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Wednesday, 13 February 2013 11:49

Apple stage manages shareholder meeting

Written by Nick Farrell



Meant to re-assure, didn’t

Jobs’ Mob attempted to hold one of its Nierenberg rallies yesterday, only this time the “faithful” were shareholders and they were far from enthusiastic. CEO Tim Cook thought to head off shareholder revolts and the fact that the company shareprice is tanking, by meeting with shareholders.

It was supposed to look like the shareholders were asking tough questions, but the ones Tim answered were clearly rigged by the company’s PR company. Take for example this exchange which sounds very pre-scripted:

Shareholder: "Are we getting to a point in the most important category where you've reached a natural limit?"
Cook: "There's that word limit. We don't have that in Apple's vocabulary. When I zoom out and look at the smartphone market in particular, what I see is a market that is projected to double in the next few years. This is a huge market. On a longer-term basis, all phones will be smartphones and there's a lot more people in the world than 1.4 billion, and people love to upgrade their phones very regularly. "

Cook was impatient when discussing David Einhorn's lawsuit. He was also dismissive of Einhorn's media and legal blitz. Cook said the board is carefully considering Einhorn's proposal for the company to issue preferred stock and return more cash to investors, but he called a lawsuit brought by the star hedge fund manager against Apple a "silly sideshow." Cook added the company's board was in "very active discussions" on how to hand out more of its $137 billion hoard of cash and marketable securities.

Unlike Apple’s usual tame audience of fanboys, who give standing ovations for the CEO coughing, investors proved to be a tough crowd. Many said that they were disappointed that Cook did not provide a "more substantial" view on returning cash. Cook’s attempts to enthuse them by talking up the market, also went down like a bucket of cold sick. Apple's share price slid after the meeting. For example Cook disputed a view that the smartphone market in developed markets may be saturated.

"On a longer-term basis, all phones will be smartphones and there's a lot more people in the world than 1.4 billion, and people love to upgrade their phones very regularly," he said. 

Shareholders were also not particularly impressed that Apple has moved to make the iPhone more affordable without introducing a specific cheaper phone, by cutting prices of older models. What is perhaps more telling is that Cook explained to them all when things got him down he just visits an Apple retail store. "It's like Prozac. It's a feeling like no other."

In other words even Cook is calling for everyone to believe in Apple’s reality distortion field. Just go to an Apple store and all will be well with the universe.

Nick Farrell

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