5by5 | The Critical Path #30: Jetlag

5by5 | The Critical Path #30: Jetlag.

The thirtieth Critical Path is an extended edition covering a broad sweep of topics: The new iPad and the value of filling the gaps, trip report on the Apple Investor Summit, conversations with a TV show writer, Tim Cook’s attack on the cash mountain and an update on Asymconf. Horace also talks about his cure for jetlag.

  • Ryan Boyle

    Horace, I really enjoyed this episode with the variety of topics it covered and your brimming enthusiasm. In particular, your discussion of dividends piqued my interest.  The conventional business school wisdom (in fact it was mentioned in one of my classes today) is that when a company can not achieve a significant rate of return on cash they *should* return that cash to investors in the form of a dividend.  So leaving the cash in the business is seen as a waste to the investor who could be using the dividend cash for their own purposes.  On the podcast, you seem to have a different perspective and I was curious if you would be able to elaborate further on it.  You mentioned the tax implications but given the indefinite time horizon of changes to the tax code, when would it be prudent to pay a dividend?  Are you suggesting that companies would be more valuable if they accumulated cash rather than disperse it to shareholder’s?  Or is it simply a question of timing?  Thanks for your insight.

    Also, I read an interesting post by Brian S. Hall where he suggests creating an Apple endowment and use the cash to effectively create a perpetuity to fund R&D indefinitely.  Curious to see if this has any overlap with your response.

    • The theory is right in that cash that is unused might be better allocated by the shareholder. However, tax policy penalizes it and I think rightly so. The policy signals to management that they better think hard about finding opportunities for investment before giving up. Management is assumed to know more than the average investor about such opportunities and returning cash is a sign of failure. I would not be “creative” in ways of allocating funding. The funding should be put through the same rigorous process that all projects are put through. They need to meet hurdle rates etc. Blank checks for research are almost always wasted because intermediate results are never tested against market forces. The research then meanders aimlessly toward abstract goals.

  • professortom

    Hey Horace,

    Great show as always. Just wanted to add my two cents worth.

    Firstly, there is a book you might be interested in by Jerry Lewis (yes, the comic of the days of yore) called The Total Film-maker. In this book, Lewis claims that a total filmmaker is one who does the job of  writer, actor, director and producer on the same project. Unfortunately, the book is out of print.

    Secondly, you gave several answers to an email I sent you. My premise was to encourage you to hold an Asymconf in Chattanooga, TN when you do Asymconf Stateside, but as you described the venue you’ve chosen, I see that I might have misunderstood how information is to be presented at Asymconf.

    Additionally, I had suggested having listeners/readers record with you, giving them the role of interviewer and you the role of interviewee. I’m glad you have the same idea.

    I still need to work on my phone theory, which, I hope to get some of typed up this weekend.


  • Horace, not sure if you saw this story on % of iPads sold with cellular capability.  Dan posed this question during the show.“According to Localytics, which derived its data based on app usage it observed, around 89.7 percent of all iPads sold can only connect to Wi-Fi networks.”

    I think the low uptake in cellular data on the iPad is logical.  Supports my belief that these are primarily being used in the home and office, where Wi-Fi is readily available.  More surprising may be the recent Informa study reporting that about 70% of smartphone data usage is over Wi-Fi.   Regards,