Nope. Instead of reducing prices for a billion customers, or rewarding hard-working employees, Apple Inc. decided to give the money away– tens of billions of dollars– to people completely undeserving. Such misdeeds are contagious. Guess who contracted the same disease Apple has?
Guess who? Microsoft. Yes, that Microsoft. The Windows and Office Microsoft. The world’s most valuable company Microsoft. As usual, Microsoft cannot chart its own course and has to follow Apple, but in this case, Apple took a wrong turn and Microsoft followed.
Shares of Microsoft climbed as much as 2.8% to an intraday record high on Thursday after the company rolled out a $40 billion share-repurchase program and raised its dividend by 11%.
Just like Apple.
Hear that? Steve Jobs is rolling over in his grave. And laughing at all the money Microsoft is throwing away.
Yes. Once a company goes public, it becomes owned by shareholders, and they want to get paid back for, uh, um… well… for being shareholders, I guess. It isn’t as if current shareholders do anything for the companies they invest in; including Apple and Microsoft.
What Tim Cook and Sataya Nadella have in common is a misplaced loyalty and a complete lack of imagination. Shareholders do not give money to Apple in exchange for stock. That’s handled by the stock market. Instead, shareholders expect the company to give them rewards– higher stock price, buybacks, dividends– simply because they bought a few shares on the open market.
What this situation says is that both Apple and Microsoft have lost all sense of fiscal responsibility and imagination or vision for the future. Yes, Microsoft has done this before and may do it again; Apple, too. But that doesn’t make it right. Legal, yes, but how does Apple Inc. benefit from a buyback or dividend expenditure?
Is there any hope for doing the right thing? Yes.
Jordan Weissmann on the status quo:
Companies exist primarily to serve the interests of their investors—which typically means making money by any means necessary, and preferably lots of it.
Here’s a new age look at modern and socially centric capitalism:
The idea that a corporation’s only real responsibility is to its shareholders has dominated American capitalism since the 1980s, when it leapt from the conservative corners of academia to the boardroom. But if some of America’s most powerful CEOs are to be believed, they’ve finally had enough with it.
A statement of rebellion came from some big corporate names:
Including such titans as Tim Cook of Apple, Jeff Bezos of Amazon, Jamie Dimon of JPMorgan, and David Solomon of Goldman Sachs. Thanks to those bold faced signatories, it is being greeted as a small but important rebellion against the old orthodoxy of shareholder capitalism, a “rebuke of the notion that the role of the corporation is to maximize profits at all costs,” as the New York Times put it.
Weissmann uncovers a growing trend that may impact Apple, Microsoft, Amazon, and other tech and financial giants in the future, but for now, all those companies do is show how little vision for the future they have and how willing they are to pay shareholders to leave them alone.