Replacing Steve Jobs: How Apple CEO Tim Cook Has Fared Five Years Later

Date: 22-08-2016
Source: The Wall Street Journal

Cook CCThe ultimate question facing Tim Cook five years into his tenure as chief executive: Are Apple’s best days behind it?

One of the most important succession plans in corporate history will hit a milestone this week.
Five years ago, Apple Inc.’s iconic and visionary co-founder Steve Jobs passed the torch to his handpicked successor, Tim Cook. The official transition took place six weeks before Mr. Jobs passed away.

Now Apple is the world’s largest company by market value and remains one of the most influential. Its $53 billion in net income last year was greater than the combined earnings of technology behemoths Facebook Inc., Google’s parent Alphabet Inc., Amazon.com Inc. and Microsoft Corp. Apple recently sold its billionth iPhone.

Apple Market CapitalisationAt the same time, though, Apple’s growth is slowing, its stock is stagnating and it is facing more concerns than ever about its future. Underscoring all of this is one key question that Mr. Cook will likely never escape: Are Apple’s best days behind it?

Apple’s product lineup has expanded under Mr. Cook, but each category faces its own set of concerns. The iPhone, launched under Mr. Jobs, is even bigger in dollar terms now and contributes roughly two-thirds of the company’s overall revenue.

And yet its outrageous success is coming back to haunt Apple. With iPhone sales slowing, Apple has reported two consecutive quarterly drops in revenue, snapping a streak of 13 consecutive years of growth. The iPad has slumped for the past few years and the Apple Watch hasn’t turned into a blockbuster product.

Apple NasdaqOn Wall Street, Apple has also made the improbable transition from a growth to a value stock thanks to the billions of dollars in dividends and share buybacks that it has showered on shareholders under Mr. Cook’s leadership.

Apple’s stock has more than doubled over the past five years, outperforming the S&P 500 but slightly trailing the tech-heavy Nasdaq Composite.

Apple PE RatioIts valuation is cheap, but it has been cheap for years. The worry that Apple doesn’t have another truly revolutionary product up its sleeve is what weighs on the stock.

In his first email to employees as CEO in August 2011, Mr. Cook said: “I want you to be confident that Apple is not going to change.”

But change is inevitable, even if Apple’s shareholders are slow to accept it.

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