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Apple’s Next Iteration – Become a Berkshire Hathaway

February 19, 2013

Apple is loaded with cash.  $135 billion!  A lot of moola!  So much so that some of its stockholders are suing to force the end of its cash hoarding.  I have an idea of what Apple could do…

apple

Apple could become another Berkshire Hathaway (BRK).  Apple could use its cash to acquire companies – whole companies.  Alternatively, they could invest in well-known brands that need cash.  Apple could follow BRK’s formula of receiving dividend-paying preferred stock with common stock warrants.  Apple would receive dividends that would be 70% tax free and have the right to buy common stock for a limited period.

 

Apple would employ its cash, get above market returns, share in company growth, and have the dividends recycled into other deals or for company use.  The most recent acquisition announced by BRK is the $23 billion Heinz purchase, along with a partner.  BRK’s partner will help in overseeing Heinz and sharing equity.  However, BRK is putting in a second amount equal to the total equity contributed by both parties for high dividend preferred stock.

 

Apple can co-venture with much more experienced M&A players, utilize their cash and grow their company independent of the market space they invented and still own a large portion of, and get rid of the pesky law suits.  And possibly, shareowner value will be enhanced!

2 Comments leave one →
  1. Ray Russoillo permalink
    February 19, 2013 11:55 am

    You are making an implicit yet very important assumption – that Apple can attract or home grow its own version of a Warren Buffett. Not such an easy task.

  2. February 19, 2013 5:17 pm

    This is my idea and a possibility and even a probability. Ray, you are right with the assumption, and it won’t be easy, and the first few deals Apple does, if they follow my idea, will lack proper diversification of their portfolio. So, it needs work, but the idea is out there now.

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