updated 11:30 pm EST, Wed February 27, 2013
Overwhelming support for board, discusses direction, more
In addition to the stockholder votes conducted today during Apple's annual meeting, the opportunity arose for CEO Tim Cook to address shareholder questions on a range of topics -- including the decline of the stock price, the forthcoming "spaceship" Apple campus, the controversy over a recent lawsuit designed to force the company to return more of its cash hoard to investors, competition from Android and a few bare hints of future directions. Cook received a 99 percent approval rate from investors during the meeting.
On the company's direction, particularly in the face of increased competition from various companies making their own smartphones and tablets, Cook took a philosophical tack in answering. He said that Apple could, if it wanted, flood the market with various models of devices -- all of which do some things well and other things poorly. "But that wouldn't be good for Apple," he said, referencing the company's historic focus on doing a few things very well than producing lots of products that range from decent to mediocre.
He pointed out that the iPhone remains the single most popular brand of smartphone by a large margin, and that Apple continues to completely dominate the tablet space. Cook mentioned Dell as an example of a company that focuses solely on making the "most" products in a given segment. "We want to make the best [stuff]," he said, "We don't just want people to buy our products, we want people to love our products."
Apple has generally looked at profit margins as more important than market share -- a technique it learned from its own Mac and iPod businesses. Though rivals such as Samsung have made significant inroads, outselling Apple overall in terms of units, they must expend enormous sums in constant advertising campaigns and other expenses in order to keep pace. The result: Apple makes 70 percent of all the profit in the smartphone business, and all the other players except Samsung are losing money on their smartphone divisions.
A common theme of Cook's statements was in taking the long view. When addressing the stock slide that has seen AAPL drop from a high of $700 a share to its present level below $500, he expressed sympathy for shareholder "disappointment" in the price -- his own stake in the company has lost about $300 million in value from the peak price -- but that Apple is continuing to do incredibly well and that revenue and profits will continue to grow. For the record, the company grew by $48 billion in revenue in fiscal 2012 -- more growth than Google, Microsoft, BlackBerry, HP, Nokia and Dell combined. Apple's "disappointing" fiscal Q1 results were "the largest quarter from any technology company in history."
He mentioned that the company "has some great stuff coming" and that "obviously, we are looking into new product categories," though he obviously didn't elaborate. In response to a question about the smartphone and tablet markets outlook, Cook pointed out that the market itself is still set to double over the next few years as feature phones fade away and smartphones become the primary offering, and there are still countries where Apple is underrepresented or doesn't compete at all yet -- mostly in developing countries. The tablet market is expected to triple in size in the next three years, he said, and Apple is well-positioned in both markets with "more work to do."
A contentious topic at the meeting revolved around Apple's difficult relationship with some investors and its enormous cash hoard -- $137 billion and growing rapidly. Investors, who until quite recently only gained from AAPL's soaring price boom and didn't get so much as a dividend until last year have put increasing pressure on the company to release some of its excess profit to shareholders.
The topic was even the subject of a lawsuit by a hedge fund manager against Apple, preventing a vote at the shareholders' meeting on the topic of preferred stock and floating a tailored plan that would offer higher dividends to some investors. Most of the investors at the meeting expressed support for Apple's refutation of the Greenlight Capital plan, but Cook told them that the company is continuing to evaluate ways of returning more cash to stockholders.
He reiterated his earlier description of the lawsuit as "a silly sideshow, regardless of how a judge ruled on it." David Einhorn, the owner of Greenlight, did not show up for the meeting, perhaps sensing the likelihood of a display of disapproval from the rank and file. Cook added that he didn't think the issue of returning cash to shareholders was silly, in an effort to separate his view on the legal proceeding from the underlying issues.
Also occurring during the meeting was the re-election of the current board, including former Vice President Al Gore and Disney CEO Bob Iger. One shareholder objected to Gore, citing his decision to sell his Current TV channel to Al Jazeera. It was the only comment in opposition to Gore.
Finally, Cook admitted to shareholders that the move-in date for Apple's futuristic new campus has been pushed back by about a year, and is now expected to take place in mid-2016. He spoke about how much of the site would be "rehabilitated" with greenery, whereas 80 percent of it is "currently covered in asphalt and concrete."
Cook said he was hopeful that Apple may break ground on the project later this year, saying "Steve [Jobs] put a lot of work into this before he passed away, and we are continuing that." The finished building, known as Campus 2, will feature 2.8 million square feet of space, house 12,000 employees and is designed to foster collaboration and social networking -- ideas Jobs also implemented at Pixar.