Apple to Competitors: Yes, We're Vulnerable

Is Apple (Nasdaq: AAPL  ) trying to tell the world that it's vulnerable? The timing, if not the tone, of its Monday announcement of management changes suggest frailty we've not seen from the Mac maker in some time. The stock ended Wednesday's trading down more than 2% for the week.

"We are in one of the most prolific periods of innovation and new products in Apple's history," said CEO Tim Cook in a press release. "The amazing products that we've introduced in September and October, iPhone 5, iOS 6, iPad mini, iPad, iMac, MacBook Pro, iPod touch, iPod nano and many of our applications, could only have been created at Apple and are the direct result of our relentless focus on tightly integrating world-class hardware, software and services."

OK, then why fire Forstall? And more importantly, why announce it at the same time that Microsoft (Nasdaq: MSFT  ) and Google (Nasdaq: GOOG  ) were reminding the world they're all-in on challenging Apple in the lucrative market for smart mobile devices?

Microsoft's Surface is already a hit in some corners. On Monday, Mr. Softy joined Nokia (NYSE: NOK  ) and Verizon (NYSE: VZ  ) to put a Windows Phone 8 device on Big Red's network, the Lumia 822.

Google canceled its planned Android event because of Hurricane Sandy, but that didn't prevent the search king from introducing three new Nexus devices on Monday: a new smartphone (Nexus 4) and two new tablets (Nexus 7 and 10). At least two of the three look like winners in the making, my Foolish colleague Evan Niu writes.

Not long after Google revealed its triplets, The Wall Street Journal reported that Forstall was pushed out for refusing to sign his name to Cook's public apology relating to problems with Apple Maps. Ugh.

Any way you position it, this is a serious PR blunder from a team that's way too good to make such gaffes. Katie Cotton and Steve Dowling have guided Apple's well-oiled communications machine for what seems like decades. They know better. Also, the timing stinks. Apple needs the iPhone 5 to deliver on a massive scale in order to get investors believing again.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple and Google at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Apple, Microsoft, and Google. Motley Fool newsletter services have recommended buying shares of Apple and Google. Motley Fool newsletter services have recommended creating a synthetic covered call position in Microsoft. The Motley Fool has a disclosure policy.

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Read/Post Comments (11) | Recommend This Article (4)

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 November 01, 2012, at 8:15 PM, JokerJoey wrote:

    Has it occurred to you that the reason Apple made the announcement when it did and the way it did is to be completely honest about the situation?

    Gee, what a refreshing thing from a big company: HONESTY!

    Y'know, it seems that every time I read a Fool article pertaining to Apple, it's always negative, doom and gloom, and the like.

    You're either trying to talk the stock down for some reason, or you just don't get it, and frankly, i'm getting a bit ticked.

    Maybe you should start looking at the positives, instead?

  • Report this Comment On November 01, 2012, at 8:29 PM, voice87 wrote:

    Forstall's refusal to sign the apology letter may have been the final straw, but it certainly wasn't the only reason he was ousted. Its widely known that his relationship with several other senior execs was so toxic that they refused to be in the same room with him. Was Tim Cook supposed to just pretend that everything was hunky-dory until that poisonous atmosphere caused AAPL's well oiled machine to grind to a halt? I don't see this as an indication of vulnerability to competitors, but rather a sign that Tim Cook will be decisive at keeping AAPL's competitive edge razor sharp.

  • Report this Comment On November 01, 2012, at 8:37 PM, mfooljdg wrote:

    It's ridiculous to suggest that the management shakeup was a PR blunder. It's true that they didn't seem to spin it as many companies would. Spin invites lots of negative scrutiny on what really happened. What are they supposed to do; make all their management decisions based on PR value?

  • Report this Comment On November 01, 2012, at 9:01 PM, TMFMileHigh wrote:

    @JokerJoey and @mfooljdg,

    >>It's ridiculous to suggest that the management shakeup was a PR blunder. It's true that they didn't seem to spin it as many companies would.

    No, you've got it backwards. Apple *absolutely* tried to spin the news, and poorly at that.

    Not only did the timing of the news stink -- it just reminds everyone that competitors are pouring billions into creating viable alternatives -- but the press release is full of the typical hyperbole.

    And I know hyperbole: I was in the PR business for 15 years before finding Fooldom.

    Apple is a great company and Cook is a perfectly good CEO. But this? No, this wasn't the Mac maker's finest moment.

    FWIW and Foolish best,

    Tim

    --

    Tim Beyers

    TMFMileHigh, Motley Fool Rule Breakers Analyst, Supernova Odyssey I Portfolio Contributor

    Web: http://timbeyers.me

  • Report this Comment On November 01, 2012, at 9:06 PM, TMFMileHigh wrote:

    Also, @JokerJoey:

    >>You're either trying to talk the stock down for some reason, or you just don't get it, and frankly, i'm getting a bit ticked.

    With due respect, you either aren't reading enough or you're investing with glasses so rose-colored that every article comes off as negative in some small way.

    Apple is my largest position. Here's why:

    http://www.fool.com/investing/general/2012/10/27/im-sticking...

    FWIW and Foolish best,

    Tim

    --

    Tim Beyers

    TMFMileHigh, Motley Fool Rule Breakers Analyst, Supernova Odyssey I Portfolio Contributor

    Web: http://timbeyers.me

  • Report this Comment On November 02, 2012, at 3:44 AM, haysdb wrote:

    "Any way you position it, this is a serious PR blunder"

    This was going to be news whenever it was released. By releasing the news when they did, not only did they give the market two days to digest it, but they trampled all over both Microsoft's and Google's time in the sun. Someone I was talking to said "wait, what, Google announced new products today?" I don't see this as a PR blunder at all, much less a serious one.

  • Report this Comment On November 02, 2012, at 8:21 AM, TMFMileHigh wrote:

    @haysdb,

    Thanks for the note.

    >>Someone I was talking to said "wait, what, Google announced new products today?" I don't see this as a PR blunder at all, much less a serious one.

    I'd say your friend's reaction reinforces my position. Why would you want to put the spotlight on yourself for not-so-good news? Crowd out Google and Microsoft by telling the word that you're losing top talent?

    I think that's a curious strategy, at best.

    FWIW and Foolish best,

    Tim

    --

    Tim Beyers

    TMFMileHigh, Motley Fool Rule Breakers Analyst, Supernova Odyssey I Portfolio Contributor

    Web: http://timbeyers.me

  • Report this Comment On November 02, 2012, at 11:26 AM, dlchase24 wrote:

    "Also, the timing stinks. Apple needs the iPhone 5 to deliver on a massive scale in order to get investors believing again."

    Tim,

    Are you suggesting they should have held off informing investors of a significant change in top level management in order to sell more new iPhones and other iProducts?

    Wouldn't announcing Scott was leaving after significant sales be a bigger shocker that announcing it now?

    Unless Scott was retiring, I'm don't see how or when it could have been less troublesome news.

  • Report this Comment On November 02, 2012, at 12:34 PM, jdmeck wrote:

    Who the hell cares? Certainly no one buying an Apple product gives a damn. Go ahead and sell the stock down so I can pick up more before the blow out quarterly results.

  • Report this Comment On November 03, 2012, at 12:41 PM, haysdb wrote:

    "Why would you want to put the spotlight on yourself for not-so-good news?"

    So you're saying Apple put MORE of a spotlight on this than they would have if they had announced it on another day? I'm saying this was going to be front page news no matter when/how they released it, so why not push Microsoft's and Google's announcements "below the fold"?.

    This assertion that Apple's timing was poor, and characterizing them as hapless, is nothing more than negative spin. It's equally easy to see it as smart.

  • Report this Comment On November 03, 2012, at 1:35 PM, TMFMileHigh wrote:

    @haysdb,

    >>This assertion that Apple's timing was poor, and characterizing them as hapless, is nothing more than negative spin.

    Strongly disagree. Picking any other day separate the two events.

    By contrast, putting them in the same news cycle reminds customers that Apple hasn't been at its best lately, and that Microsoft and Google are making progress in creating alternatives.

    Thanks again for the comments everyone.

    Foolish best,

    Tim

    --

    Tim Beyers

    TMFMileHigh, Motley Fool Rule Breakers Analyst, Supernova Odyssey I Portfolio Contributor

    Web: http://timbeyers.me

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