We all know the internet has become synonymous with misinformation superhighway, and while I will defend to the death someone’s right to say that which is wrong, someone needs to stand up and say what’s right and what’s not so right.
Take headlines about Apple. Puhleeze. Whatever happens to Apple, for good or not, instantly brings out the craziest headlines from worst of all possible worlds. Look no further than yesterday. Or, any day. Yep, it’s time for another episode of Kate’s Hair on Fire.
They Said What?
It seems to me that major websites simply make up the most contrarian pieces of refuse possible, just to keep the embers in my latest do from going out.
Take Ben Lovejoy. Without a shred of evidence he seems to think Apple may abandon the plastic iPhone because of the apparent failure of the iPhone 5c.
Hello? Apparent failure? In what world? Only in the makeup world of website headline link baiters.
You see, Apple doesn’t break down iPhone numbers, but Apple’s CEO Tim Cook is on record saying that the iPhone 5c sold better than its predecessor (as the second in Apple’s tiers of iPhones), the iPhone 4s, and it’s likely the iPhone 5c, being made of plastic cost Apple less money to make than the iPhone 5 it replaced.
Presto abracadabra, Apple made more money on the second tier iPhone and managed to upsell plenty of buyers to the more expensive (and, ostensibly, more margin rich) iPhone 5s.
In other words, Lovejoy made something that tastes like nothing from something that was nothing, but if you read the headline you were sucked into the void anyway.
Wait! There’s More!
Hair grows back steadily but slowly for most of us, so even Lovejoy’s ridiculous premise wasn’t enough to put the fire into mine. What he could not do Aswath Damodaran did.
Apple CEO Tim Cook got plenty of kudos and favorable digital ink by telling an illegitimate stockholder representative from NCPPR that he doesn’t check the ‘bloody ROI‘ when it comes to doing the ‘right thing.’
In other words, Apple wants to be a responsible corporate citizen. Damodaran took issue with the how and the why and the how much it costs.
In fact, he went further and suggested that any investor that does not believe in Apple’s social mission should sell Apple stock.
As if Apple has a single social mission, and as if it was any of Damodaran’s business anyway.
Since everyone else seems to have been selling Apple stock ever since Cook became CEO, I guess adding one more group to the mix will not make much of a difference.
If I remember my Economics 101 class correctly, whether the stock goes up or down, for every seller there’s a buyer, right? Apple’s stock, though beaten up of late, despite record revenue and profits, is still far higher than when Cook took over following Steve Jobs’ death.
What’s the beef?
At the risk of sounding like a moral reprobate, I take issue with both what Cook said at the meeting, and how he said it… I am an Apple stockholder, I am not a member of the NCPPR.
NCPPR is the oil industry funded conservative think tank which apparently doesn’t think much of Apple’s management.
Back to Damodaran:
I am supportive of good environmental policies and find your response to be troubling, because it reveals a mindset that I would not want in the CEO of a company that I own stock in, for four reasons.
Translation: ‘I bought Apple stock at $700 and it’s just over $500 now so do something to fix that.’
I understand the sentiment. If you ever want to make money shorting a stock, tell me which one to buy. I can almost guarantee the stock will fall.
What set my hair on fire, besides, Damodaran’s condescending and elitist attitude about Apple and stock was his list of four reasons. Here they are, followed by reasonable commentary.
- Social responsibility comes with a price tag – Yes, it does. And Apple seems to have figured out the proper balance between being socially and environmental conscious so as not to screw up the planet and its inhabitants, and grow profitability.
- If you choose to be socially responsible, as a publicly traded company, you have to be transparent – That’s not true. Some transparency may be required, but completely transparent is not a requirement. It’s not even good policy. Stockholders should not be allowed to micromanage a public company.
- If you are transparent, and you truly respect your stockholders, you have to give them a say – See above, and ‘no you don’t, not really, not all the time.’ Some stockholders have enough stock to get Tim Cook to go out for dinner, the rest of us keep our fingers crossed and hope the stock goes up.
- If you give stockholders a say in CSR spreading, and they tell you no, you have to listen – Fair enough. Cook listened. But listening isn’t the same as acting. Stockholders vote two ways– by buying or selling, and electing board members. Looks to me like the stockholders voted and retained the same board members, so the majority of stockholders (as in ‘stocks held‘) are happy with how Cook runs Apple.
End of story, right? Nope.
I don’t want sanctimonious CEOs to define social responsibility for me, to be generous with my money and then refuse to let me know how much they have spent (let alone give me a say).
First, Cook wasn’t sanctimonious with NCPPR, he was condescending. There’s a difference. NCPPR deserved it because their representative was not respectful of Apple or the majority of shareholders.
Second, the CEO, along with the executive team and the board of directors defines the company’s social responsibility whether an individual shareholder likes it or not. Damodaran may not like how Apple does what it does, and he has a right to say so, but based upon his list of grievances, maybe he should cut his losses and move on to another stock with more potential. Like BlackBerry.
Third, let me point out what isn’t exactly obvious. Apple isn’t being generous with Damoradan’s money. Shareholders don’t give money to Apple. That step ended long ago when Apple became a publicly traded company. Shareholders buy Apple stock in the hopes the price will go up. It’s not much different than gambling in Las Vegas (and I’m not even sure the odds are worse there).
The money Apple has earned since going public is Apple’s money, not the shareholder’s money. They may have a share in ownership, but Apple isn’t a big personal piggybank. So, even with a dividend, Apple isn’t returning money to shareholders, they’re merely sharing the wealth with shareholders.
Not A Fan
It should be obvious that I’m not a fan of the likes of NCPPR or Damordaran and their ilk, but Apple seems to have reached a pretty good balance between being a profitable company with hundreds of millions of happy customers eager to buy their wares, and a socially nimble company that treats employees and shareholders quite well.
While dividends are good when a company can afford it, and Apple can, I’m not a fan of Apple’s stock buyback plan. The idea seems sound. Buying back stock shows the company believes in itself (as if that’s a problem at Apple) and thinks the share price is too low. That’s all well and good but doesn’t seem to have done much to prop up the share price at all. Apple has spent somewhere around $40-billion buying back stock and the price hasn’t gained any traction in the marketplace.
Couldn’t $40-billion buy something that would? Like Tesla?