Comments:

1. Mark on January 8th, 2012 at 20:53:

   After 60 years it really is time for something to come along and replace “rock” but in the interim this deserves not just the “awesome” tag but a special “AWESOME” one.

Comments:

1. Spaceman Spiff on January 7th, 2012 at 15:36:

   I think that for shutdown/restart confirmation dialog boxes there should only be two options – “Yes” and “Oops…”

2. Jim on January 7th, 2012 at 23:05:

   That’s a lot of fun. I wonder how many viewers got the exact version of the OS right, just from the looks of the dialog box. Loved the floppydrivesound from the Amiga restart, lol.

Comments:

1. Mudak on January 7th, 2012 at 10:23:

   This letter has to be a joke. If not, where did it come from?

2. Desiato on January 7th, 2012 at 14:00:

   The fact that it makes no sense is the point, right? The implied argument is “only a crazy BS argument could be used to try to explain why Apple isn’t paying out some of its crazy cash hoard to its share holders”.

3. John Sinteur on January 7th, 2012 at 14:02:

   One could argue that the hoard of cash makes Apple a more interesting take-over target, and that’s why I suspect Apple has dropped hints that they may start paying a dividend. But this, claiming that they are hoarding cash because they are about to go broke makes so little sense I have no idea…

4. Desiato on January 7th, 2012 at 15:05:

   (Aside: the quoted text does not claim Apple is “about to” go broke. It says that if Apple holds on to the cash, then “one day” they’ll find a way to waste it.) (Given that Apple already almost went broke in the 90s, it’s not much of a stretch to argue that this is a long term possibility.))

   I’m intrigued by your mention of take-over noise. It may be obvious that having cash makes any company a “more” interesting take-over target, in the narrow sense of “more so than if they didn’t have cash and traded at the same stock price”.

   But is Apple a feasible take-over target in any sense? Since Apple is quite profitable and the stock has done well, you’d have to offer a serious premium over the current stock price. Market cap is $400bln these days. Even subtracting out the $80bln in cash and assuming a 50% premium, the take-over bid would have to be $480bln (ie. minimally 51% thereof in hand to get control). Where would that come from? There’s no other company that could offer its stock in a deal. The Chinese government deciding it’d like to own Apple? I can’t think of many other players at that level. And I don’t think you can make it work by selling off parts of the company to finance it–Apple would be hard to split up. So I’d be curious to read a serious argument that Apple is a take-over target.

5. John Sinteur on January 7th, 2012 at 15:11:

   Market cap is $400bln these days. It is. And today that’s fine – but if it ever were to drop, say, 15% in a month, the 50% premium would evaporate overnight, and suddenly you’re talking a much, much lower take-over bid, where the $80bln in cash makes a big dent in that amount, and it’s probably better to lower it a bit to, say, $40bln over a few years by giving out significant dividends.

   And since European banks park $500bln of their assets overnight at the ECB right now because they’re afraid to borrow to each other and probably don’t really know what else to do with it, I’m not too sure that lower take-over bid wouldn’t be easier to assemble than you’d think.

6. Desiato on January 7th, 2012 at 15:45:

   Can you support the claim that a stock price drop would make the 50% premium evaporate? I don’t agree with that at all. Of course it depends on the cause of the drop (i.e. does the stock drop because of material news about the company). But Apple regularly fluctuates by ~10%. That doesn’t change the fact that it’s a high-growth, high-profit company, which is the reason it would command a premium.

   Just some reference points: HP paid a 23% premium for Palm, which was dying. Microsoft offered a 62% premium for Yahoo! which was far from its prime. You think Apple will fetch less of a premium than Yahoo, even if the stock dips a bit?

   The fact that dozens of banks park a combined $500bln of liquid assets is no argument. First, banks rarely team up in high profile corporate take-overs. Second, banks can’t randomly convert liquid cash into long term holdings. You’d need to find a private equity fund with hundreds of billions in cash. Hint: Berkshire-Hathaway’s market cap is $190bln, and Buffett tends to do deals up to single-digit-billions.

   This whole logic that a company’s cash can be used to buy it doesn’t work for every company. Companies tend to be valued primarily for their future earnings potential. When the expected earnings are very uncertain (say, AOL or B&N), the valuations-from-earnings may drop towards zero and thus cash on hand will become significant. The key is that the new management think they can produce dramatically better earnings.

   None of this is the case for Apple, right? Future earnings are expected to be huge. Other management is very unlikely to do better. An acquisition would send important talent scurrying for the door. The company might immediately start using its cash on hand to start driving up the stock price. You’d have to offer a HUGE premium to get shareholders to sell.

   Nah.

7. Roland Hesz on January 7th, 2012 at 17:13:

   That’s the problem with the current system. The moment they took the dividends out of the system, it all turned into this short term oriented finance we came to know.

8. Sue W on January 7th, 2012 at 18:54:

   @Roland: Exactly!