Buffett: I Told Jobs to Buy Back Apple Stock

Apple co-founder Steve Jobs asked Berkshire Hathaway CEO Warren Buffett about two years what he should do with his company’s growing cash pile. Mr. Buffett said Apple should buy back some of its stock — advice Mr. Jobs never took.

Buffett to Jobs: Buy back some stockBuffett to Jobs: Buy back some stock

Mr. Jobs was still Apple’s CEO when he called Mr. Buffett to talk about his company’s cash reserve. Mr. Buffett said he offered Mr. Jobs four options: stock buybacks, dividends, acquisitions, or holding onto the money, according to CNBC.

“I would use it for buybacks if I thought my stock was undervalued,” Mr. Buffett told Mr. Jobs, and Mr. Jobs agreed that Apple’s stock was undervalued. At the time, the company’s stock was sitting up over over US$200. Today it’s above $520.

“[Steve] didn’t do anything, and of course, he didn’t want to do anything,” Mr. Buffett said. “He just liked having the cash.”

As of Apple’s fist quarter earnings report in January, the company has over $97 billion in cash. While Apple still hasn’t bought back any of its stock, it has at least made an acquisition recently with the purchase of Chomp.

Chomp is an app and service that offers an arguably easier way to discover new titles on the iOS App Store compared to Apple’s own search system.

Of course, Apple could decide to buy back stock at any time, although for now it looks like the company will stick with the occasional acquisition despite Mr. Buffett’s advice.