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Apple: Looking Back
“Picasso had a saying – ‘Good artists copy, great artists steal’ – and we have always been shameless about stealing great ideas”. - Steve Jobs
Tim Cook’s Challenge
It had been the toughest few months since he had taken over from Steve Jobs in August 2011, Tim Cook reflected. There had been a spate of suicides at Apple’s assembly plant in Shenzen, China, run by Foxconn. A run of high profile senior departures had included the exit of Scott Forstall, a favourite of Steve Jobs and once seen as CEO in waiting. Apple had been called to the U.S. Senate Permanent Subcommittee on Investigations, which accused Apple of being “among America’s largest tax avoiders”. After investor activist and hedge fund manager David Einhorn launched a law suit against Apple demanding higher shareholder returns, in March 2013 the share price had fallen to $420, bringing market capitalisation below $400 billion for the first time in a year. Apple was no longer the world’s most valuable company: that distinction had passed back to Exxon-Mobil.
But as Apple’s share price recovered to $460 in May 2013 (see Exhibit 1), CEO Tim Cook had cause to congratulate himself on the hard-won Board decision to make a step change in the share buy-back programme. The previous month the Board had authorised an expansion of the programme to $60 billion of repurchases, up from $10 billion authorised the previous year. On top of dividend payments – resumed in 2012 for the first time since 1995 – this would help to answer investor queries about how Apple intended to make use of its mountain of cash and securities, grown to $145 billion by April 2013.
With these troubles largely behind him, Cook looked forward to the world’s most successful company being firmly back on track. Apple’s competitors like RIM and Nokia had fallen by the wayside, Sony had long ago been outdistanced in personal entertainment and the old adversary - IBM - was no longer present as a PC maker. But what might be
“Picasso had a saying – ‘Good artists copy, great artists steal’ – and we have always been shameless about stealing great ideas”. - Steve Jobs
Tim Cook’s Challenge
It had been the toughest few months since he had taken over from Steve Jobs in August 2011, Tim Cook reflected. There had been a spate of suicides at Apple’s assembly plant in Shenzen, China, run by Foxconn. A run of high profile senior departures had included the exit of Scott Forstall, a favourite of Steve Jobs and once seen as CEO in waiting. Apple had been called to the U.S. Senate Permanent Subcommittee on Investigations, which accused Apple of being “among America’s largest tax avoiders”. After investor activist and hedge fund manager David Einhorn launched a law suit against Apple demanding higher shareholder returns, in March 2013 the share price had fallen to $420, bringing market capitalisation below $400 billion for the first time in a year. Apple was no longer the world’s most valuable company: that distinction had passed back to Exxon-Mobil.
But as Apple’s share price recovered to $460 in May 2013 (see Exhibit 1), CEO Tim Cook had cause to congratulate himself on the hard-won Board decision to make a step change in the share buy-back programme. The previous month the Board had authorised an expansion of the programme to $60 billion of repurchases, up from $10 billion authorised the previous year. On top of dividend payments – resumed in 2012 for the first time since 1995 – this would help to answer investor queries about how Apple intended to make use of its mountain of cash and securities, grown to $145 billion by April 2013.
With these troubles largely behind him, Cook looked forward to the world’s most successful company being firmly back on track. Apple’s competitors like RIM and Nokia had fallen by the wayside, Sony had long ago been outdistanced in personal entertainment and the old adversary - IBM - was no longer present as a PC maker. But what might be