Apple pledges increased innovation – what’s next?
At Apple’s annual meeting in Cupertino, California, CEO Tim Cook assured investors that the company haven’t “got their head stuck in the sand” and “we’re really aware of the competition as well”.
Shares in the company increased from $405 (£267) in early 2012 to a record $705 in September, since falling to $444.57 (at time of writing) amid concerns of Apple failing to meet analyst expectations in it’s quarterly report and increasing pressure from competitors such as Samsung.
Frustrated shareholders have demanded that Apple apportion more of it’s $137bn (over double the US government’s operating cash reserves) pile of cash and that Tim Cook’s recent 51% salary increase to over $900m be reversed. Despite being awarded numerous stock options and cash bonuses, Steve Jobs’ official salary famous sat at just $1 anually.
The shareholder-led war has been fronted by hedge fund manager David Einhorn, filing a lawsuit against Apple to force the company to distribute some cash to disgruntled investors. Cook has dismissed this as a “silly slideshow”, but admits that he takes the principal of cash distribution seriously, and understands widespread shareholder concern.
I don’t like it either [falling stock price]. The board doesn’t like it. The management team doesn’t like it. But by focusing on the long term, revenue and profit would follow.
But why has the AAPL stock price fallen so dramatically? When Apple have hit record revenue, sales and profit figures for Q4 2012, it seems somewhat illogical that their valuation halves.
The answer, of course, is the ‘analysts’. Tirelessly cynical and always speaking from the perspective of those who are solely worried about their investments rather than the company’s future, analysts are able to instil mass panic within shareholders by the simple posting of an article or report. Of course, Apple’s market cap is an irrelevant sum as the company aren’t closing up shop any time soon, but it does have a direct effect on their share price and in turn the appeal to potential investors.
Surely the cost to invest in a company should be based on their sales performance and ability to deliver constantly increasing profits?
Shareholder interest may however take a turn to brighter prospects soon, as Apple is rumoured to have an ‘iWatch’ in production. Said to share features with the iPhone, and iWatch would work intelligently with your iPhone/iPad to deliver notifications and simple functionality without unpocketing your device. A useful article by The Telegraph compiles rumours about the upcoming iWatch.
An ‘iWatch’ would compete directly with Google Glass, as both companies rush to innovate in the next popular product category. For Apple, it would define a major step in the company’s future, creating a new category as they did with the iPhone and iPad. Whilst to many consumers a wrist-worn personal computer may not seem useful, and far too futuristic to be viable, Apple have a knack of making hoards of dedicated fans realise they need something they never knew they did.
What’s your view on the future of Apple? Do you think share price is a good measure of a company’s success, and if Apple released an ‘iWatch’, would you be queuing at the store or dismiss it? Comment below.