Even with a purported net worth of close to $90 billion, shares of Apple have apparently gotten too expensive for even American business magnate and Berkshire Hathaway CEO Warren Buffett. However, the “Oracle of Omaha” did leave the door open for buying more shares if the price gets cheaper.
“If it were cheaper, we’d be buying it. We aren’t buying it here,” Buffett said in an interview with CNBC “Squawk Box” co-host Becky Quick. “I don’t see myself selling – the lower it goes, the better. I like it, obviously.”
Recent SEC filings show that Berkshire Hathaway pared down its holdings of Apple in order to make way for other investment opportunities–a move made by the holdings company’s money managers.
Last month, Apple bested analyst expectations in earnings and revenue for its fiscal first quarter, muting earlier warnings by CEO Tim Cook that results would disappoint due to lackluster iPhone sales. Cook cited weaker demand in China as a major factor affecting iPhone sales.
Shares of Apple have been battered in the waning months of 2018 as a result of weaker guidance with the tech giant projecting lower revenue due to weaker demand for its iPhone, especially in China. This was reflected in the final fiscal first-quarter earnings results as the iPhone maker beat expectations in earnings per share, revenue and services revenue, but as expected, fell short on iPhone revenue.
Buffett, a fan of Apple devices, covets the iPhone maker more for its brand reach as opposed to sheer sales.
“I do not focus on the sales in the next quarter or the next year,” Buffett said in August. “I focus on the … hundreds, hundreds, hundreds millions of people who practically live their lives by it [iPhone].” He also called the iPhone “enormously underpriced” at that time, saying that it’s worth far more than the $1,000 Apple charges.
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Apple, Goldman Sachs Searching for Revenue
Apple and Goldman Sachs are teaming up to issue a joint credit card that will incorporate iPhone features for intuitive money management.
A beta test of the card will be rolled out to employees within the next few weeks and its official launch will take place later this year. The goal is to entice cardholders by offering more robust features that can work in cohesion with Apple’s Wallet app.
The card will allow for money management features, such as spending goals, bank balance tracking and financial rewards. The foray into the money management business comes as Apple is looking towards other revenue sources, particularly after iPhone sales are languishing.
Goldman Sachs is also looking for other avenues for revenue. After months of review, the investment firm is paring down its commodities arm, citing too much capital used for too little profit generated.
The proposed move comes as Chief Executive David Solomon is reassessing the firm’s business operations in order to cut costs and explore other avenues for profit generation. Commodities traders at Goldman had their worst year in 2017 and only improved slightly in 2018.
Goldman Sachs generated $6.04 per share in profit for the fourth quarter of 2018, versus the $4.45 per share estimate of analysts surveyed by data company Refinitiv. The investment bank also posted revenue of $8.08 billion, beating estimates of $7.55 billion.
Both Apple and Goldman Sachs are entering a competitive space with little experience. Goldman Sachs is hoping to leverage Apple’s wide user base to attract cardholders that can earn cash back rewards of 2 percent on purchases and possibly more on Apple devices.
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