Wall Street to try to manipulate the stock price. Apple is a technology company, not a trading company. If you're so sure that Apple should spend billions on a stock buyback then buy some shares, come to the shareholder's meeting and propose it. I'll vote my shares against it."

Rob writes:
"I can't believe that anyone with any shred of responsibility could say what you've said with a straight face. Your advice isn't worth the paper it isn't printed on. Thank goodness Mr. Jobs doesn't listen to people like you."

And this, from Tom Fraser:
"Jim, you are without question one of the best journalists covering Silicon Valley." (Come on, after those first few, indulge me. I had to put this in.) "Mostly your case comes down to 'show us you care,' or 'put your money where ours is...A company buying back stock is making a decision that this is the best investment it can make."

Lindy writes: "You can't even begin to know (or maybe you've heard from a lot of shareholders, and 'do' know) how elated and grateful sooooo many Apple shareholders are - to have read your letter to Steve Jobs !!"

Vashdev was short and to the point:
"I believe a company buyback of some stock makes good sense for the shareholder value."

Chigusa adds: "Thanks you for the fantastic article." He also says, "I do not care if Apple actually buys back shares. Just having the buyback program will protect Apple from repeated bear attacks that we have seen recently. In addition, if Apple does not buy back, then the bears will see Apple is not so confident that they will meet the Street expectations. Another reason that Apple should buy back is the declining return on cash."

Don Bach says: "An Apple stock buyback is not a good idea." He wants Apple to be nimble enough, and flush enough, to make acquisitions. Not to mention the ability to fend off "hair-brained litigation." He says, "Apple does not want to find itself in a position where it wishes it had more cash."

Don, I'm not saying the company needs to spend ALL its cash. Or even most of it. Just some.

David from Kentucky says:
"As an Apple shareholder, I couldn't agree with you more..."

Pedro, all the way from Portugal, writes: "...My motivation to write this email is just to tell you how much appreciation you have here in this reader and how thankful I am for you to be out there, Jim Goldman, speaking your mind out in your very unbiased characteristic way. THANK YOU!"

And Thank You for writing in!

Thomas from Pennsylvania writes:
"Mr. Jobs owes all us shareholders a bone."

Says Ed:
"You are right on with a stock buyback. But there is another way to spend the $18 billion: Cut the damn cost of owning an Apple product!"

Just a taste of some of the reaction thus far. Keep the comments coming. I'm glad you're reading. I'm looking forward to Apple's question and answer period at the meeting tomorrow.

Questions?  Comments?