Eric Jackson, a notable tech and media investor, thinks Apple Inc. (NASDAQ:AAPL) needs to make some changes.
Jackson appeared on Business News Network program Business Day AM on Monday and told host Amber Kanwar that Apple needs to discontinue paying its dividend and focus its capital on research, development, and making acquisitions that would really boost the top line.
He pointed at Alphabet Inc. (NASDAQ:GOOGL)(NASDAQ:GOOG) as an example. Google is constantly spending money on big, game changing technologies. It’s also willing to spend billions to buy companies that have the potential to really move the needle. Jackson thinks Apple should embrace a Google mentality and look to shape the future more.
Jackson also thinks Apple’s aggressive dividend and share buyback program is raising the white flag, so to speak. Apple spent nearly $14 billion on dividends and buying back shares in 2016.
But at the same time, it’s easy to argue that Apple doesn’t need to discontinue its current path to invest in new technology. Apple has almost $250 billion in cash stashed in bank accounts around the world. It also earned $45.6 billion in its most recent fiscal year.
If Apple really wanted to, it could easily afford to double or even triple its research and development spending of approximately $10 billion per year. It’s obvious management doesn’t see the value in doing so.
Besides, Apple’s status as a dividend-growth stock opens it up as a potential investment to thousands of individual investors or funds that won’t even consider investing in a stock that doesn’t pay a dividend.
