Einhorn has a point: what the hell is Apple doing sitting on that money?

Apple hoards cash, apparently, "like a person who has gone through a trauma".

Apple has had to fend off an attack from one of its share holders who is demanding it fork out more of its $137bn cash pile to investors.

David Einhorn has sued iPhone maker Apple accusing the most valuable company in the world of having a “depression era” mentality.

But for a company with a reputation like Apple, which no amount of third world worker scandals seems able to damage, this should be seen as nothing more than an advertisement, splashing the fact that Apple is sitting on more ready cash than a fair amount of small countries on to headlines around the world.

The billionaire activist, who heads up hedge fund Greenlight Capital, told US TV news channel CNBC that Apple hoards cash like a person who has gone through a trauma, referring to Apples near bankruptcy in the early ‘90s before Steve Jobs turned the firms fortunes around with the introduction of the iPod.

Apple shares have tumbled 35 per cent from their peak in September 2012 as its growth has slowed, despite the successful, if not phenomenal, launch of the iPad mini and iPhone 5.

Einhorn’s opinion may be justified; Apple is planning to eliminate its “preferred” stock, which pays out a fixed dividend over time, at its shareholder meeting later this month. These shares are better than ordinary shares when it comes to paying out a company's assets.

Einhorn, it should be noted, has a history of corporate meddling. In May 2011, Einhorn called for Steve Ballmer, (who is still) CEO of Microsoft, to step down after Microsoft was passed by both IBM and Apple in market value.

While Einhorn may not be the most trustworthy of activists, his point may well stand: What the hell is Apple doing with all that money? 

Apple has never explained its reasons for holding onto the cash other than to say its preserving its options but it certainly isn’t using it to develop new products. Apple's tally for research and development in 2012 was 2 per cent of its annual spend, dwarfed by its tech rivals. IBM’s for example is 6 per cent.

While Einhorn’s motives for demanding Apple make use of their cash maybe entirely about increasing his own fortune, Apple is in danger of stagnation if it doesn’t use its vast hoard wisely. 

Maybe the reason it has yet to spend its money is that, without the guiding light of Jobs at the helm, it doesn’t know what to spend it on.

Photograph: Getty Images

Billy Bambrough writes for Retail Banker International at VRL financial news.
 

Photo: Getty Images
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The barbecue that shows that Jeremy Corbyn is inevitable

Labour's been a long time dying, says Neal Lawson.

Just sometimes you spot something small and throw away which crystalizes something much bigger and really profound.  It happened recently about the future of the Labour Party, tucked away in the letters page of the Guardian. Steven Pound the MP for Ealing North shared his concerns about the influx of new, presumably Corbyn voting, members. 

The worry was this – only two of the 43 invited new members could be bothered to turn up for a barbecue and social. There it was, in a tiny chicken nugget, all you needed to know about why the Labour Party is a vehicle out of time and place and so ripe for the Corbyn Surge.

Let’s unpick the BBQ, the new members and their seeming reluctance to show up. The first thing that’s screams at anyone vaguely normal is why on earth would you want to go to a BBQ being organized by the Labour Party – when presumably you could go to a real one, with real friends.  There is a give away – it’s a “barbecue and social” – ie a barbecue where you have to be social – where you have to told to be social as if that weren’t a given. Does the Labour Party or anyone have BBQs that are unsocial?  When you decode it, what it means is come and pretend that Labour is ‘with it’ – that being a member is a deep cultural and social experience – when everyone knows it isn’t.

The Labour Party has been a front for years – a front for a technocratic and managerial elite who like to tell everyone what’s good for them and that they must suck up almost as many right wing ideas and polices as the Tories are offering to be in office.  And the party, in desperation and with nothing else on offer, had to go along with it. 

 Of course people get bored of being used and eventually despise knowing that all the party was doing was slowing the rate at which the poor got poorer and the planet burnt – that meetings were meaningless because all the real decisions were being made elsewhere. But the elite still needed the legitimacy of plastic members and their leaflets wouldn’t deliver themselves.  So the foot soldiers had to be given something – so why not a BBQ – that will show Labour has changed – that the party has deep roots and bags of fun. But it’s a scam. A Quorn sausage when only meat will do. Because we all know that really the elite want to read out the minutes and the matters arising from the last BBQ, to be Minister for burgers and the secretary of state for baked potato’s.

But its stopped working. What the Ealing 41 refusniks tell us is that they didn’t previously join Labour because there was no point.  Modestly humanized neo-liberalism, even with a BBQ and social, is not enough. A party still rooted in the culture of the last century – the factory - with no democracy and little connection to the governing norms of the 21st century – that of Facebook – was not attractive to them.

The surge around Jeremy Corbyn changed all that – Labour became interesting for the fist time despite everything about it – its elitism, its awful compromises, its lack of hope or belief in the best in people – only the worst (I’m really resisting German sausage jokes here).

The Pound letter ends with the chilling warning that maybe all these people had joined for was to get Jeremy Corbyn elected in the hope for something better. As if that’s wasn’t good enough – surely they understand there are more BBQs to be organized?   Cant they join and pretend with us  – vote for the status quo and eat their meat?

 But this is the 21st century. People join and swarm, in a none David Cameron unpejorative way.  Bubbles and waves appear so fast.  Foot free but progressively minded, agile and connected is the way millions of people now are. 400,000 of them have joined Labour since the last election. They will swarm  elsewhere quickly if Corbyn doesn’t win or over time if he fails to understand the nature of these new times.  The party of the past is dead regardless of who becomes Labour's leader.  But these wave of hope and action mean we can still change the world – just without making a meal of it. 

Neal Lawson is chair of the pressure group Compass and author of the book All Consuming.