There is no world where an airline/hotel or any business could have possibly saved enough cash to fight a 90%+ drop in revenue for months and still remain competitive in the market.

The point is, it’s hard to predict the future. Who knows if the future will bring a fatal bug in your software, a pandemic, or both. But regardless, we all know tough times will always happen, and to therefore be prepared.

For example, a hotel owner can choose to squirrel away cash to protect the hotel and its employees for months of no income. A competing hotel will instead choose to renovate the hotel. Which hotel will customers choose to stay at?

The job of management is to find a profitable way to deploy capital. If management are returning capital to shareholders, outside of expected dividends of course, it’s because they are bereft of ideas. What would I have done? Invested a large portion of that money in long term R&D and careful strategic acquisitions. It’s the same over at IBM. The current generation of managers have inherited cash flows set up by their predecessors but have no idea what to do with them.

The businesses in years past made money, invested some of it, spent some on R&D, and distributed some to shareholders (via buybacks). What other option was there?