Berkshire Hathaway (BRK.A) chairman Warren Buffett says he would advise Apple (NASDAQ:AAPL) chief executive Tim Cook to ignore all the pressure to return to cash to shareholders and run the business so it creates the most value over the next few years.
“I would ignore him,” Buffett said on CNBC on Monday, referring to Greenlight Capital manager David Einhorn, who has been pressuring Apple to return more money to its shareholders. “I would run the business in such a manner as to create the most value over the next five to ten years. You can’t run a business to push the stock price up on a daily basis.”
According to Buffett, Berkshire Hathaway’s stock has dropped substantially on multiple occasions, leading to people criticizing the company and making strategy suggestions. Apple has been under immense pressure lately after its stock price fell more than 36 percent since reaching a record high in September and then shareholders started clamoring for an increased payout.
“Berkshire has gone down 50 percent four times in its history,” Buffett said, according to a Barron’s transcription of the interview. “When that happens, if you’ve got money you buy it. You just keep working on building the value. I heard form 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”…
Buffett did concede that the iPhone maker probably had too much cash on its hands. “They may have too much cash,” Buffett said. “When Steve [Jobs] 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.’”
According to Buffett, he recommended to Jobs at the time to buy back Apple’s stock. “If you could buy dollar bills for 80 cents, it’s a very good thing to do,” he said.