Warren Buffett Says Steve Jobs Once Called Him Asking How To Invest Apple's Cash Pile – But Ignored His Advice And Did Nothing Instead

Apple recently released its Q3 earnings report, beating expectations and showing why it's still a top player in tech. Even though Steve Jobs passed away in 2011, his name will always be synonymous with Apple. During a 2012 interview on CNBC's Squawk Box, Warren Buffett shared a memorable phone call he had with Jobs about Apple's cash reserves a couple of years prior.

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"It was an interesting conversation because I hadn't talked to him in a long time," Buffett said. Jobs had called to get advice on what to do with Apple's massive cash pile. "He said, ‘We've got all this cash. What should we do with it?' So we went over the options."

Buffett told Becky Quick that companies usually have four choices for using cash: stock buybacks, dividends, acquisitions, or holding onto it. Jobs made it clear that Apple wouldn't go for big acquisitions needing a lot of cash.

"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 recalled. When Buffett suggested stock buybacks if Apple thought its stock was undervalued, Jobs replied, "I think my stock is very undervalued."

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Despite this, Jobs chose not to follow Buffett's advice. "He didn't do anything, and of course, he didn't want to do anything. He just liked having the cash," Buffett noted with a laugh. "It was very interesting to me because I later learned that he said I agreed with him to do nothing with the cash."

Buffett admitted he wished he had bought Apple's stock back then. Once hesitant about tech investments, he has become a major shareholder in Apple through Berkshire Hathaway. His investment in Apple is now one of Berkshire's largest, showing his confidence in the company's future. 

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Over the years, he has repeatedly sung praise for Apple and Tim Cook. During a 2020 Squawk Box interview, Buffett explained how valuable Apple is to Berkshire, saying, "I don't think of Apple as a stock. I think of it as our third business." 

In a 2023 conversation with CNBC, Warren Buffett expressed his admiration for Tim Cook’s leadership at Apple. He described Cook as “one of the classiest CEOs” and emphasized his deep understanding of the business. Buffett remarked, "Tim Cook has managed that company in an extraordinary way." 

Highlighting the strong connection between the Apple brand and its loyal customers, Buffett illustrated this loyalty with an example: "If you're an Apple user and someone offers you $10,000, but the only condition is that they'll take away your iPhone and you'll never be able to buy another, you're not going to take it."

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Under Cook’s leadership, Apple has taken a more balanced approach to managing its cash reserves. Unlike Jobs, who preferred to hold onto cash, Cook has implemented a strategy that includes stock buybacks, dividend payments, and increased investment in research and development. 

In May, Reuters reported Apple increased its cash dividend by 4% and also authorized an additional program to buy back $110 billion of stock, making it the largest buyback in the company’s history.

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