In Investment v. Investors, GM Loses: Your Headlines for Tuesday

GM is buying back $5 billion in shares – essentially handing $5 billion back to investors to soothe aggressive hedge funds. CEO Mary Barra was head to head with Harry Wilson, an activist investor with backing from four hedge funds and once behind the scenes of GM's federal bailout, who demanded an $8 billion buyback.

In any company, management has to allocate cash along two lines: how much to give to investors for their legitimately expected ROI (capital returns) and how much to keep to invest in the company's future (capital expenditure). Lately, investors have been coming out on top of that math. In the past few months, Boeing, Intel, Apple and many more have announced major buybacks and/or dividend increases, setting up 2014 as a record year for investors and 2015 likely higher. Shortly after GM, Qualcomm unveiled its own $15 billion program. And Yahoo, which agreed to spin off its Alibaba stock to please investors, is still facing pressure to do the same.

It's not like GM has nothing better to spend on. It's facing billions in fines for its ignition switch default, wages for the middle class are stubbornly stagnant and structural challenges in the auto industry are a dime a dozen. Heck, if no one else, Detroit could use the cash. But this spares Barra a fight – precisely because she has all these other things to focus on. It's hard to fault an investor for wanting their money back, and then some. But research by the Wall Street Journal shows that investment quickly nosedives at companies targeted by activist investors. And a company that doesn't invest, doesn't stay a good investment very long. It's the eternal battle of who knows better – management or shareholders. This is why Michael Dell preferred to go private again and why the massive IPO isn’t always a dream exit.

The headlines from yesterday's Apple Watch event: in stores April 25, prices start at $350. But $10,000 to $17,000 for the gold-plated Apple Watch Edition, a product that pretends to compete with heirloom Swiss time pieces while promising to be obsolete within a year. The one burning question I mentioned yesterday – What is this thing for? – remained unanswered. My colleague John C. Abell, underwhelmed but hopeful, writes that "Apple's presentation to a tech press which knows better portrayed the device as sort of an iPhone replacement — getting calls, responding to texts — that still requires an iPhone." So he answered the question for them.

Pioneer tech blog GigaOm is shutting down. The company founded by Om Malik could no longer pay its creditors and has ceased operations. Tip of the hat to these early believers in a different kind of media. "It's sad reality that a site like GigaOm – which produces lots of useful and insightful content – has to shut down while other sites with you won't believe what happens next continue to live on," writes aspiring tech journalist Aminul Islam Sajib.

The world's largest dairy company, New Zealand's Fonterra, has received threats that its infant formula would be contaminated unless use of a controversial pesticide is immediately halted. New Zealand dairy represents a quarter of the country's exports and can be found all over the world.

Credit Suisse has a new CEO. Tidjane Thiam is an interesting choice: he's an insurance exec with no experience in banking, but who ensured strong share price growth while leading Prudential (see top item above). He was also once a government minister in his native Ivory Coast and is only the second ever black CEO of a global bank.

The US' three major credit reporting firms have vowed to simplify the process to correct errors on one's credit score. For readers outside the US, credit scores determine one's ability to borrow money – and are generally used as a measure of one's morality and trustworthiness. Having a good one is a big deal.

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