Category Archives: Business

Just How Much Is Apple’s $137 Billion Cash Pile (Updated)

By William A. Foster, IV

“Cash is king.” – Unknown

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It was last July that I first did this narrative. At the time Apple, Inc. was sitting on $117 billion and has since added another $20 billion to its coffers. This has stirred a mass of controversy amongst shareholders who believe the company is simply hoarding the cash that could be put to better use.

Let’s compare the amount of Apple’s cash holdings to a few things:

If divided over all 300 million men, women, and children in America – each would receive a check for $456.67.

If divided over the 40 million men, women, and children who are African American – each would receive a check for $3 425.00 (it should be noted that coming out of the Great Recession the African American median net worth was $2 170 according to the Economic Policy Institute).

It is 4.5 times the size of Harvard’s endowment (largest HWCU endowment and largest U.S. college endowment) and 297.8 times the size of Howard’s endowment (largest HBCU endowment). In July, those numbers for Harvard and Howard were 3.7 and 216.7 times their endowments, respectively.

It is 304.4 times the size of all HBCU research budgets combined. Previously, 265.9 times the size of HBCU research budgets.

It is 9.1 times the size of Jamaica’s GDP (previously 7.8 times) and 18.6 times the size Haiti’s GDP (previously 15.9).

It is 8.6% of Africa’s entire GDP (previously 6.2%).

This is not to take any particular shot at Apple. It just happens to be the company with the largest corporate cash holdings at the time. U.S. companies last year had a record $1.45 trillion in cash sitting outside of the U.S., according to Moody’s. It is 91% of the GDP of entire Africa and larger than the buying power of African America which is currently $1.1 trillion.

We’re talking “straight cash, homey” as Randy Moss said once.

Disclaimer: There is no ownership of any of the companies mentioned in this article by myself, my business, or my family as of this article’s publishing.

The HBCUpreneur Corner – Delaware State University’s Chris Stevens & Stevens Communications & Consulting

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Name: Chris Stevens

Alma Mater: Delaware State University, Class of 2007

Business Name & Description: Stevens Communications & Consulting (stevenscommcons.com), a multi-media business specializing in assistance with writing/editing, social media management and consulting for small businesses, as well as producing an internet radio show/podcast, “All Subjects Everything.” We also have advertising space open on the show, which is $10 per week or $40 per month for anyone who wants to advertise their business/organization/event on our show.

What year did you found your company? 2012

What was the most exciting and/or fearful moment during your HBCUpreneur career? Actually just getting started. It’s been an ongoing process these first 9 months as I’ve had to re-assess everything I thought I knew about the media industry and most important of all, myself. A social introvert starting a business that thrives on interpersonal communication has been a harrowing experience, but a necessary step.

What made you want to start your own company? I worked as a sports reporter for community newspapers for 5 years and I didn’t like the direction the business was going in as well as I wanted to do my own thing and not have to answer to anyone but myself and my clients/customers. So I took the things I knew best (social media, writing, editing) and decided to strike out on my own.

Who was the most influential person/people for you during your time in college? Two professors for different reasons. Dr. Yohuru Williams, who is now at Fairfield University, and DeWayne Wickham, a syndicated columnist with USA Today, who was a scholar-in-residence at DSU for a while. Dr. Williams gave me the courage and confidence to be a student of life, just to keep learning and incorporate what you’ve learned into whatever you’re doing in life while Professor Wickham showed me how vital networking is and I’m still putting those lessons about “who you know” into practice.

How do you handle complex problems? For me, asking questions is vital. You never want to have misunderstanding or miscommunication with a client or customer, so you always ask questions to make sure you have everything tailored to their needs and if you fall short, keep trying until you get it right. My first client, I did some serious re-writing for and it was a fun and challenging experience that let me know that this wasn’t going to be easy, but it would be rewarding.

What is something you wish you had known prior to starting your company? Never a good idea to start cold. If you’re starting a business, be sure to save some money and be in a position to weather some rough times. I left my job thinking I could apply my knowledge and start off well. I’ve had some lean periods because of that, but I wouldn’t change the journey because I get to share that experience now and hopefully someone else will learn from the mistakes I’ve made.

What do you believe HBCUs can do to spur more innovation and entrepreneurship while their students are in school either as undergraduate or graduate students? Certainly one way is to show them the perils of traditional employment. You can see it everyday – people who give their all to improve someone else’s bottom line can find themselves jobless at the drop of a hat. Depending on someone else signing your check to live life is so overrated. Also, HBCUs can draw on their own history as self-starters and self-reliant institutions to foster that spirit of entrepreneurship, that it’s “in the blood,” so to speak.

How do you deal with rejection? I hate rejection in ALL facets of my life, but surprisingly, business rejection is much easier to take because I know it’s not personal. It bothers me, but the key is to keep trying. The no’s are plentiful, but the one or two acceptances you get are your chance to make an impression and set yourself up for something bigger. The key is to keep plugging away. If you believe in your vision and what you’re offering, sooner or later, people will see that and will be willing to help and take a chance on you and your business.

When you have down time how do you like to spend it? I’m always reading, I just finished up “The Warmth of Other Suns” by Isabel Wilkerson which is a phenomenal book about the Great Migration of Blacks from the South to the Midwest, East and West Coasts. I love music also, I blog about music on my personal website (chrisstevenssite.com) from time to time and I love discussing/arguing sports with just about anyone.

What was your most memorable HBCU memory? It’s hard to pinpoint just one because I’ve had so many, so I’ll just say the experience of being a part of the HBCU experience. My own good times at Del State, visiting other HBCUs while working for the Hornet newspaper, it was a special time for me and I’m proud to be a part of HBCU tradition and I will stand for Black Colleges until I can’t stand up anymore. And even then I’ll be shouting for them from my bed or wheelchair.

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In leaving is there any advice you have for budding HBCUpreneurs? A few things to note: Have a vision, be confident in that vision and go for it. You never want to spend the rest of your life wondering “Woulda, coulda, shoulda.” My mother always tells me “nothing beats a failure but a try,” so go for it. If there’s an idea that you have that you think people can benefit from and that you can execute for them, float it out there, prepare yourself for the road ahead and make it happen.

The HBCUpreneur Corner – Morgan State’s Jarrett Carter, Sr. & Carter Media Enterprises

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Name: Jarrett Carter Sr.

Alma Mater: Morgan State University, Class of 2003

Business Name & Description: Carter Media Enterprises, a new media development and consulting company with focus on coverage of African-American news and lifestyle.

What year did you found your company? 2008

What was the most exciting and/or fearful moment during your HBCUpreneur career? One of the most exciting highlights of my career thus far was the chance to give the keynote address to Hampton University’s Greer-Dawson-Wilson Student Leadership program. To take a stage at one of the nation’s most prestigious HBCUs headed by perhaps the greatest black college president in history, and to speak to students who will soon become esteemed leaders in a wide range of fields is something I will never forget. And I will be forever grateful to Hampton University for such a honor.

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What made you want to start your own company? Understanding that media was changing in a way that would give more black people a chance to have media leverage and credibility, I thought that I would bring a unique perspective to some underrepresented elements of our culture, and so I started a series of blogs focusing on HBCU news and issues, black images in mass media, and hip-hop culture from an artistic perspective. (StereotypeSquad.com and RapReservoir.com, respectively.)

Who was the most influential person/people for you during your time in college? Morgan gave me so many great role models. Among my professors was Frank Dexter Brown, the creator of YSB Magazine, Dr. Ruthe Sheffey, one of the world’s leading experts on William Shakespeare and Zora Neale Hurston, Dr. Michael Bayton, a brilliant scholar and professor of American literature, and Dr. Burney Hollis, my Dean Emeritus of the MSU College of Liberal Arts who to this day remains a source of humor, insight and inspiration as a Morgan Man. All of these people taught me, but also inspired me to think as a creator and observer, and not just as a student.

How do you handle complex problems? I talk to my wife constantly. She really is my best friend, my harshest critic, and the love of my life. Between her perspective and mine, we are frequently able to hash out solutions for difficult problems. I’m also blessed to have great mentors and friends, whom I can depend on to talk critical issues in my life, or even to have discourse on cultural problems and issues. Many times, the discourse is a good way to exercise the brain in such a way that complex personal problems often reveal simple answers.

What is something you wish you had known prior to starting your company? I wish I had established a larger network of media industry contacts and officials at schools. Hampton President William Harvey once told me that the key to running a college is to run it as a business with educational objectives. I set out to tell stories and to improve perceptions about HBCUs, but if I could do it over again, I would have managed my company to operate as a media brand with outreach objectives from Day One.

What do you believe HBCUs and colleges of the African Diaspora can do to spur more innovation and entrepreneurship with their students and the local community? – I think that if colleges and universities mandated for the major courses to examine ownership and business building, our students would have a different outlook on what it means to be a professional, a community member and philanthropist. They would approach work from what they could own one day, and not what company is most prestigious to work for. In turn, I think our alumni and supporters would buy into this concept enough to support by giving money and expertise.

How do you deal with rejection? When I first got started, not well. I would buy into the stereotype that black people were hesitant to support their own. But three years in, I understand that when you don’t have a lot of resources, and you are a great idea with low-level executions, our people are much more likely to invest in a personality and vision than they are an actual product. Paul Quinn President Michael Sorrell once told me that there’s no such thing as ‘no,’ only ‘not yet.’ I have found this to be true at a professional and personal level, if you invest a lot of time analyzing your vision and personality, and working to make those things come to the front of every approach you make in business or in life.

When you have down time how do you like to spend it? I’m a very simple guy, so I love being with my wife and two sons. Watching sports, playing video games, and reading are the ways I get away to think about new ideas, or to just take my mind off of overwhelming topics, requests or development strategies. I’ve learned that you have to incorporate time off to let your mind, body and spirit recover from fully investing in your calling. If you don’t, you can’t appreciate the work that you’re called to do, or the fact that you are called to do it.

What was your most memorable HBCU memory? Strangely enough, graduating from a PWI with my master’s in communication management. The five years it took me to finish that degree – a year and a half to do course requirements and three years to assemble a non-racist, supportive thesis committee, were the toughest times I ever encountered. Finishing the program made me realize several things – one, how much tougher it must have been for our forbearers to seek and endure integration in the throes of civil rights. Two, how spoiled I was by the HBCU experience of having faculty push and support you beyond the classroom. Three, how much harder I need to work for HBCUs to get fair representation in the media, so that they won’t have to endure potential scenarios of isolation, racism or discrimination at a PWI as they work towards college degrees.

In leaving is there any advice you have for budding HBCUpreneurs? – College is a professional development and networking haven. You are there to learn about an industry, and to find your place within it. If you aren’t a business major, take some business courses for electives, and learn all that you can through volunteering and internship about how to do a job and manage a product. Before you leave, make sure that you have incorporated an LLC, and even if you don’t know what product or service you can offer, create a business idea that can evolve into a business plan. In a down economoy, it is the person with the most creativity, the most innovation, and the one who finds a need to fill that will become wealthy, and will be able to give back to our people to build more entrepreneurship in our communities.

If Cash is King, Then Apple is God – But Is David Einhorn The Devil?

By William A. Foster, IV

Yesterday is a cancelled check. Today is cash on the line. Tomorrow is a promissory note. – Hank Stram

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My entrepreneurship teacher in b-school was a man who grew up in the depression, was stubbornly frugal, and had LBO’d, run, and sold two companies before taking up teaching. He talked about how the depression impacted him personally (he still drove a late 80′s Acura and bought a used sailboat despite having a net worth near nine figures) and his approach to business. In class he seemed to start off every single class and every case study with the same message on the board. Cash is king. He even went so far as to say that cash was oxygen and the moment a business did not have it, that business was dead. He abhored companies (or students) who suggested that companies should pay down debt ahead of schedule unless there were obscenely excessive cash reserves. Paying ahead on debt for a company and draining its cash reserves to do so was not only foolish but dangerous. As he said you do not get any brownie points from creditors for being ahead but you do endanger your business if an emergency arose or opportunity for that matter. But what about a company that has no debt and sits on the Mount Rushmore of cash? Enter Apple.

Apple, Inc. has no debt and currently sits on $137 billion in cash and cash equivalents and they are being criticized for it. David Einhorn, an “activist” investor in Apple, who is cogently trying to convince Apple that it needs to release its mountain pile of cash back to investors. He has gone so far as to say that Apple is behaving with a depression-like mentality. Apparently, Mr. Einhorn has short-term memory loss. It was not even five years ago when companies were begging for life lines to cash. I am sure the former Lehman Brothers and Bear Stearns had wished they were sitting on a fraction of the cash Apple is currently  holding. Let me not just pick on the banks as we saw Circuit City and 70 year old iconic retailer Mervyn’s go out of business in 2008. It just so happened that the only company willing to lend any cash was Warren Buffett’s Berkshire Hathaway which is not even a bank. In fact, Berkshire Hathaway lent money to two notable banks in Bank of America and Goldman “Teflon” Sachs. In return, Berkshire has received handsome returns in a current investing environment where others are better off standing on the side of the road panhandling to get returns on investments. Berkshire Hathaway’s cash pile was not only able to provide shelter to its stable of companies but Berkshire’s cash infusion into a troubled market was able to bring some level of calm to the global markets that was quickly deteriorating into pure chaos as liquidity had dried up faster than the Sahara desert on Mercury. Yes, it was that bad. Mr. Einhorn says that the money needs to be returned to shareholders because it is shareholders who can put that cash to better use.

Now Mr. Einhorn, exactly where are investors going to go with this cash other than back into Apple? We are in a negative interest rate environment currently and from all impressions of Federal Reserve Chairman Bernanke posturing – not leaving it anytime soon. One has to wonder if Bernanke could find a missile to push real rates even lower he will. A look at the graph below shows just how futile it could be chasing new investments. We know fixed income is dead but over the past five years since the Great Recession the S&P 500 (even with Apple in it) overall has returned almost a 0 percent return while Apple is closing in on 300 percent over the same period. The argument that they do not need “that much” cash is almost as fun of a ponderance as asking someone “how much money is too much?” and expecting any consensus to occur in a group of more than one.

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That is just the investment side of it. There is another real reality of this. Apple needs to be transforming itself into more than a company that makes the IPhone because like all things eventually it too will fade and then what? The television? The watch? This company has the ability to do something truly transformative with the cash that Mr. Einhorn so abhors. Apple can take a cue from an old rival IBM and become a technology and consulting company thereby adding and creating a diversified revenue stream to reduce the angst around so much of Apple’s revenue being based solely on one or two products. What Apple chooses to consult in should be an assessment of its managers of where the company has strengths and competitive advantages.  Or it can hope the IPhone/IPad 40 will still be popular in a decade even though we know how that turned out for IBM. Yes, at one point IBM “Big Blue” made personal computers too. The company also went from one of the most profitable in the world in 1990 with $6 billion in profits to the brink of bankruptcy in 1993. Why? Because Microsoft, Dell, and others were changing the industry underneath its behemoth feet as young, energetic, and nimble companies something IBM was unable to respond to with its size, age, and bureaucracy that comes with a maturing company.  It is now considered a multinational technology and consulting company and this ultimately will be the route Apple will have to take. A transition like this will take time and cash. Lots of it. There is no reason for Apple to have the same fate unless pushed by shareholders who want to join Mr. Einhorn’s short term amnesia of 2008 or forget the lessons of IBM’s near collapse taught us 20 years ago.

It appears Mr. Einhorn and much of the investment community today who are seeking yield in such an onerous investing climate have already forgotten the lessons of yesteryear. Not to mention an American political climate where Democrats and Republicans are acting as if they at best are engaged in a remnant of the Cold War and possibly moving closer to that of the Vietnam conflict as the country tries to get its financial house in order. The herd mentality that so often plagues the investment community’s inability to dare to be contrarian.  Unfortunately, few managers of public companies today have the sense to not succumb to the perils of the 90 day cycle also known as quarterly earnings and instead focus on managing a company with the vision of tomorrow’s tomorrow in mind. Apple should do what it does best and what allowed it to come from the brink of irrelevance to one of the world’s most valuable company – “Think Different”. Yes, cash is king and Apple is indeed currently God – but as mythology taught us even gods can be killed.

Disclaimer: There is no ownership of any of the companies mentioned in this article by myself, my business, or my family as of this article’s publishing.

The HBCUpreneur Corner – FSU & A&T’s Keysha Best & Elect Elegance

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Name: Ms. Keysha Best

Attended: Fayetteville State University; North Carolina A&T State University

Business Name & Description: Elect Elegance the Boutique, Women’s clothing, shoes & accessories

What year did you found your company? 2011

What was the most exciting and/or fearful moment during your HBCUpreneur career? The most exciting day was the day I got my first ‘like’ on the facebook business page. To know someone was interested enough in what I was about to offer them was humbling. Can’t say I’ve experienced fear yet. Even when I fail to meet a certain goal, I’m excited about the lesson that was gained in it.

What made you want to start your own company? Having been perceived as “fashionable” for so long, I was ready to offer women style and looks at affordable prices and hope that I could encourage them to become more confident and proud of whom they were.

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Who was the most influential person/people for you during your time in college? Having graduated HS at 16, my college experience was not the most memorable in a positive way. I did however, meet my husband while in school and he has influenced me tremendously since then.

How do you handle complex problems? Every problem that’s presented to me I look at it as if my entire company is riding on it. If it’s one customer or one vendor, I handle it with compassion because I never know how those individuals may show up again in the future. Other issues I try not to stress about. Being a fairly new company and not having any professional training in retail, every lesson is self-taught. I don’t want to be too hard on myself because I’ll lose sight of my end goal(s).

What is something you wish you had known prior to starting your company? I wish I would’ve known that there were a million other female (and some male) entrepreneurs trying to do the same thing. Finding that out now makes me try harder to set myself apart from the others. We may all have the same products to offer but I want to give my customers more than just a piece of jewelry or clothing.

What do you believe HBCUs can do to spur more innovation and entrepreneurship while their students are in school either as undergraduate or graduate students? I honestly don’t believe an institution can assist in this area. It’s a mindset. Some people feel the need that they HAVE to work for someone else, not realizing that they’re working for an entrepreneur. Perhaps if students were actually persuaded to take courses in things that they are naturally gifted and talented in, they would see that they are here for another purpose. But again, that’s way past a standard any University can set.

How do you deal with rejection? I haven’t physically experienced it yet. What I could call rejection is perhaps someone not liking my pages but I would write that off as them either not knowing about it or feeling my products aren’t what they need at present.

When you have down time, how do you like to spend it? When I’m not spending time with my family, I’m shopping for exclusive items. I don’t have much down time.

In leaving is there any advice you have for budding HBCUpreneurs? Things may go wrong, and they may happen more often than you wish but you only fail when you quit. Take every setback as a lesson and learn from it.