Warren Buffett educated Tim Cook, Steve Jobs about the benefits of stock buybacks

Apple CEO Tim Cook shared details about Apple's start of stock buybacks, and has confirmed that Warren Buffett put Apple on the track to do so — and the "Oracle of Omaha" tried to put the company on the path years before.

Speaking to CNBC at the Berkshire Hathaway shareholder's meeting in a broadcast interview, Cook elaborated on the time leading up to Apple's decision to start the stock buybacks, and how we ultimately made the decision to do so at the end of 2012.

"I'd been in the CEO spot maybe a year or so, we had a growing amount of cash, we had crossed the $100 billion mark, if my memory is correct. When I don't have experience with something, I make a list of the people that I think that are the smartest people that I can contact to get advice," recounted Cook. "Warren was on the top of the list. As you can imagine, I hadn't met Warren before."

"I get his number, I call out in Omaha, and I wasn't sure that he'd take the call. Call out of the blue, he doesn't know me from Adam," said Cook. "But he took the call, and I had a great conversation with him, and that was the first time that I met Warren."

"He was very clear to me, he said 'let me just cut through it, if you believe that your stock is undervalued, you should buy your stock,'" Cook said, recounting the call. "I thought that was just the simplest way to look at it."

Cook and Buffett also both confirmed during the Berkshire Hathaway shareholders' meetings and resultant interviews that Steve Jobs was also given the same advice about buying back stock. Cook took the advice, and Jobs continued to reject it for years.

The Wall Street Journal called the repurchase programs a "bad investment" in late 2018. That didn't stop Apple from announcing more, with an additional $75 billion program announced during the April 30 earnings announcement.

Other Apple-related tidbits that have come out of the shareholder's meeting include the fact that Apple buys a small company every few weeks, and Apple is now more of a "consumer company" than a tech firm, as it has evolved.

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16 Comments

Latko 398 comments · 7 Years

About 5 years ago

Cook should have better followed Jobs’ track and leave finance to the many professionals Apple has. His companies’ interests are institutionally different from Berkshire Hataways’

SpamSandwich 32917 comments · 19 Years

Latko said:

Cook should have better followed Jobs’ track and leave finance to the many professionals Apple has. His companies’ interests are constitutionally different from Berkshire Hataways’

I agree. Buybacks and dividends are generally a dumb use of cash. They should concentrate on growing the value of the stock with continued profitability and market growth, not engage in accounting tricks to satisfy institutional investors.

Kuyangkoh 838 comments · 7 Years

Latko said:

Cook should have better followed Jobs’ track and leave finance to the many professionals Apple has. His companies’ interests are institutionally different from Berkshire Hataways’

He said he took that advice....why invent the wheel....No body can be Steve but follow his legacy only. Wall Streets only wanted to play and makes money by manipulating and announcing un verifying factoid. So called analysts or experts are paid to spread falsehood.....

Kuyangkoh said:

Latko said:

Cook should have better followed Jobs’ track and leave finance to the many professionals Apple has. His companies’ interests are institutionally different from Berkshire Hataways’

He said he took that advice....why invent the wheel....No body can be Steve but follow his legacy only. Wall Streets only wanted to play and makes money by manipulating and announcing un verifying factoid. So called analysts or experts are paid to spread falsehood.....

Be assured: Luca Dimaestri will know a thing or 200 and more about stock buybacks.
This is just public Buffett appeasement <=> countryclub gameplay that a product guy wouldn’t be involved in. Hence my ref to Steve

cia 269 comments · 21 Years

SpamSandwich said:

Latko said:

Cook should have better followed Jobs’ track and leave finance to the many professionals Apple has. His companies’ interests are constitutionally different from Berkshire Hataways’

I agree. Buybacks and dividends are generally a dumb use of cash. They should concentrate on growing the value of the stock with continued profitability and market growth, not engage in accounting tricks to satisfy institutional investors.

As a shareholder for over 20 years, I've seen Apple's stock price rise thanks to solid products and terrific marketing. When income and profits are consistently rising thanks to those factors, buybacks and dividends just add gravy. No complaints at all about the current program. They've bought back 30% of the outstanding shares since 2012. I'd be happy to see another 30% bought back over the next 7 years. Stocks should be a long play. If you are looking for monthly massive increases, Apple isn't the stock for you. If you are investing for 10+ years, Apple is a solid pick. They aren't going away anytime soon.