The company is innovative, huge and beloved. So on the face of it, former
Genentech boss Arthur Levinson, just elevated to chairman, and Walt Disney
president Robert Iger, newly appointed board member, have received an
unmixed blessing.
Apple’s board has been criticised in the recent past for its near silence on
the late Steve Jobs’ health and on succession planning. But his death led to
an orderly transition, and the shares have not been hit. That may be because
the share price already discounted his passing and new chief executive Tim
Cook was already running the company day-to-day.
The fact is that when a company provides shareholders with 4,500 per cent
returns over 10 years, the board looks good, even if its work consists
primarily of vigorously agreeing with the brilliant chief executive.
Tested
This board, by contrast, is likely to be tested. Apple has ample room to
expand (“If iPhone can take 10 per cent of the Chinese market . . . ”), but
not even Apple trees grow to the sky.
They will have to decide how much freedom to give Mr Cook, who has huge shoes
to fill as he manages the transition to slower growth.
Move into services
One big shift could be a move into services, if it becomes harder to profit
from Apple’s innovations by selling hardware. The quality gap between
Apple’s gadgets and the competition is wide, but it is narrowing by tiny
increments, as services such as Google Music improve.
Apple’s much-anticipated move into televisions may go well or badly. And
investors owning a slower growth Apple will be more restive about that abuse
of potentially productive capital: Apple’s $82bn cash reserve. Whatever
choices the board supports, it will be under a magnifying glass. That will
make the glare hotter still.
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