What to expect from Apple's Tim Cook

With Steve Jobs on medical leave, all eyes are on his No. 2.

By TheStreet Staff Jan 20, 2011 12:54PM

Credit: Apple Chief Operating Officer Tim Cook ((C) Chris Hondros/Getty Images)By James Rogers, TheStreet


Investors listening to Apple's (AAPL)first-quarter conference call Tuesday hoping for some Steve Jobs-style showboating and fiery rhetoric were surely disappointed. A soft-spoken, somewhat reserved Southerner is now center stage at the world's biggest technology company.


With Jobs on medical leave, all eyes are now focused on his No. 2, COO Tim Cook. Whereas his flamboyant boss spiced up press events and analyst calls with the occasional dig at fellow Silicon Valley companies like Adobe (ADBE), Cook's conference call comments (save for one swipe at rival tablet makers) were much more restrained. The Alabama native instead made vague references to the "magic of Apple" while giving little away about the company's broader strategy and its succession plan.


Cook, of course, is familiar with this role. He has already taken the company's reins on two prior occasions: for two months in 2004 when Jobs was receiving treatment for pancreatic cancer, and again for six months in 2009.


Widely regarded as a safe pair of hands with an intimate knowledge of Apple, the COO's status as a capable lieutenant is unquestioned. A graduate of Auburn University with an MBA from Duke, Cook held stints at Compaq and IBM (IBM) before joining Apple as senior vice president of operations in 1998. Cook's success in that role and his subsequent job as executive vice president of worldwide sales and operations led to his promotion to COO in 2005.

"We believe investors would embrace Tim Cook in any potential succession plan," Goldman Sachs analyst Bill Shope said in a recent note. "Many investors became comfortable with Tim Cook as the permanent CEO during Jobs' 2009 medical leave."


Shope also believes that the "revolutionary" phase of Apple's mobile computing strategy, marked by technology launches such as the iPad and iPhone, is now complete. "Tim Cook appears more than qualified to shepherd this platform approach into the future," he said.


While new versions of the iPad and iPhone are expected to appear later this year, it is unclear if Apple has future game-changing devices up its sleeve. Instead, there is growing speculation that Apple will push into cloud-based services this year.


As an IT operations maven, Cook could provide the expertise needed to build out this cloud strategy, which is said to center on a massive new data center in Maiden, North Carolina. During his 12 years at IBM, Cook was in charge of manufacturing and distribution for the company's PC business in North America and Latin America, and he was also responsible for procuring and managing product inventory while at Compaq.


More recently, Cook has been credited with overhauling Apple's manufacturing and streamlining its operations.


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Against this backdrop, at least one analyst thinks, Cook is likely to become a permanent fixture in the Apple hot seat.


"Obviously, Jobs is irreplaceable as the industry's innovator, but he has more pressing matters today than being CEO of Apple," said Brian Marshall, an analyst at Gleacher & Company. "Running a $100 billion annual revenue company while being forced to take periodic medical leaves is not fair to anyone."


Marshall adds that Cook's "flawless" performance while previously deputizing for Jobs make him an obvious, and maybe imminent, successor. "We expect he will become the full-time CEO of Apple this year with Jobs hopefully serving as a senior advisor," he added.


There are, however, hurdles in Cook's path, not least of which is the glaring absence of Steve Jobs. The Apple CEO has earned a fearsome reputation for turning ideas into reality, and his sheer force of personality, will and ability to get things done will be sorely missed, although he has vowed to stay involved with major strategic decisions at the company.

Other potential challenges for Cook could include phone pricing pressure with carriers, and, despite his conference call comments, increased competition in the tablet market.


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