Warren Buffett Said Steve Jobs Completely Ignored His Advice On How To Invest Apple's Cash

Warren Buffett shared a look into a conversation with Steve Jobs about Apple Inc.'s financial strategy during a 2012 appearance on CNBC’s “Squawk Box.” 

In the "Ask Warren" segment, Buffett said, “It was an interesting conversation because I hadn’t talked to him in a long time. He said, ‘We’ve got all this cash. What should we do with it?’ So we went over the alternatives. It was kind of interesting.” 

This dialogue between two industry titans sheds light on the decision-making process at one of the world’s most valuable companies.

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Jobs, known for his transformative role in making Apple a global technology leader, reached out to Buffett to seek advice on the company’s cash-management strategies. Buffett, a legendary investor and chairman of Berkshire Hathaway Inc., outlined the four primary options available for deploying cash: stock buybacks, dividends, acquisitions, or holding onto it. 

Despite Jobs’s acknowledgment that Apple’s stock was undervalued, indicating that buybacks could be a wise choice, he ultimately decided against taking any action, preferring to maintain the company’s cash reserves. 

“I went through the logic of each thing. He told me they would not have the chance to make big acquisitions that would require lots of money," Buffett said. "And then I asked him the question, I said, ‘I would use it for buybacks if I thought my stock was undervalued.’ And I said, ‘How do you feel about that?’ The stock was 200-and-something. He said, ‘I think my stock is very undervalued.’ I said, ‘Well, what better to do with your money?’" 

Jobs liked having the cash and that was what he ultimately decided was his best option. Buffett added that Jobs interpreted their conversation as Buffett endorsing his decision to hold onto the cash. "I later learned that he said I agreed with him to do nothing with the cash," Buffett said.

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The discussion between Steve Jobs and Warren Buffett underscores a cautious financial approach, contrasting sharply with the bold actions of Jobs’s successor, Tim Cook. Cook’s tenure at Apple witnessed aggressive stock buybacks, totaling over $500 billion in the last decade, a sum surpassing the market capitalization of major corporations like Visa Inc., JPMorgan Chase & Co., and ExxonMobil Corp. This demonstrates Apple’s steadfast commitment to repurchasing its shares.

Apple’s buyback strategy not only boosted shareholder value but also increased Berkshire Hathaway’s stake in the company, despite no additional investment. Berkshire Hathaway, holding nearly 6% of Apple, benefited from these repurchases.

Buffett publicly endorsed Apple’s buyback endeavors, citing their positive impact on Berkshire’s holdings and Apple’s ecosystem in his 2021 letter to shareholders.

While Jobs prioritized liquidity, Cook utilized Apple’s financial robustness to actively manage its capital structure. This approach solidified Apple’s leadership in the technology sector, delivering value to both shareholders and stakeholders.

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This story was previously published on Benzinga and has been updated.