Mountain View, CA February 1, 2016
Sven Searcharsky of Google announced today that they beat their top and bottom line numbers. “We’re rockin and rollin here. I tell you the wheels gonna come off this baby. Yeah! Man I know that’s not corp speak but we are charged up here like never before. We got the world in the palm of our hands and our digits are electrified. OK, so you want some business-like talk. Here we go. First we want to thank Apple, Inc. for leading and guiding us through this. Without their help, I’m not sure we could have got to this point so fast. We have been closely observing their actions and have modeled our future almost entirely on what we have witnessed. We watch them intently and set our strategy almost in direct opposition to each of their moves. It’s like they have created a playbook on how to destroy value so we look to play the other side of their bet. We knew they were effectively shutting themselves out of the game when they agreed to meet with Carl Icahn at his apartment for dinner to discuss financial engineering. Even though Carl owned a tiny bit of the company, perhaps 1% or less, he was successful at getting the Board to see things his way and borrow what is now a 61 Billion dollar debt load and send that money to shareholders. An extraordinarily short-term strategy. Not illegal. Not even immoral. Just short-term and not tech-friendly. Iterating in the tech word occurs in nanoseconds globally. Dividends don’t get paid out -ever. The value is in buying companies, talent and massive R & D budgets. Discovering, creating and iterating constantly and consistently. We watched as Apple focused on “return of capital”. We knew right then and there that we would do the opposite. Our weapon against Apple was the utter failure to recognize that their weakness was their focus on share price and dividends. Tim Cook actually called in to Jim Cramers show to discuss specifics! Tim can’t believe how undervalued Apple stock is. He can’t believe it and he called into a cable show to discuss it. The reason it’s undervalued is because the President of Apple is on the phone with Jim Cramer and not focused on the future of the company – he’s more worried about the daily stock chart! What? We used this time to double down and reinvest in our portfolio of companies including Google. Apple has been resting on their pile of cash, handing out dividends and watching their share price drop like an iPhone down the toilet. Messy, wet, not functioning properly but not quite out. No, they’re not out. We need them to stay in so we can have clear direction about what not to do. Can you imagine in your wildest dreams Steve Jobs bowing to shareholder demands and issuing dividends on borrowed money or any money for that matter? Steve was product and company focused and let the stock chips fall where they may. Now Apple wants to be liked by Wall Street. Isn’t that nice? So they do what they want. Ironically Wall Street will ultimately like us better because they always gravitate to the winner and as of today that’d be us.” —©