A strong argument can be made both ways– keep Cook or fire Cook– and based upon similarly related but slightly different math. Cook has been a top dawg at Apple for a long, long time. AAPL stock rose dramatically– as did revenue and profits– under Cook’s reign. Let’s look at some math.
Expectations vs. Reality
To say that Cook has done well at Apple since Steve Jobs died almost five years ago would be a massive understatement. The reality is this. Apple’s revenue and profits and market value have skyrocketed under Cook. But that was then and this is now and it’s been almost a year and a half since AAPL peaked at $134 a share and now it’s in the toilet at less than $100 today.
Likewise, many of Apple’s products are like some of the company’s executive team; they’re growing long in the tooth and devoid of the product innovations and disruptions of the past decade. Half the Mac line hasn’t seen a substantial update in years. iPad sales have fallen for two years straight. iPhone’s features haven’t kept up with the best of the Android smartphone makers.
Have we reached peak Apple? Is it time for a change at the top? Tim Cook has been at or near the top since Steve Jobs hired him in 1998. That’s 18 years. Likewise, marketing veep Phil Schiller has been at the top of Apple’s executive circle since Jobs returned in 1997. Among other executives of noted tenure, Eddie Cue came to Apple in 1989. Software honcho Craig Federighi works at NeXT before it was bought by Apple. Other executives have long careers at Apple.
- Dan Riccio – SVP Hardware (1998)
- Jonny Ive – Chief Designer (1996)
- Jeff Williams COO (1998)
These and other Apple executives have been around for one to two decades, and held leadership positions during both the good times of revenue, profit, and stock price growth, and before the iPhone era. Apple’s numbers in recent years, by whatever math standard that can be used, have been phenomenal under a solid, experienced executive team.
That’s the reality.
Apple remains a valued brand with a billion well satisfied customers; a company that does much that’s different from competitors, including revenue and especially profits.
Expectations are different. It’s one thing to make massive profits, but it’s something entirely different to grow shareholder value and over the past year AAPL has struggled and the product pipeline seems to have plenty of gaps with little of note coming down the pipe.
On one side of the numbers, Apple remains massively profitable thanks to the efforts of an experienced, seasoned, veteran team of executives. On the other side of the numbers, AAPL and Apple haven’t done much recently and the stock market seems to agree, despite massive stock buybacks and massive dividends.
Regardless of how the numbers are viewed, Apple appears to be languishing, drifting in the wind, unable to bring back the excitement of the early iPhone models or the iPad; unable to stop the ongoing revenue shortfalls despite enormous profits from every product group.
Yesterday, Apple posted better-than-expected financials because expectations were so low. Revenue was down again, and so were iPhone sales, iPad revenue grew, but sales in China dropped dramatically. Again. Revenue to the growing Services group continued to grow, iPad unit sales fell again, as did Mac sales year over year. Guidance for the next quarter remained very conservative.
Are these financial results enough to keep Tim Cook as CEO? Probably, but it should be obvious that Apple is not the product machine it was just a few years ago. CEO’s usually lose their jobs through scandal or performance. Apple isn’t performing well these days.