Warren Buffett Reveals Steve Jobs Called For Investment Advice, Ignored Advice

Mr. Buffett recalled a memorable phone call he had with Mr. Jobs

Following Apple’s third-quarter earnings report that exceeded expectations, a story from 2012 has resurfaced about how Steve Jobs approached legendary American investor Warren Buffett for investment advice on Apple’s cash reserves.

In a 2012 interview CNBCMr. Buffett recalled a memorable phone call he had with Mr. Jobs two years earlier. “It was an interesting conversation because I hadn’t talked to him in a long time,” the Berkshire Hathaway chairman said. Mr. Jobs had asked him for advice on managing Apple’s sizable cash reserves. “He said, ‘We have all this cash. What should we do with it?’ So we discussed options.”

Mr. Buffett explained that companies typically have four options for using cash: stock buybacks, dividends, acquisitions or holding on to it. Mr. Jobs made it clear that Apple would not pursue large acquisitions that would require significant cash.

“I analyzed the logic of each option. He told me they wouldn’t have the opportunity to make big acquisitions that would require a lot of money,” Mr. Buffett said in an interview. When Buffett suggested a stock buyback if Apple thought its stock was undervalued, Mr. Jobs replied, “I think my stock is very undervalued.”

Ultimately, Mr. Jobs decided not to follow Mr. Buffett’s advice. “He didn’t do anything, and of course he didn’t want to do anything. He just liked having the cash,” Mr. Buffett said with a laugh. “That was very interesting to me because I later learned that he said I had agreed with him not to do anything with the cash.”

Earlier this year, Microsoft founder Bill Gates told Dax Shepard: “Steve Jobs was a natural. It was always fun to watch him practice because part of his genius was that when he finally did it, it seemed like he was just thinking it,” he said. “I’ll never get to that level,” Mr. Gates added.

During the podcast, Mr. Gates said he and Mr. Jobs travel the world acting as representatives for Microsoft and Apple, with the goal of convincing individuals and organizations of the potential benefits that tools like spreadsheets and email can have on their daily lives and careers.

“We even called it evangelism. Some people might not like the fact that we stole a religious term, but telling stories about the magic of software is something that was certainly a big part of the job when I was 30,” he said.