He will ignore the latest call for Apple to share its huge cash hoard as he ignores them all
Sacconaghi’s polemics against Apple’s policy of holding on to its profits — rather than distributing them to its shareholders — tend to pop up like Sweet Williams every two years. In the 22 months between his Oct. 2008 call for a stock buyback and his July 2010 call for a buyback and dividend, Apple holdings in cash and marketable securities have grown from $24.5 billion to $46 billion — highest among all U.S. listed companies, as Sacconaghi is at pains to tell the board, and greater than the total market capitalization of all but 49 of the S&P 500 companies.
Here’s what Sacconaghi — and most of the commentators — is missing. He writes as if Apple’s shareholders owned the company. While this is technically true, and it’s certainly the way investment advisers talk to their clients (see, for example, here), it’s clearly not the way Steve Jobs sees things.
Jobs, you will recall, was ousted from Apple and had to sell NeXT in part because as a young entrepreneur he paid insufficient attention to the bottom line. When he returned to Apple in 1997 the company was, according his recollection, three months away from bankruptcy. Since then he has treated Apple’s growing cash hoard like a starvation survivor treats food in the larder — something that could disappear at any time.
“We know if we need to acquire something — a piece of the puzzle to make something big and bold — we can write a check for it and not borrow a lot of money and put our whole company at risk,” Jobs said in February, the last time a shareholder asked him publicly why Apple didn’t pay dividends.
“The cash in the bank gives us tremendous security and flexibility.”
And he’s going to keep it that way, no matter how loudly the shareholders — or Toni Sacconaghi — complain.
ADDENDUM: Reader Dave Bernard, who knows a thing or two about taxes, adds this twist:
Bernard is the former vice president of taxes at Kimberly-Clark and past International President of the Tax Executives Institute.
[Follow Philip Elmer-DeWitt on Twitter @philiped]