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With dividends and stock buybacks, Tim Cook forges a path separate from Steve Jobs


"This would have never happened if Steve Jobs were still alive."

When it comes to Apple, this is a quip that's repeated so frequently that it has essentially become a laughable cliche. The aforementioned quip is typically bandied about whenever Apple makes a misstep or even takes a step in a new direction.

More often than not, folks who use this blurb employ it derisively, usually trotting it out when criticizing Tim Cook's ability to ably steer the massive ship that is Apple.

The thing is, not every idea Steve Jobs had was golden. Not every decision he made was a smart one. Which is to say, sometimes Tim Cook deviating from what Steve Jobs would have done is actually a good thing, if only to prove that Cook and Company aren't falling prey to "What would Steve Jobs do?" syndrome. Apple needs a leader who is able to make smart, informed, and often difficult decisions. Dwelling on what Steve Jobs may or may not have done impedes that ability, and Tim Cook, to his credit, has had no problem putting his own stamp on the way Apple does things.

One such example of Tim Cook deviating from what Steve Jobs would have done was Apple's 2012 announcement that it would start paying a substantial $2.65 cash dividend to investors and repurchasing its own shares on the open market. One year later, Apple increased the dividend payout to $3.05. And one year after that, it was increased to $3.29. In the process, Apple has paid out billions of dollars to investors in a relatively short time period, quickly making the company one of the largest dividend payers in the world. Over and above that, Apple since 2012 has repurchased millions upon millions of its own shares on the belief that the stock is undervalued.

"This never would have happened if Steve Jobs were still alive."

Now in this scenario, that's likely true. Jobs was averse to paying out dividends and repurchasing shares, even when Apple's cash hoard reached levels beyond what the company actually needed to run its business.

Interestingly enough, Jobs at one point even consulted with noted investor Warren Buffett about Apple's ever increasing stockpile of cash. Buffett advised Jobs to repurchase shares of Apple though Jobs chose to just do nothing with Apple's cash. According to Buffett, Jobs simply "liked having the cash" around.

Funny enough, Buffett recalled during a 2012 interview on CNBC that Jobs wasn't exactly forthright with others with respect to the the advice he had given the Apple CEO.

He told me they would not have the chance to make big acquisitions that would require lots of money... And then I asked him the question, I said .. 'I would use it for buybacks if I thought my stock was undervalued.' And I said, 'How do you feel about that?' The stock was 200-and-something.

He said, 'I think my stock is very undervalued.' I said, 'Well, what better to do with your money?' And then we talked awhile. And, he didn't do anything, and of course, he didn't want to do anything. He just liked having the cash. It was very interesting to me because I later learned that he said I agreed with him to do nothing with the cash. (Laughs.) He didn't want to repurchase stock although he absolutely felt his stock was significantly underpriced at two-hundred and whatever it was then.

Sometimes, the "This would have never happened under Steve Jobs" line is actually a compliment.

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