Warren Buffet, speaking at the annual conference of Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) in Omaha Nebraska, has said he does not consider Apple Inc. (NASDAQ:AAPL) a buy for his company. He added that Google Inc. (NASDAQ:GOOG) was in the same boat in his estimation. As Buffett still accounts for much of the purchases made at the firm it is not too likely that position will change any time soon, at least as long as Buffett remains at the head of the company. The statements were reported by Reuters earlier today.
Despite his antipathy toward Apple, surely the world’s most successful technology company, and businesses in the technology sector in general Buffett presided over the purchase of $11.75 billion in stock of International Business Machines (NYSE:IBM). That company has been around a lot longer that most other technology giants, even Apple. IBM was started in 1911 at the very beginning of the computing revolution. Perhaps its longevity is what gives Buffett confidence in the firm’s future.
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Buffett certainly believes that IBM is a better fit for Berkshire Hathaway going forward and there are several reasons this could be the case. IBM’s recent change of focus, dropping it’s consumer hardware business in favor of enterprise sector services like servers, high powered computing and business analytics software, may have attracted Berkshire believing enterprise computing demand to be analogous to other business services.
In annual report to shareholders Buffett outlined his position on tech companies clearly. He wrote “If there’s a lot of technology we won’t understand it”. A commendable attitude in an environment many fear is turning into a bubble. Apple executives need not worry about Buffet’s assessment of their stock. He said he had no intention of shorting either that firm or Google any time soon and he would not be surprised if they gained huge value in the next decade.
Buffett is concentrating on businesses that he understands, a worthy philosophy for one of the world’s foremost investors. His success was bought with hard work and study into industries he comprehends, something he’s unlikely to change now. Investing isn’t a game and it isn’t easy. Buffett’s guiding principals are an excellent introduction for any beginner and a perfect refresher for veterans. People who do understand Apple’s business have a good idea about where it’s going, though after last week’s trading the outlook seems undecided. The stock closed at 565 on Friday down from the previous week’s close of 603.
We’ll be covering the Berkshire Hathaway conference all day today so stay tuned for more information.