Apple: Time To Take Buffett’s Advice?

With Apple’s (NASDAQ:AAPL) stock etching out new and concerning lows — falling below the psychologically key level of $400 per share on Wednesday — it may be time for it to take some advice Warren Buffet gave late company co-founder Steve Jobs several years ago, back when its shares were trading much lower.

As Buffet said during his live “Ask Warren” appearance on CNBC’s SquawkBox, Apple can do four things with the $137 billion locked away in its cash stockpile: buy back stock, boost its dividend, make acquisitions, or sit on it. He made this observation to Jobs when he called to ask Buffett for guidance several years ago.

“It was an interesting conversation because I hadn’t talked to him in a long time,” recounted Buffett. “He said: ‘We’ve got all this cash. What should we do with it?’ So we went over the alternatives. It was kind of interesting.”

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The investing legend made this recommendation to Jobs. “I went through the logic of each thing,” said Buffett. “He told me they would not have the chance to make big acquisitions that would require lots of money… And then I asked him the question, I said .. ‘I would use it for buybacks if I thought my stock was undervalued.’ And I said, ‘How do you feel about that?’” The stock was trading around $200 per share at that time, and Jobs said he felt the stock was very undervalued…