Mr Buffett recalled a memorable phone call he had with Mr Jobs
Following the release of Apple’s Q3 earnings report, which exceeded expectations, a story from 2012 has resurfaced about Steve Jobs seeking investment advice from legendary American investor Warren Buffett regarding Apple’s cash reserves.
In a 2012 interview with CNBC, Mr Buffett recalled a memorable phone call he had with Mr Jobs two years prior. “It was an interesting conversation because I hadn’t talked to him in a long time,” said the Berkshire Hathaway chairman. Mr Jobs had reached out for advice on managing Apple’s significant cash reserves. “He said, ‘We’ve got all this cash. What should we do with it?’ So we went over the options.”
Mr Buffett explained that companies typically have four choices for utilizing cash: stock buybacks, dividends, acquisitions, or holding onto it. Mr Jobs made it clear that Apple wouldn’t pursue large acquisitions requiring substantial cash.
“I went through the logic of each option. He told me they would not have the opportunity for big acquisitions that would require lots of money,” Mr Buffett said during the interview. When Buffett suggested stock buybacks if Apple believed its stock was undervalued, Mr Jobs replied, “I think my stock is very undervalued.”
Ultimately, Mr Jobs decided not to follow Mr Buffett’s advice. “He didn’t do anything, and of course, he didn’t want to do anything. He just liked having the cash,” Mr Buffett said with a laugh. “It was very interesting to me because I later learned that he said I agreed with him to do nothing with the cash.”
Earlier this year, Bill Gates, the founder of Microsoft in an interview with Dax Shepard said, “Steve Jobs was a natural. It was always fun to watch him rehearse because part of his genius was when he would finally do it, he would make it look like he’s just thinking it up right there,” he said. “I’ll never achieve that level,” Mr Gates added.
During the podcast, Mr Gates stated that he and Mr Jobs were travelling the world in their respective capacities as representatives of Microsoft and Apple and that their task was to convince individuals and organisations of the potential benefits that tools like spreadsheets and email could have for their daily lives and careers.
“We even called it evangelization. Some people might not like that we stole a term of religion, but telling the story of the magic of software is something that – certainly by the time I was in my 30s – was a big part of the job,” he said.
