It’s not very often you read something from an Apple investor or Wall Street Analyst that makes sense. However, prominent Apple investor David Einhorn has achieved the impossible in an interview with CNBC (via AllThingsD).
People look at Apple and ask, ‘Is it the next Motorola or BlackBerry? People paid fancy multiples for those stocks and got crushed and they don’t want to go through that again. But I think Apple’s a little bit different from those companies, because the ecosystem component [drives] recurring sale[s]. If you have an iPhone, you’re more likely to buy the next iPhone. They have over a 90 percent renewal rate on that basis, which is something those other companies never had.
Totally agree. It’s the ecosystem, stupid.
Einhorn hit the headlines earlier this year for suing Apple over their large cash stockpile.
At the time, Einhorn said: “We believe Apple must examine all of its options to unlock the growing value of its balance sheet for all shareholders. Over the past several months, we have had an ongoing dialogue with Apple regarding one option to do so, namely the creation of a new security, a perpetual preferred stock that would be distributed at no cost to Apple’s existing shareholders, and would provide an attractive, sustainable dividend while preserving Apple’s financial resources to pursue its business strategy.”
Einhorn later dropped his lawsuit and appears to appreciate the value of Apple holding on to its cash.
“I think that that moves Apple’s capital management from a D- to a C or something like that, so obviously more could be done that would probably unlock more value, but it’s not so bad at this point that I really want to complain about it,” Einhorn said.