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Are Apple’s glory days may be behind it? 🤔
Happy talk. That’s what you get when CEOs pass the baton, and so it was with Apple’s long-anticipated announcement that Tim Cook would give up the top job, effective in September. “I love Apple with all of my being,” Cook said in the announcement (he’s sticking around as executive chair). “I am filled with optimism about what we can achieve in the years to come,” said Cook’s successor as CEO, John Ternus, currently a senior hardware executive. The truth is that Ternus should be terrified.
After all, it’s going to be tough, if not impossible, for Ternus to top Cook when it comes to delivering shareholder returns. While Steve Jobs set the stage for Cook with his development of such iconic products as the iPhone, Cook turned those products into a well-tuned cash engine.
Apple’s revenues quadrupled to more than $400 billion from 2011, when he took the top job, and last year. Free cash flow tripled to about $100 billion annually. Apple stock is up about 2,322% in that time, according to Koyfin. That’s a bit below the appreciation in Google and Amazon over the same period, but above that of Microsoft.
But Apple’s glory days may be behind it. Ternus is inheriting a company whose top line has grown a mere 3.4% on average per year since 2022 (although this year is looking much stronger), which is behind in potential new categories such as smart glasses. It remains massively dependent on the iPhone, a product now nearly 20 years old, which is two or three lifetimes in tech. Apple shares are virtually flat for the year—a worse performance than for all other big tech stocks except Microsoft.
The worry for shareholders is that Ternus, who has spent most of his life at Apple and who described Cook in today’s announcement as a mentor, will continue on the cautious course Cook has been pursuing. Critics fear Ternus is too risk averse. As good as Cook has been for Apple, the company arguably needs fresher blood. #The Most Important Thing
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Three Big Questions for Apple’s Next CEO, John Ternus
The most anticipated CEO transition in Silicon Valley is finally official. Apple on Monday announced that Tim Cook will pass the CEO baton to John Ternus, the company’s senior vice president of hardware engineering. The changeover will happen September 1, when Cook will become executive chair, ...