These need to be asked.
I just watched the snow job that was the purported interview of Tim Cook by one Brian Williams on NBC. It confirmed why I never watch US commercial TV. Williams, new to me and hopefully never to be seen again, is one of those saccharine presenters who gets $10m annually for reading a Teleprompter while looking good. As for Cook, he rivals the hammers in my garage for charisma. These are the questions the sycophantic Williams should have asked:
- Your stock just crashed 28% from $705 to $505, recovered some, then crashed again. There was no news to cause these events and zero communication from you to stockholders. Do you think such lack of communication is appropriate for the CEO of the world’s largest public company?
- You have $120bn cash in the bank of which $80bn is abroad. It earns negligible sums. You have set aside $20bn in tax liabilities on your balance sheet to pay taxes in the event the $80bn is ever repatriated. By leaving the money abroad you are denying the US government and taxpayer $20bn in revenues which is rightly theirs. You can bring the money back, pay the taxes with no effect on earnings and distribute most of the remainder to shareholders. As you have stated, you have no earthly need for that sum of money when your quarterly free cash flow is $4bn. Why do you not do the right thing for America, its taxpayers and Apple’s shareholders and bring the money back onshore, while simultaneously sending a loud message about what constitutes good US corporate citizenship to your fellow CEOs who are denying the US taxpayer over $0.3 trillion in tax revenues?
- You fired Scott Forstall, the father of the NeXT, OS X and iOS operating systems. Do you believe that a stress-free, ‘nice’ culture is more conducive to innovation than one where strong internal competitors drive for excellence?
- Rumors have it that you are going to roll out an Apple TV set. Why would you enter a commoditized low margin business with a decade long replacement cycle and limited sales opportunities for your premium-priced product when none of the content majors wants to play distribution ball?
- All modern smartphones are now ‘good enough’ and many have better screens than yours for less money, making for a harder than ever sale for Apple’s premium priced, telco-financed iPhone. What are you doing about this to compete for the minds and wallets of young, affluent consumers in huge markets like China where you have failed to execute a contract with China Mobile which accounts for over half of Chinese cell phone users, owing to your insistence on a ‘subsidized’ price model?
- Do you think your annual product refresh cycle is optimal in a world where your competitors are on a quarterly upgrade frequency?
- You claim to be innovative and that 80% of current sales are of products which did not exist three months ago. Realistically these ‘new’ products are simply modest refreshes of their predecessors. A smaller iPad, a thinner iMac, a slimmer iPhone, new cases for iPods. When are we going to see some real innovation again from Apple? Apple’s path to future growth is paved with innovative products in new markets commanding high profit margins with high frequency replacement cycles. Do you think you have peaked like Sony, Microsoft, Dell, HP and RIM?
- Products like the iPad and Apple TV will have very long replacement cycles for most users, and at current prices you are going to be increasingly uncompetitive with solid alternatives being significantly cheaper. Price does matter, regardless of what you believe. Why are you not aggressively pursuing alternative product markets with high demand and replacement frequencies to show off your design chops and allow you to maintain 40+% gross margins? Markets like car controls, home appliances, cameras (a market made for Apple’s business model if ever there was one), ‘green’ products, etc.
- Apple seems obsessed with making everything thinner and lighter. Few users care that the new iMac is thinner than its predecessor when repair ease is seriously compromised, the machine is never moved, the user cannot easily reach the camera card slot and needs a separate DVD reader for his discs. Few want an even lighter iPhone. Are you not answering questions which no one has asked while complicating the mass production process and compromising your time-to-market?
- You have placed great prominence on the skills of Jony Ive, your chief designer, as a key man at Apple, rewarding him with a recent promotion. How many people with similar skills are waiting in the wings in the event of the proverbial bus or if Ive concludes that his $125 million fortune is enough and he would rather put his feet up in his new English castle?
Not one of these questions was remotely hinted at in the TV piece. Now do you see why I do not watch US commercial television?
Apple’s idea of innovation. A screen tilted at a ridiculous angle on a near
totally worthless stand at a premium price. Did I mention that it’s thin?
Disclosure: Long AAPL bull LEAP spreads.