This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Buffett to Tim Cook: 'Ignore' Einhorn

Stocks in this article: AAPLBRK.A

NEW YORK ( TheStreet) -- When Warren Buffett speaks, the markets listen. Perhaps it's time for Apple (AAPL) to listen as well.

Appearing on CNBC earlier this morning, Berkshire Hatahaway's (BRK.A) Buffett had some advice for Apple on managing the company.

The Cupertino, Calif.-based firm has come under attack from David Einhorn in recent weeks with regard to Apple's $137 billion cash hoard and what to do with it. "I would ignore him," Buffett told Becky Quick, talking about Greenlight Capital's Einhorn. "I would run the business in such a manner as to create the most value over the next five to 10 years. You can't run a business to push the stock price up on a daily basis. Berkshire has gone down 50% four times in its history. When that happens, if you've got money you buy it. You just keep working on building the value."

In order to boost Apple's share price, Einhorn has suggested Apple issue preferred stock, dubbed "iPrefs," to unlock the value of the company's foreign cash, which he believes the market is not giving credit to. Apple would offer perpetual preferred stock at a dividend rate of 4% to 6%, and not use any of its existing cash. Apple has responded to this, saying it would "thoroughly evaluate Greenlight Capital's current proposal to issue some form of preferred stock."

Speaking at a Goldman Sachs conference last month, Apple CEO Tim Cook echoed Buffett's thoughts. "We're managing Apple for the long-term," he said, when asked about Apple's direction. "I know people care about quarters and so forth and we care, but the decisions we make, the profound decisions we make, are for Apple's long-term health. Not for the short-term 90 day clock."

Apple has discussed returning cash to shareholders in recent weeks, and Buffett suggested that perhaps buying back stock would be the best course of action. He gave Steve Jobs this advice when he was running the company and asked what to do with Apple's growing cash hoard. "When Steve 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.' laughs I said, 'then buy back your stock.' He didn't ... But if you could buy dollar bills for 80 cents, it's a very good thing to do."

At its recent shareholder meeting, Cook said he and the board are not happy with Apple's share price compared to a few months ago. He reiterated, however, that the iPhone maker is focused on the long term. Cook mentioned that Apple's actively thinking about returning cash to shareholders. Apple's $137 billion cash hoard has attracted a lot of attention and Cook said Apple is in "very, very active" discussions on what to do with it.

On Monday Buffett revealed that Real Money's Doug Kass has been appointed to represent the bearish view of Berkshire Hathaway at the company's shareholder meeting scheduled for May 4.

Doug Kass headlines RealMoneyPro.com where he posts his Daily Trading Diary. See it free for 14-days.

-- Written by Chris Ciaccia in New York

>Contact by Email.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,765.60 +304.28 1.85%
S&P 500 1,959.62 +32.51 1.69%
NASDAQ 4,470.2480 +87.4010 1.99%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs