Now I’ve Heard It All

Karl Smith, in an “open letter from Apple” to its shareholders:

Paying a dividend and burning down our war chest would jeopardize all of that.

You see, one day a competitor will come along and cut our core product line out from underneath us. We will need all the cash we can muster to fend them off. When that cash is done, we will mortgage the company. The first several times we may be successful. However, as is always the case, eventually time will get the best of us and we will be unable to meet our creditors demands.

We will go bankrupt. Our creditors will seize the equity and the shareholders will be left with nothing and having made zero return on their investment.

Apple should pay its shareholders a dividend because it’s on a course for inevitable bankruptcy. OK. This is why I drink.

★ Friday, 6 January 2012