Apple grows new core
Published 28/01/2012 | 05:00
A workaholic who gets up at 4.30am for a gym workout, the new boss prefers calm reason to Mr Jobs's abusive tirades
APPLE, under its new boss Tim Cook, overtook Exxon Mobil this week to become the most valuable company in the world following the publication of an impressive set of quarterly results.
When Apple's charismatic founder Steve Jobs died in October there were many who wondered if the iconic electronics and consumer products company would be able to survive without its presiding genius.
Apple's first-quarter results published this week provided the first indication of how the company was performing in the post-Jobs era. Apple sold no less than 37 million iPhone smartphones during the three months to the end of December. The company also shifted 15.4 million iPad tablet computers during the same period.
This helped power a 73pc increase in first-quarter sales to $46.3m and an after-tax profit of more $13bn. The excellent first-quarter results blew away the consensus analysts' forecasts for sales of about $38.9bn and after-tax profits of less than $10bn.
While the first quarter includes the key Christmas period, Apple also hiked its sales and after-tax profits forecasts for its second quarter. It is now predicting sales of $32.5bn and after-tax profits of about $8bn for the three months to the end of March.
Wall Street loved the better-than-expected numbers and pushed the Apple share price up by 7pc to $448, which valued the entire company at $418bn. It has now overtaken oil and gas giant Exxon Mobile to become America's and the world's most valuable company.
This combination of knockout profits and the fact that Apple doesn't pay a dividend means the company is now accumulating cash at an accelerating rate.
It had an incredible $97.6bn in cash on hand at the end of December and, such is Apple's continuing profitability, that most analysts now believe the figure stands at well over $100bn.
Indeed, at one stage during last summer's political stand-off between the Obama administration and Congress over the debt ceiling, Apple was widely believed to have had more cash on hand than Uncle Sam.
Apple's position has also been greatly strengthened by the fact that Mr Jobs, knowing that his time was running short, ensured that he left the company with a pipeline of must-have new products.
The iPhone 5 smartphone is due to be launched this summer while the iPad 3 is expected to debut in March or April.
And that's not all we can expect from Apple's boffins. The company is also set to launch an entirely new product, an iTV or smart television that would combine television, internet and workstation in one device some time this year. In his authorised biography of Mr Jobs, author Walter Isaacson revealed Apple had "cracked" the TV interface.
This would see the traditional and infuriating TV remote control, which most of us have never managed to completely master, being replaced by something much more user-friendly. Bring it on.
The iTV, which will render the old distinctions between different screen-based devices such as TV, laptops and tablets irrelevant, is causing ripples before it has even been launched.
It is the imminent arrival of the Apple device and competing products from rival companies that is forcing countries, including Ireland, with licence-funded public service broadcasters, to explore alternative funding mechanisms.
A native of Mobile, Alabama, Mr Cook is the son of shipyard worker. After graduating with a degree in industrial engineering from Auburn University in 1982 he spent 12 years at IBM. He then went to work at Intelligent Electronics before spending six months as head of procurement with PC manufacturer Compaq.
Which is what attracted Mr Jobs. When he regained control of Apple in 1997 the company's supply chain was a complete shambles, with two months of inventory piling up in warehouses.
Not alone was this tying up huge amounts of working capital, in a fast-changing industry such as electronics, it also exposed Apple to the risk of losses if it was stuck with obsolete stock.
In his first year in charge, Mr Jobs managed to cut inventory to one month. Then, when Mr Cook joined Apple in March 1998 the process intensified. By September 1998, Mr Cook had cut Apple's inventory to just six days and to just two days by September 1999.
It was a bloody, brutal process. In order to reduce Apple's inventory, Mr Cook slashed the number of Apple's key suppliers from over 100 to just 24 and closed 10 of the company's 19 warehouses. Apple also outsourced most of its manufacturing, mainly to China, around this time.
His success in rationalising the Apple supply chain impressed Mr Jobs. In 2004, he was promoted to head up the Macintosh division, then Apple's core business line.
Later that year, his position as Apple heir-apparent was first recognised when he was appointed acting chief executive after Mr Jobs took extended sick leave to receive treatment for the pancreatic cancer that was to eventually kill him.
In 2007, Mr Cook was officially promoted to be Apple's chief operating officer, a position he had effectively been performing for the previous two years. This cemented his position as number two to Mr Jobs. When in 2009, Mr Jobs took further sick leave to receive a liver transplant, it was Mr Cook who once more stepped into the breach as acting chief executive.
When Mr Jobs took what was to prove to be his final sick leave in February 2011, Mr Cook was once again appointed to replace him. This meant there was little surprise when he got the job on a permanent basis when Mr Jobs formally resigned as chief executive last August.
Despite having been a long-time protege of Mr Jobs, the two men are very different. In contrast to Mr Jobs's often abrasive manner, Mr Cook is famously soft spoken. He prefers calm reason to the often abusive tirades that were a prominent feature of the Jobs management style.
That doesn't mean he is a pushover. Far from it. In fact, he is a workaholic who usually rises at 4.30am. He uses these early starts to work out at the gym -- he has been a director of sportswear manufacturer Nike since 2005 -- and bombard his colleagues with emails.
Mr Cook is also notorious for his Sunday night conference calls during which he maps out Apple's plans for the week ahead.
Despite having been frequently "outed" in the mainstream and gay media, Mr Cook has never commented publicly on his sexuality. Walter Isaacson's normally informative biography of Steve Jobs merely states that he (Mr Cook) has "never married".
As Apple faces the future, Mr Cook faces two challenges.
Firstly, what does he do with the company's ever-growing cash mountain? He is facing increasing pressure to either consummate a major acquisition or else return some of the cash to Apple shareholders.
His second challenge is how to deal with mounting evidence of low pay and poor working conditions at Chinese firm Foxconn, to which Apple has outsourced a large proportion of its manufacturing. This is an issue that refuses to go away and was the subject of a highly critical 'New York Times' article this week.
While any chief executive would dearly love to have Apple's cash problem, the Foxconn issue has the potential to severely tarnish the company's carefully burnished brand image.
How Mr Cook addresses this problem could have serious implications for Apple's future.