Buffett on Apple
The interview then moved on to Buffett’s investment in Apple Inc. (NASDAQ:AAPL), with Buffett being asked why he decided to finally pull the trigger on Apple despite it also having risen substantially in value over the years.
“Well, the shares when we bought them at least, were much more reasonable in relation to current earnings. Apple didn’t have to do a lot better in the future than they were doing at the current time. When you get into a Google and Amazon, you’re paying for the future more.” Buffett added that, “it’s amazing where Apple’s ended up with consumers. I can very easily determine the competitive position of Apple now and who’s trying to chase them and how easy it is to chase them.”
Buffett exclaimed that smartphones are a somewhat unique market in that product is generally superior to pricing. Whereas a sale on TVs might spur a consumer to buy the model that’s on sale, that’s not the case with smartphones.
“You can’t move people by price in the smartphone market remotely like you can move them in appliances or all kinds of things. People want the product, they don’t want the cheapest product; the loyalty is huge.”
Berkshire Hathaway owned 57.36 million shares of Apple Inc. (NASDAQ:AAPL) on December 31, buying over 42.13 million shares in the fourth quarter. The investment has been a huge success for the holding company, with Apple’s shares gaining 31.7% so far in 2017. Last week, Berkshire reported first-quarter revenue of $65.19 billion and income of $4.06 billion. Revenue was up by 25% year-over-year, though profit slumped by 27% as Berkshire’s insurance businesses suffered a $480 million decline in profit.