Apple's Cook needs to answer $137B question
Waiting for Apple's chief to address the numerous questions on the minds of investors is an exercise in futility.
As market indexes have crept ever closer to their highest levels since 2007 in recent weeks, Apple’s (AAPL) share price has largely moved in the opposite direction. The company’s earnings, as impressive as they were, disappointed Wall Street, and so far there is no clear indication of what the company will do in order to return to the days of high growth and high margins.
Yesterday morning marked what was widely anticipated to be a significant appearance by Cook at the Goldman Sachs (GS) Technology and Internet conference out in California. Policy wonks may have spent the day eagerly anticipating President Obama’s comments at Tuesday night’s State of the Union address; for many investors, however, what Tim Cook might have had to say about the state of Apple was even more important.
The problem was that Cook ended up saying remarkably little of significance, and even less that was at all surprising or revelatory. Does it shock anyone to hear that Apple's "only religion" is to never "make a crappy product" or that its corporate mantra may be "We must do something great"? Was it really all that noteworthy that Cook thinks the display screens on the iPhone’s archrival Samsung Galaxy S III are "awful"?
Apple "innovates like magic," Cook reminded his audience. Yes, but what is coming next?
In fact, as Estragon and Vladimir discover peering into their hat or their boot in Beckett’s play, there was a lot of nothing. Except, perhaps, frustration on the part of Cook that his investors (and especially hedge fund manager David Einhorn of Greenlight Capital) want Apple to do something. In Einhorn’s case, that is to create a special class of shares that would pay out a whopping dividend to their owners, addressing the peculiar problem of Apple’s $137 billion cash mountain. Einhorn is even suing the company to prevent a change in policy that he believes would make this more difficult to execute.
Clearly, if some of Apple’s shareholders and investors are frustrated by all the waiting for the company to do something -- launch a new product and not just a version five or six of an existing one; announce a big dividend payout; take the first step in a new direction through an acquisition -- Cook’s response is irritation and incomprehension.
Maybe that’s because he failed to put on his "listening ears" (as the parents of one kindergartner I know phrase it) before he started talking. Cook made it clear, for instance, that Apple has no plans to launch a cheaper iPhone.
Apple’s stock drifted lower in the aftermath of Cook’s comments, having risen slightly as he spoke. The reaction isn’t surprising; aside from an offhand confirmation that Apple has contemplated large acquisitions but ultimately not proceeded with any of them (no names mentioned), there wasn’t much here that would challenge an investor’s preconceived opinions.
Resolute bulls will take comfort in Cook’s optimism and confidence; those made anxious by the stock’s fall from grace won’t find much here to revive their enthusiasm. And the status quo remains in place, at a time when what Apple really needed to do was deliver something that would jolt investors into remembering that this is Apple, the innovator par excellence.
Suzanne McGee is a columnist at The Fiscal Times. Subscribe to The Fiscal Times' FREE newsletter.
More from The Fiscal Times:
- 13 stocks that have outperformed Apple
- 7 hot tech stocks to watch in 2013
- The smartphone wars: Is Apple’s dominance over?
It`s not just Apple, but many companies are sitting on tons of cash.Don`t tell me companies can`t afford
to offer health insurance and to raise the minimum wage.It should match all raises the congress
gets.Didn`t congress get a 100% raise when Ronnie was Pres?
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Start investing in technology companies with help from financial writers and experts who know the industry best. Learn what to look for in a technology company to make the right investment decisions.
The Internet giant purchased the startup -- and, perhaps as importantly, its personnel -- from DreamWorks Animation in CEO Marissa Mayer's latest 'acquire-hire' move.
VIDEO ON MSN MONEY