If you had $100 billion, what would you do?

1 day ago, giovanni wrote

More realistically: I seriousely thing they should invest in their own manufacturing. Outsourching to Asia has been the current development model for some times, but is it the future?

 If they did their own manufacturing, people would rightfully point out that Apple has employees in sweatshop conditions. If they pay people high wages and low hours, the cost of manufacturing will go up.

The condition they have set up right now works best for them, they still get the benefit of cheap labor (the margins Foxxconn ends up making are razor thin), while partially washing their hands of it ("it's our suppliers, not us").

The only thing that could bring manufacturing back home is better industrial automation. I've read an article (I believe it was in Time?) about how industrial automation is stagnate because there isn't enough factories domestically to do the kind of research and development needed to advance. It's a bit of a chicken and the egg.

@Bass: iPad would cost more then $20.000 if it was produced domestically. Read it somewhere, I'll dig up link later.

1 hour ago, Maddus Mattus wrote

@Bass: iPad would cost more then $20.000 if it was produced domestically. Read it somewhere, I'll dig up link later.

Sounds a bit high. I would have said about $2000

@evildictaitor: I thought that the board has to act in the interest of the company, not so much of the shareholders and that would give it a little more freedom, but I am probably wrong. But in any case it is unrealistic to imagine that any company would give that amount of money to charity or to a foundation.

@Bass: and @Maddus Mattus:

The argument that, if someone working for me treats his employees badly is better than if I treat my own employees badly is simply hypocrite and should not be accepted by any society (and indeed it hasn't in many other cases).

I remember an article on the NY Times where Obama invited the gurus of the tech industry who were allowed to ask him a question. At the end, Obama asked a question to Steve Jobs: "what would it take to take these jobs back home [US]?" The answer was not primarily economical but that Asia has developed an incredibly flexible network of suppliers that can react very quickly to problems.

Apple was one of the last US tech companies to subcontract its assembly outside of the US and while its products have always been more expensive than average, they have never been so out priced.

If a large company like Apple tried to move some of its manufacturing back in the US I am convinced that it could fuel not only a stronger recovery but also the creation of a more solid network of industries and suppliers which would make the US competitive again on a global market.

What better opportunity than a $100 billion to try?

44 minutes ago, giovanni wrote

@evildictaitor: I thought that the board has to act in the interest of the company, not so much of the shareholders and that would give it a little more freedom, but I am probably wrong. But in any case it is unrealistic to imagine that any company would give that amount of money to charity or to a foundation.

The board has to act in the interests of the shareholders because the shareholders own the company. By looking out for the company they are looking out for the shareholders, but looking out for the shareholders is wider than that. A case in point being the handing out of dividends - this is strictly a bad thing for the company because it is giving away cash. But it is looking after the shareholder's interests by giving them back some of the money that they have.

@evildictaitor: I would argue that acting in the interest of the company is not always the same as the interest of the shareholders.

Normally, the interest of the shareholders is - rightfully - to earn as much money as possible in the short and/or long term (though different shareholders might have different and conflicting goals such as personal satisfaction or political aims).

The interest of the company is to exist and continue to do so in the long run. For this it needs to satisfy its shareholders but also obey the law and contribute to a healthy economy.

15 minutes ago, giovanni wrote

@evildictaitor: I would argue that acting in the interest of the company is not always the same as the interest of the shareholders.

Normally, the interest of the shareholders is - rightfully - to earn as much money as possible in the short and/or long term (though different shareholders might have different and conflicting goals such as personal satisfaction or political aims).

The interest of the company is to exist and continue to do so in the long run. For this it needs to satisfy its shareholders but also obey the law and contribute to a healthy economy.

* Obeying the law sort of goes without saying.
* Managing the economy is the job of the government, not the job of the companies and workers that constitute it, and hence of no real concern to companies (that doesn't mean they can't lobby the government for changes that would benefit the company). In fact this is one of the reasons why so many big companies use tax-avoidance schemes to pay less tax. Tax avoidance damages the wider economy, but reduces the tax-burden on the company and hence improves profits.

The long term profitability of a company is a special case of ensuring the long term profitability of the shareholders. If the long term profitability of the shareholders can be served at the expense of the long term profitability of the company. the board may also take that action (for example selling company assets to pay a dividend).

44 minutes ago, evildictaitor wrote

*snip*

* Obeying the law sort of goes without saying.
* Managing the economy is the job of the government, not the job of the companies and workers that constitute it, and hence of no real concern to companies (that doesn't mean they can't lobby the government for changes that would benefit the company). In fact this is one of the reasons why so many big companies use tax-avoidance schemes to pay less tax. Tax avoidance damages the wider economy, but reduces the tax-burden on the company and hence improves profits.

The long term profitability of a company is a special case of ensuring the long term profitability of the shareholders. If the long term profitability of the shareholders can be served at the expense of the long term profitability of the company. the board may also take that action (for example selling company assets to pay a dividend).

Unfortunately not all companies obey the law, I only mentioned as an example of the requirements for a company to operate.

The question of who should manage the economy is very complex, but relying exclusively on governments I think is naive and, in my opinion, is in large part the cause of the current economic downturn. I strongly believe that it is the responsibility of every individual (physical or moral) to contribute at some degree to a healthier economy. The government is not an abstract and foreign concept, at least in most modern democracies.

To quote a person I admire a lot: "there is no business to be done on a dead planet." Acting responsibly and beyond the minimum government requirements is an act of self-preservation: if Apple (or other companies for that matter) contributed to the health of the North American economy, it would for sure contribute to maintain its most valuable costumers (I believe that was one of the principles of the Fordism, but I could be wrong).

15 minutes ago, giovanni wrote

Unfortunately not all companies obey the law, I only mentioned as an example of the requirements for a company to operate.

My statement was that companies are legally required to operate in the good faith best interests of the shareholders. "Not killing someone is a legal obligation on the public" is a true statement, whether or not some people choose to break the law and commit murder.

The question of who should manage the economy is very complex, but relying exclusively on governments I think is naive and, in my opinion, is in large part the cause of the current economic downturn. I strongly believe that it is the responsibility of every individual (physical or moral) to contribute at some degree to a healthier economy. The government is not an abstract and foreign concept, at least in most modern democracies.

Again, my statement wasn't what ought to be the case, just simply what is the case. There is no legal obligation on a company to act in the best interests of the wider economy, and so when companies chooses for example to engage in tax-avoidance schemes, that company has done nothing wrong.

To quote a person I admire a lot: "there is no business to be done on a dead planet."  

Markets don't look that far into the future. Keynes, one of the most influential people behind the design of the entire 20th centuary western economics model famously argued that waiting for market forces to do stuff in the long run doesn't work, because, "in the long run, we are all dead.". His argument was that companies don't and won't act in their own long term interests - and it's the responsibility of the state to impose restrictions on corporate activities that hurt society in the longer term.

Time and again we've shown that American consumers care more about the price of goods than about the origin of the product. If that trend was reversed then jobs would flow back from China to America. The sad fact is that an iPad made in the US would be more expensive, and then US consumers would buy Japanese, European or Asian cheaper equivalents because American consumers care more about their wallet than about other people's jobs.

@Ray7: Can't find the link anymore, was some time ago, but the estimates I find now are closer to your mark.

@evildictaitor:

I understand what you are saying and unfortunately I agree with your conclusion. I am only speculating what else would be interesting and possible to do with that much cash  More specifically, I was wondering what effects could have moving some of the manufacturing in NA even though this might not plase shareholders as much.

I was looking for the name of Keynes for some time, this is a famous quote and is very true. It has also been argued that the short run can have effects on the long run, and sometimes it feels that the long run is actually closer than we expect it.

I only used the bold to emphasize that my point of view isn't absolute, I hope I didn't convey another meaning.

3 hours ago, evildictaitor wrote

*snip*

The board has to act in the interests of the shareholders because the shareholders own the company. By looking out for the company they are looking out for the shareholders, but looking out for the shareholders is wider than that. A case in point being the handing out of dividends - this is strictly a bad thing for the company because it is giving away cash. But it is looking after the shareholder's interests by giving them back some of the money that they have.

I think they should pay more money to their shareholders. Why would I invest £10.000 in a company if I did not expect any return on that investment?

I think they should pay considerably more in dividends to their shareholders, there is nothing wrong with that. If they run into problems in the future, then shareholders won't hesitate in giving them money, as it is, if things do slow down, I would not give them any more cash if I was an investor.

I actually agree with evildictator here. It's the job of the government to put restrictions on what is unacceptable behaviour. Corporations should not self-police their business. Firstly who doesn't do this will win almost every time. So really, to have a fair and consistent economy the government decides what are the rules of business not the companies themselves, the company just do whatever they can in this legal framework to make as much money for their shareholders.

@vesuvius:

Paying dividends is not the only way to create value for a company. There are companies out there Berkshire Hathaway being notable who never pay dividends as a policy. Any profit they make is immediately reinvested in the company. This allowed them to grow from a textile company to a huge conglomerate. The shareholders benefit greatly because that share you had of a small textile company is now a share of a huge conglomerate - it's inherently worth more because it covers more assets.

I personally think this a better way of doing business. Consider the HUGE overhead of paying dividends. I personally have some stocks in various companies that pay dividends, and I swear I get like 50 cent checks every now and then. Now why the hell do I need that? All that overhead in mailing the check (postage, printing etc.) is more than the value of the check. And now I have to go to the bank and possibly waste more than $1 in gas to cash this check? They have to do this for millions of shareholders!

Plus the taxation systems in many countries disincentive dividends. I guess dividends can make sense for companies with a small number of shareholders but I don't think they make sense for big publicly traded companies. Just reinvest the money in the company and help my stock value grow and I'll be happy.

@evildictaitor:

The board has to act in the interests of the shareholders because the shareholders own the company

tell that to Jerry Yang.

Weak willed people are much more popular with investors.  it's all about controlling interest, not trust or belief in leadership. board members are supposed to be eye candy and disposable, making only predictable decisions. in reality a 10 year old would make the ultimate modern tech board member as children are easily influenced.

the modern day board member should be well connected and push deals on friendship basis rather than any merit. that's where we are today in 2012.

@Bass: Mostly I also agree with him: it is definitely is the job of the governemnt to put limits on what is legal and to police those limits, but if a comapny has the means to improve beyond that point, it would be a great experiment and one that could probably be profitable at some point.

@1001011: That is extremely sad, because if no one is capable of pushing his ideas forward, the company will quickly loose that something special that makes it outdo the competition.