Mounting cash piles an embarrassment of riches for tech companies(ft.com)
ft.com
Mounting cash piles an embarrassment of riches for tech companies
http://www.ft.com/intl/cms/s/0/63e60612-827c-11e3-8119-00144feab7de.html
3 comments
"They are investors, not advisors or owners"
Actually, the shareholders of a public corporation are its owners. If a wealthy investor like Carl Icahn bought up 51% of Apple's shares, he could make it do pretty much anything he wanted: appoint his friends to the board, fire the CEO, etc. Big institutional investors like state retirement funds have lots of influence over companies, sometimes even seats on the board. And if I bought just one share of Apple's stock, I could attend the annual shareholders' meeting and vote on the issues presented there (or I could vote by proxy).
Also, the management of a company has a fiduciary obligation to its shareholders (owners). The shareholders can sue the management for breach of this obligation, and if they can prove that holding billions of dollars in cash is not in the best interest of the shareholders, they can force the company to distribute it as dividends.
Actually, the shareholders of a public corporation are its owners. If a wealthy investor like Carl Icahn bought up 51% of Apple's shares, he could make it do pretty much anything he wanted: appoint his friends to the board, fire the CEO, etc. Big institutional investors like state retirement funds have lots of influence over companies, sometimes even seats on the board. And if I bought just one share of Apple's stock, I could attend the annual shareholders' meeting and vote on the issues presented there (or I could vote by proxy).
Also, the management of a company has a fiduciary obligation to its shareholders (owners). The shareholders can sue the management for breach of this obligation, and if they can prove that holding billions of dollars in cash is not in the best interest of the shareholders, they can force the company to distribute it as dividends.
There's lots of problems with this theory :
1) buying 51% of most companies is not possible without approval from the existing holders of power. The problem is that buying 51% of the shares necessitates buying at least a few percent from the current power holders.
These power holders usually vote themselves some amount of stock so that they can sell it for a comfortable lifestyle without dilution or with dilution limited to the point they don't lose control.
2) Even the 1) ignores the different classes of stock. Stock with voting power and stock without is part and parcel of the landscape these days and guess whose power it protects ?
3) Fiduciary obligation ... really ? How does that work ? (aside from not committing fraud and the like, which is really protected by other laws already) Can you give examples of it in action ? Usually management protects the stock price, for their own self-interest. They do not make sure shareholders actually make money (which is how I'd interpret said obligation).
4) Even where the interests of stockholders and management/board are opposed, I can name dozens of examples of where shareholders sues company cases were decided in favor of management. When not involving fraud, I can name none where shareholders prevailed.
1) buying 51% of most companies is not possible without approval from the existing holders of power. The problem is that buying 51% of the shares necessitates buying at least a few percent from the current power holders.
These power holders usually vote themselves some amount of stock so that they can sell it for a comfortable lifestyle without dilution or with dilution limited to the point they don't lose control.
2) Even the 1) ignores the different classes of stock. Stock with voting power and stock without is part and parcel of the landscape these days and guess whose power it protects ?
3) Fiduciary obligation ... really ? How does that work ? (aside from not committing fraud and the like, which is really protected by other laws already) Can you give examples of it in action ? Usually management protects the stock price, for their own self-interest. They do not make sure shareholders actually make money (which is how I'd interpret said obligation).
4) Even where the interests of stockholders and management/board are opposed, I can name dozens of examples of where shareholders sues company cases were decided in favor of management. When not involving fraud, I can name none where shareholders prevailed.
> Can't read the article, behind a paywall.
Like the WSJ and the NYT, just open an incognito window and do a google search for the title. In order to have their content indexed by Google they have to allow that to work. With the NYT you don't even have to Google, just right click the link to open an incognito window.
Like the WSJ and the NYT, just open an incognito window and do a google search for the title. In order to have their content indexed by Google they have to allow that to work. With the NYT you don't even have to Google, just right click the link to open an incognito window.
I use refcontrol (https://addons.mozilla.org/en-US/firefox/addon/refcontrol/) on Firefox to set the referrer for www.ft.com to always be https://encrypted.google.com/search, works great.
Nice, that's cool, too bad I don't trust browser extensions to not steal my personal banking information or whatever else I go to online and I can't be bothered to audit every single extension I use. Third party audits are pointless in a world where these things autoupdate.
You think that may be paranoid, but I visit seriously important sites in my browser and I'm not going to always do that in an incognito window.
You think that may be paranoid, but I visit seriously important sites in my browser and I'm not going to always do that in an incognito window.
Just type in google: cache:http://www.ft.com/intl/cms/s/0/63e60612-827c-11e3-8119-00144...
Google the title and click through from the Google SERP to read without registering: https://www.google.com/search?q=Mounting+cash+piles+an+embar...
Wait wait wait.
You mean by "owning" a company, I might get some of the "profits"?
But how does this help the board of directors and the c-suite?
You mean by "owning" a company, I might get some of the "profits"?
But how does this help the board of directors and the c-suite?
However, it is not an embarrassment of riches IMO.
Look at what happened to RIM/Blackberry, Nokia, and so on. Tech titans can fall at any given moment, and they are going to need to rely on that "war chest" to get back up, to reinvent themselves.
Investors need to back off and let the companies handle things themselves. They are investors, not advisors or owners, they need to mind their business. They don't like what companies are doing, they can sell their shares and invest into something else.