Cook is No Jobs
Mohamed is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
About 2 weeks ago I published an article about Apple (NASDAQ: AAPL) and its potential to be the first trillion dollar company in history. Whether that becomes a reality or not rests on the shoulders of Apple’s 60,000 employees led by their new CEO Tim Cook. When Steve Jobs died, he left very large shoes to fill, but from how things are looking, Tim Cook has done a superb job of managing the company. Apple has gained about $180 billion in market value since he took over.
Tim Cook however is no carbon copy of Steve Jobs. He has his own leadership style and his own leadership qualities. He has been praised for his more open, transparent, and down to earth approach regarding everything from his stance on the patent wars to eating lunch in the cafeteria with employees to making inspection tours at Foxconn factories.
He has also been much friendlier to shareholders. When Steve Jobs made his return to Apple in 1997 Apple was in financial distress and had stopped paying its dividend. Apple during the reign of Steve Jobs never did reinstate its dividend despite the fact that earlier in the year and assuming market prices it was holding enough cash ($93 Billion) to buy Boeing (NYSE: BA) outright and still have some left over to acquire General Motors (NYSE: GM)!
Tim Cook earlier in the year reinstated Apple’s dividend at a quarterly rate of $2.65 giving it a yield of about 1.8%. This move will help the stock going forward because large institutional investors love cash dividends as it provides them with liquidity and positive cash flows which they can use to make additional investments. Warren Buffet's Berkshire Hathaway (NYSE: BRK) owns a plethora of dividend paying stocks. Coca Cola (NYSE: KO) which is Berkshire Hathaway’s largest holding has provided Berkshire with an accumulative $3.28 Billion cash payout since 1997. Berkshire’s original investment was a little over $1 Billion made in 1988!
The Final Test
Tim Cook has yet to be put to the test on one more front that has helped make Steve Jobs an icon and that's Product Development and Launch. So far, Apple hasn't released any major new products since Tim Cook took over aside from the new thinner MacBook Pro that was announced at the WWDC Developers conference 2 weeks ago.
The way Apple designed, developed, and launched their products was what really distinguished Apple from the rest of the pack. In the last decade I can’t think of any product that Apple has launched and had been a bust while I can name several for its competitors. Google (NASDAQ: GOOG) struck out with Google Wave and hasn’t had any real success so far with Google Plus, Chrome Books, and Google TV. Dell (NASDAQ: DELL) recently terminated its Venue and Venue Pro smartphone in the US and Microsoft (NASDAQ: MSFT) didn’t do so well with the Zune, Windows Vista, and Windows Mobile.
Apple is expected to release the iPhone 5 later this year. If history is any guide, it will probably be on a Tuesday in the 2nd week of October. The iPhone is currently Apple’s most successful product line and the new iPhone release will be of the utmost importance. With the new Microsoft Surface surfacing on the scene (no pun intended), a new iPad release which can match the observed laptop/ultrabook like qualities of the surface seems to be imminent. Apple is also expected to release Apple TV sometime in the near future which will be an entirely new product line and a real test for Apple under Cook.
For Tim Cook, having outlandish success with all these new product releases is a must. It shows that Apple still has that core competency that has made it the largest corporation in the world today and will propel it to that trillion dollar mark in the future.
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