Apple: David Einhorn Responds to Being Labeled a 'Hustler'
Over the weekend, hedge fund manager David Einhorn sent me an email and we had what ended up a constructive exchange.
I'm not going to kiss the guy's tail. As much as I enjoyed his dialogue with Einhorn , I don't buy Henry Blodget's repeated "You are vastly more sophisticated" and "way smarter than I am" act; that's a weak way to concede an argument. If you're not sophisticated or smart enough to make your case in the first place, then why make it?
That's why I never got into the merits of Einhorn's preferred stock proposal. Frankly, I don't understand it well enough. At the same time, I feel strongly that Einhorn -- and others -- miss big when they demand that Apple (AAPL) (A) has a responsibility to return even more cash to shareholders and/or (B) needs to do something better with its cash.
Apple has never acted merely for the sake of acting or because an MBA textbook prescribes that it should.
But I humbly digress. There's one thing I wish I would have done differently in Friday's article. And, for the record, Einhorn put no pressure on me to say this; I'm doing it of my own accord because it's simply the right thing to do.
In one of the emails we exchanged, Einhorn said this:
Hustling is what an energetic center fielder does to get a fly ball in the gap. A hustler is a con man, who operates on the edge of the law and at a minimum takes advantage of people.
Well-stated. As a person who takes the not-so-subtle differences between words seriously -- and appreciates well-done rhetoric -- I value Einhorn's distinction. I agree with it. I'm always hustling, but I'm not a hustler. Although trading a few emails doesn't make us buds, I'm confident the same applies to Einhorn. I think he's a good guy.
I called him out. Einhorn responded. In this business, you can't ask for much more than that. If he considered himself too big -- or me too small -- for engagement, all I could do is continue to speculate about his motives.
After conversing with Einhorn, it's clear that he has well-thought out and well-informed opinions on Apple. He's convinced that Tim Cook runs a software company; that Apple's hardware sells (and provides a lion's share of the company's revenue and profit) because it runs Apple software and the Apple ecosystem. But this view minimizes the design achievements of Apple devices.
Heck, when Apple Maps flopped, everybody wanted a Google Maps app. But they wanted it on their iPhones. It's not like more than a handful of people, if that, said screw this, I'll just switch to Android . Not at all, you keep the Apple hardware to run all sorts of platforms. Sometimes they're Apple platforms; however, quite often, probably more often than not, they're somebody else's, be it Google's (GOOG) , Netflix's (NFLX) or Pandora's (P) .