Apple’s new CEO Tim Cook has an unenviable job stepping into the shoes of tech icon Steve Jobs, but he has plenty of scope to make his mark on the company built by his mentor.
“Tim Cook has a different personality than Steve Jobs, and I think that he might be open to more options than Steve Jobs,” explained Allen Nogee, an analyst at tech research firm In-Stat. “He doesn’t want to depart too much from Steve Jobs’ vision, at least initially, but I think as time goes by we will see more deviation.”
Tim Cook, Apple’s new CEO
More reserved than the fiery and flamboyant Jobs, Mr. Cook nonetheless built an impressive reputation during his time role as Apple’s COO. With the iPhone maker set to announce its fourth-quarter results on Tuesday, though, investors are eager to see glimpses of the 50-year old’s management style, not to mention his long-term plans for Apple.
Steve Jobs, Silicon Valley’s greatest innovator, will be an impossible act to follow, although experts have identified key areas where Mr. Cook could outperform his iconic predecessor.
Carve Up the Cash
Apple remains one of the few holdouts in the tech sector that avoids dividend payments, preferring instead to sit astride its vast $76.2-billion cash pile.
The tech giant stopped paying dividends in 1995, opting to focus on growth at a time when the company was facing stiff competition from the likes of Microsoft. More than a decade and a half later, though, Apple is tech’s biggest hitter but still maintains an aversion to dividends.
With the CEO change, there are calls for the gadget maker to rethink this strategy. TheStreet reader Carrie Pollock, for example, urged Cook to implement a dividend or a stock split, in response to a question posted on Facebook.
Word on the Street
This issue, however, has divided investors, with some arguing that the size of the Apple cash mountain is now hard to justify. Other investors, though, see Apple’s cash haul as providing security and the flexibility needed to extend the company’s product line.
A share buyback, which would be immediately accretive to Apple’s earnings, would also be an option, although there have been no indications of Apple going down that road.
Last October, during Apple’s fourth-quarter 2010 conference call, Jobs explained that the company was keeping hold of its cash for “one or more strategic opportunities” in the future. Whether this involves a major acquisition or the development of expensive new technology is unclear. Either way, expect analysts to quiz Cook on Apple’s cash plan during the company’s fourth-quarter conference call.
Bolster the Board
“Maybe Cook might make some changes in the [Apple] board, bring some new blood in and expand it,” said Joel Achramowicz, senior vice president of equity research at investment bank Blaylock Robert Van. “People have talked about the board being a little bit small, so expanding the board would add some perspective, something new.”
Apple has a seven-person board, which includes former U.S. vice president Al Gore, J.Crew CEO Millard Drexler, and Andrea Jung, the CEO of Avon Products. Intel, in contrast, has 11 people on its board, while IBM has 12 directors.
Jung, along with Genentech Chairman Art Levinson, currently serve as co-leads of the Apple board, although there have been recent calls for Apple to appoint an independent chairman. This would be a non-Apple insider who would help Cook steer the company in the right direction.
Apple’s board has faced criticism in the past for lack of transparency, particularly around succession planning, although the company’s directors can point to their biggest success: Apple’s share price.
The iPhone maker’s stock has grown more than 4,500 per cent over the last 10 years, a stark contrast to fellow heavyweight Microsoft, which has seen its shares slip 3 per cent over the same period.
Could Cook add new technologies to the iPhone that were shunned by his predecessor? Quite possibly, according to In-Stat’s Nogee, who think that this would further differentiate the phone from its competitors.
