This month we’ve seen two magazine spreads on Apple executive management. That alone might be significant if we were discussing any other Fortune 500 company.
Fast Company – Eddy Cue And Craig Federighi Open Up About Learning From Apple’s Failures
The Washington Post - Tim Cook, the interview: Running Apple ‘is sort of a lonely job’
But Apple hasn’t been like any other Fortune 500 company when it comes to media relations. They’ve avoided the spotlight at all costs. So for long-time Apple watchers, this is highly unusual.
Fast Company – Eddy Cue And Craig Federighi Open Up About Learning From Apple’s Failures
The Washington Post - Tim Cook, the interview: Running Apple ‘is sort of a lonely job’
But Apple hasn’t been like any other Fortune 500 company when it comes to media relations. They’ve avoided the spotlight at all costs. So for long-time Apple watchers, this is highly unusual.
But who is the intended audience for these pieces? It’s not potential customers. If Apple wanted to burnish their brand to sell more iPhones I highly doubt a magazine spread on Eddie Cue or Craig Federighi is going to make a difference. Besides, consumers don't care about corporate inside-baseball. Could they be targeting potential employees? Possible. But that would be unorthodox and would smack of desperation.
I think this is targeted towards investors. There has been a barrage of negative news articles in the past three months regarding the iPhone’s first ever quarterly sales decline and 2016 could be the first year that the iPhone shows sequential declines for revenue. It would make sense that Apple might try and counter the constant stream of “Apple is Doomed” articles that have been written.
Some positive press by Apple management could serve a few purposes. First, it would benefit the stock price by wooing more value fund managers to purchase a stake in the company. Second, it would allow the current investors outside of the board of directors to kind of get a glimpse at their management team as well. Third, it could portend where the company is thinking in terms of their succession planning for their CEO.
Wooing New Investors
Apple isn’t just targeting any investor, this is specifically aimed at value stock investors. The growth funds have already left the building. Apple has given them a quite a ride in the last decade but if you are looking for double-digit returns every year then you’ve probably already moved on to greener pastures.
Value stock investors are more thoughtful. They are looking for well-managed companies. They’re investing in a management team as much as the product. Markets are fickle and products will have their ups and downs but a good management team greatly increases your odds of better than average returns over the long haul. The timing of these interviews coincides perfectly with the exact period in which value investors are taking a hard look at AAPL.
Apple stock bottomed out at $89.47 per share in May after their Q2 earnings release reported the iPhone’s first ever sales decline. The value fund managers sat on the sidelines for a while hoping that it would go down further. But once it became clear that it had bottomed out they started jumping in and the stock has been on a slow rise ever since. Now, three months later it’s sitting at $109.36 as of Friday, August 19th.
An Appeal to Current Investors
A lot of people like to think that the CEO reports to no one, when in fact, that’s not true at all. He serves at the pleasure of the board of directors. A CEO is hired based on his future vision of what he thinks the company should be. If the stockholders who are represented by the board ever lose faith in that vision, that’s the point where the search for a new CEO begins.
But the board of directors serve at the pleasure of the greater shareholder group. If the current shareholders are happy with how their management team is performing and buy into their vision then there will be peace. If they are unhappy, they’ll either start harassing the board to intervene or sell their shares in the company. Too many unhappy investors could precipitate a major share price decline.
Or you could even have a situation where the board is unhappy with the management team but doesn’t act because the team is popular with the shareholders at large. Everyone reports to someone.
Potential Successors?
I’m sure that Tim Cook has given much thought to his eventual retirement and who should be given the CEO job next. It would make sense that at some point that they start introducing these potential successors to the media. This would allow Tim and the board to see how well these potential successors handle the spotlight and represent the company. Also, it would make any transfer of power less traumatic because the successor would be a known variable.
Does that mean that Eddie Cue and Craig Federighi would be on the short list should Tim Cook get hit by a bus? I don’t know but that sounds like an interesting article in the making.
Conclusion
A lot of Apple watchers cling to this romantic view that Apple is different from other companies and not as concerned with pleasing their shareholders and board of directors. But when you look at Apple’s actions, you don’t get that picture at all. This little media blitz looks precisely aimed at investors and shows that Apple is showing proper deference to the position of power that investors hold. Even if Tim Cook is willing to defy the board in certain areas, that doesn’t mean that he doesn’t try to curry favor with them at other times to buy himself more capital.
And boosting AAPL’s stock price by wooing new value oriented investors into the fold would definitely buy him a lot of capital.
I think this is targeted towards investors. There has been a barrage of negative news articles in the past three months regarding the iPhone’s first ever quarterly sales decline and 2016 could be the first year that the iPhone shows sequential declines for revenue. It would make sense that Apple might try and counter the constant stream of “Apple is Doomed” articles that have been written.
Some positive press by Apple management could serve a few purposes. First, it would benefit the stock price by wooing more value fund managers to purchase a stake in the company. Second, it would allow the current investors outside of the board of directors to kind of get a glimpse at their management team as well. Third, it could portend where the company is thinking in terms of their succession planning for their CEO.
Wooing New Investors
Apple isn’t just targeting any investor, this is specifically aimed at value stock investors. The growth funds have already left the building. Apple has given them a quite a ride in the last decade but if you are looking for double-digit returns every year then you’ve probably already moved on to greener pastures.
Value stock investors are more thoughtful. They are looking for well-managed companies. They’re investing in a management team as much as the product. Markets are fickle and products will have their ups and downs but a good management team greatly increases your odds of better than average returns over the long haul. The timing of these interviews coincides perfectly with the exact period in which value investors are taking a hard look at AAPL.
Apple stock bottomed out at $89.47 per share in May after their Q2 earnings release reported the iPhone’s first ever sales decline. The value fund managers sat on the sidelines for a while hoping that it would go down further. But once it became clear that it had bottomed out they started jumping in and the stock has been on a slow rise ever since. Now, three months later it’s sitting at $109.36 as of Friday, August 19th.
An Appeal to Current Investors
A lot of people like to think that the CEO reports to no one, when in fact, that’s not true at all. He serves at the pleasure of the board of directors. A CEO is hired based on his future vision of what he thinks the company should be. If the stockholders who are represented by the board ever lose faith in that vision, that’s the point where the search for a new CEO begins.
But the board of directors serve at the pleasure of the greater shareholder group. If the current shareholders are happy with how their management team is performing and buy into their vision then there will be peace. If they are unhappy, they’ll either start harassing the board to intervene or sell their shares in the company. Too many unhappy investors could precipitate a major share price decline.
Or you could even have a situation where the board is unhappy with the management team but doesn’t act because the team is popular with the shareholders at large. Everyone reports to someone.
Potential Successors?
I’m sure that Tim Cook has given much thought to his eventual retirement and who should be given the CEO job next. It would make sense that at some point that they start introducing these potential successors to the media. This would allow Tim and the board to see how well these potential successors handle the spotlight and represent the company. Also, it would make any transfer of power less traumatic because the successor would be a known variable.
Does that mean that Eddie Cue and Craig Federighi would be on the short list should Tim Cook get hit by a bus? I don’t know but that sounds like an interesting article in the making.
Conclusion
A lot of Apple watchers cling to this romantic view that Apple is different from other companies and not as concerned with pleasing their shareholders and board of directors. But when you look at Apple’s actions, you don’t get that picture at all. This little media blitz looks precisely aimed at investors and shows that Apple is showing proper deference to the position of power that investors hold. Even if Tim Cook is willing to defy the board in certain areas, that doesn’t mean that he doesn’t try to curry favor with them at other times to buy himself more capital.
And boosting AAPL’s stock price by wooing new value oriented investors into the fold would definitely buy him a lot of capital.
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