How Jack Welch Would Offer a Hand to David Einhorn on His Apple Position

Michael Teague |

Earlier this week, Jack Welch was asked about his feelings on the recent agitations of various activist investors like David Einhorn in an interview on CNBC.

His answer left little room for doubt, when the former General Electric (GE) CEO told hostess Maria Bartiromo, “Look, these guys are after a quick hit, I’d blow him off”, adding, after some dismissive hand gestures, “I’d give him the back of my hand.”

Welch expressed a similar sentiment in February, when he was quoted in a separate CNBC interview as saying, "Exactly what he has been told already: take a hike."



Compared to the Herbalife (HLF) showdown between Carl Icahn vs. Bill Ackman from late January, Welch’s comment was a bit of harmless bluster. His larger point was that a company in the position in which Apple (AAPL) currently finds itself, with competition finally encroaching on its market share in a significant way, needs a large amount of cash on hand to be able to make decisions that will help it maintain competitive advantages.

The only alternative Welch seemed to suggest for what should be done with the famed $137 billion in cash currently held by the tech giant was an acquisition. He noted that Apple CEO Tim Cook currently has Samsung and others “nipping at his heels. And he risks running, rather than a sexy company, a commodities company."

The interview devoted far more time to Welch’s feelings about the current roles of both the Obama administration and the Federal Reserve in the present economic recovery (he was more or less disparaging of both, especially in terms of onerous regulation), as well as how jobs result from growth and not the other way around.

His dismissal of Einhorn’s recent high-profile spat with Apple did however seem to echo what Warren Buffet said on the subject only four days ago on the same channel’s “Squawk Box” program, in which the famed investor recounted a past conversation with the late Steve Jobs during which he advised Jobs to buy back his own company’s stock rather than increase dividend payouts.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
GE General Electric Co 30.44 -0.08 -0.26 7,179,153
AAPL Apple Inc. 136.48 -0.22 -0.16 5,062,600
ATL:CA Atlatsa Resources Corporation 0.07 0.00 0.00 0

Comments

Emerging Growth

NXT-ID Inc.

Nxt-ID Inc provides products, solutions, and services that have a need for biometric secure access control. Its lines of business include mobile commerce; law enforcement and biometric access control applications…

Private Markets

BioSculpture Technology, Inc.

BioSculpture Technology, Inc. (“BST”) is a commercial-stage medical device manufacturer of liposuction surgical instruments for surgeons. It offers the FDA-cleared Twin Cannula Assisted Liposuction ("TCAL") Airbrush Liposculptor II® controllers, Airbrush®…

D-Wave

D-Wave Systems is the first quantum computing company. Its mission is to integrate new discoveries in physics, engineering, manufacturing, and computer science into breakthrough approaches to computation to help solve…