Tim Cook's First Year as Apple CEO: So Far, So Good

Many leaders are judged by the early days of their time in the driver's seat. It was exactly one year ago today that Steve Jobs tendered his resignation letter to Apple's (Nasdaq: AAPL  ) board, handing the iKeys to the ship over to Tim Cook:

August 24, 2011

Letter from Steve Jobs

To the Apple Board of Directors and the Apple Community:

I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple's CEO, I would be the first to let you know. Unfortunately, that day has come.

I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee.

As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.

I believe Apple's brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role.

I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you.

Steve

Exactly six weeks later, Jobs would pass away, losing his battle to the health issues that had been plaguing him for so long.

That's what I call a signing bonus
Upon Cook becoming CEO, after several occasions of serving as interim CEO during Jobs' medical leaves, Cook was the happy recipient of a cool 1 million restricted stock units, or RSUs. The grant was meant for retention, with half of it vesting in five years and the remainder in 10. Shares closed that day at $376.18, valuing this award at over $376 million. Since then, investors have expressed confidence in Cook's leadership as Apple continues to post tremendous results and the shares have nearly doubled in just one year's time.

AAPL Chart

AAPL data by YCharts

The stock is up an incredible 77% since then, and shares have reached as high as nearly $675, meaning the value of Cook's award has similarly skyrocketed to about $675 million at the peak. Now that's what I call a signing bonus.

Products first
Over the past year, Cook has overseen several major product introductions, the first of which was the iPhone 4S, which was unveiled the day before Jobs' death. Apple would proceed to sell a monstrous 37 million iPhones that quarter, a sequential jump of nearly 20 million units. That contributed greatly to Apple's current record quarterly revenue of $46.3 billion.

A few months later, Apple unveiled the third-generation iPad on Cook's watch. The device launched at the very end of the first quarter, and the second quarter saw iPad unit sales jump 44% sequentially to 17 million. The iPad currently continues to claim an estimated 69% share of the booming tablet market.

At the company's worldwide developer conference in June, Apple brought the Retina display to its Mac lineup, starting with a redesigned MacBook Pro, and updated the rest of its notebook lineup to include the latest Intel (Nasdaq: INTC  ) Ivy Bridge processors and NVIDIA (Nasdaq: NVDA  ) Kepler graphics. These chips will inevitably make their way throughout the rest of Apple's Mac lineup.

More recently, Apple released the newest version of its desktop operating system, Mountain Lion, and the new iPad was launched in China after the resolution of its trademark dispute in the country.

Think Different
There are several other ways that Cook is leaving his mark on Apple, ways that are decidedly different than those of his predecessor. He reinstated Apple's charitable contribution matching for employees, a program that Jobs had axed over a decade prior.

Jobs had an inexplicable predisposition to hoarding Apple's cash, even declining to heed advice from Warren Buffett (who does that?) to the contrary. Buffett recalled, "He just liked having the cash." At a certain point, though, enough is enough. Apple's swelling money mountain was a frequent topic of investor debate, and Cook has now implemented a quarterly dividend -- the first one in 17 years -- and share repurchase program.

There's now speculation that Apple may be considering a stock split. The last one was a 2-for-1 split back in February 2005. A split could also potentially lead to Apple's inclusion in the Dow Jones Industrial Average. With Apple being the largest company in the world by market cap and the Dow consisting primarily of blue chips, Apple is the bluest chip of them all, so it's arguable that Apple should be in the Dow. Due to the Dow's silly price-weighting mechanism, Apple's current price is prohibitively high, although Apple also carries a disproportionate weight in market-cap-weighted indexes as well. At the end of June it comprised 4.4% of the S&P 500 and currently equals 13.2% of the Nasdaq Composite.

In some ways, Apple is also less close-mouthed under Cook. Before, many of Apple's relations with the media were considered a one-way street. The Mac maker would reach out to select members of the press when it wanted something. Proactively reaching out to Apple for press inquiries would either be fruitless or simply yield a "No comment." Nowadays, Apple will issue official statements to the press, like when it responded in defense to The New York Times' piece on how Apple minimizes its tax liability (like just about every other tech company). Apple is much more willing to converse with the media under Cook.

Kudos
The past year has been very kind to Cook, Apple, its customers, and its shareholders. Cook had already been responsible for much of Apple's success behind the scenes, and will continue to lead the way now that he's in the spotlight.

So far, so good, Mr. Cook.

Apple has entered a new era of growth on Cook's watch, and you can read all about it right here in this brand new premium report on Apple. Sign up today and get free updates at no additional cost!

Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Intel and Apple. Motley Fool newsletter services have recommended buying shares of Intel, Apple, and NVIDIA. Motley Fool newsletter services have recommended writing puts on NVIDIA. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (5) | Recommend This Article (24)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 24, 2012, at 4:18 PM, TMFBreakerRob wrote:

    Good summary, Evan!

    I like the dividend and buy-backs, hopefully they will be expanded.

    Long term, it's a difficult path trying to stay on top of the consumer electronics heap, even though they have to some extent grown past that and also enjoy the support of the iEcosystem.

    Regardless, still long AAPL, my #1 allocation at 16%.

  • Report this Comment On August 24, 2012, at 4:19 PM, Darwood11 wrote:

    I wonder if I'll be able to meet my duties and responsibilities up to within 6 weeks of my death, should I have a terminal illness?

    As for Cook, isn't it important to note that the recently released products and possibly even the iPhone5, were in the pipeline a year ago?

    Where I'm going with this is simple. AAPL was established in 1976. The company has had 36 years to get to where it currently is,

    I suspect most people who purchase AAPL think of one year as "long term." So I guess they would consider 36 years as going back to the ice age.

    Bottom line, given the momentum of this juggernaut, I don't think one year is worth a damn.

  • Report this Comment On August 24, 2012, at 4:29 PM, kahunacfa wrote:

    It was indeed sad for me to endure the passing of Steven Jobs. First met, Jobs, The Woz, Bill Gates, Esther Dyson of Oppenheimer, then Morgan Stanley, followed to her starting Release2.0 - http://www.Release20.com at an Institutional Investment Conference held at the Lake Geneva, Wisconsin Playboy Club. Because I had just that month started as a Technology Analyst then Options and Venture Capital Portfolio co-manager of a start-up VC portfolio in Chicago.

    Because our firm managed billions of dollars -- sat at the head table with Jobs, Ben Rosen, and Gates for most of the Lunches and Dinners served by the Playboy Bunnies with their, absurd, politically incorrect Bunny attire..Day Flystra was also there, the alledged inventer of VisiCalc. Dan invented the Visi-products in much the same way Zuckerberg developed Facebook -- <b>the Old Fashioned Harvard way -- they stole it!!!</b>

    Jobs has done what all GOOD CEO's and Venture Capitalists start-out and intend to do, they Found, develop, and train new managers for the time when they move on to other things -- sometimes departing this World.

    Stephen <Yes, I know he prefers Steve>; this is my post, he is and always will be Steven to me. He did a splended developing outstanding Talent and managers throughout the Apple Organization.

    With Cook, andthe Kleiner-Perkins Board of Directors, Apple the Company is in the best professional hands availableon this Planet. We all miss Jobs, -- Yet Apple is in GREAT Hands. Steven Jobs did his job in his own unique way. Shareholders are well served by the Current Management Team.

    Kahuna, CFA

    A Venture Capital

    Founding General

    Partner 2012 - 2019 .

    .

  • Report this Comment On August 25, 2012, at 12:49 PM, DividendsBoom wrote:

    Man, kahuna loves kahuna

  • Report this Comment On August 26, 2012, at 9:19 AM, WHOVPLLC wrote:

    It is written, way before Christ, in a message to Moses, "Love thy neighbor as thyself..."

    First always good advice, way better than any investment advice you are likely to read on any Investment Board, including The Street.com with Stephanie & and, of course, Dr. James J. Cramer, Esq. <JD, Harvard Law School>.

    If you do not Love yourself, who else would ever Love you, and why-ever would they Love you? Also, if you do not at lease like yourself, why-ever would anyone else like you?

    Two very simple questions to an offensive MF message board post, by a perhaps offensive poster DividendsBoom. Mon mere always said, if you can not say anything good about someone else silence is Golden, n'est pas?.

Add your comment.

DocumentId: 1995267, ~/Articles/ArticleHandler.aspx, 7/31/2014 11:51:14 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement