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
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Amber Rudd's ignorance isn't just a problem for the laws she writes

Politicians' lack of understanding leads to the wrong laws - and leaves real problems unchecked. 

Amber Rudd’s interview with Andrew Marr yesterday is not going to feature in her highlights reel, that is for certain. Her headline-grabbing howler was her suggesting was that to fight terror “the best people…who understand the necessary hashtags” would stop extremist material “ever being put up, not just taken down”, but the entire performance was riddled with poorly-briefed errors.

During one particularly mystifying exchange, Rudd claimed that she wasn’t asking for permission to “go into the Cloud”, when she is, in fact, asking for permission to go into the Cloud.

That lack of understanding makes itself felt in the misguided attempt to force tech companies to install a backdoor in encrypted communications. I outline some of the problems with that approach here, and Paul Goodman puts it well over at ConservativeHome, the problem with creating a backdoor is that “the security services would indeed be able to travel down it.  So, however, might others – the agencies serving the Chinese and Russian governments, for example, not to mention non-state hackers and criminals”.

But it’s not just in what the government does that makes ministers’ lack of understanding of tech issues a problem. As I’ve written before, there is a problem where hate speech is allowed to flourish freely on new media platforms. After-the-fact enforcement means that jihadist terrorism and white supremacist content can attract a large audience on YouTube and Facebook before it is taken down, while Twitter is notoriously sluggish about removing abuse and hosts a large number of extremists on its site. At time of writing, David Duke, the former head of the Ku Klux Klan, has free use of YouTube to post videos with titles such as “CNN interview on Bannon exposes Jewish bias”, “Will the white race survive?” and “Stop the genocide of European mankind”. It’s somewhat odd, to put it mildly, that WhatsApp is facing more heat for a service that is enjoyed by and protects millions of honest consumers while new media is allowed to be intensely relaxed about hosting hate speech.

Outside of the field of anti-terror, technological illiteracy means that old-fashioned exploitation becomes innovative “disruption” provided it is facilitated by an app. Government and opposition politicians simultaneously decry old businesses’ use of zero-hours contracts and abuse of self-employment status to secure the benefits of a full-time employee without having to bear the costs, while hailing and facilitating the same behaviour provided the company in question was founded after 2007.

As funny as Rudd’s ill-briefed turn on the BBC was, the consequences are anything but funny. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.