“Apple has been a phenomenally successful company over the past 15 years, releasing three new product lines which revolutionized the markets they entered and drove enormous growth and profits for the company,” Jan Dawson writes for Tech.pinions. “Shareholders have benefited enormously too, as revenues and share price have risen largely in tandem over that period. During the period from 2000-2012, Apple pleased two constituencies equally well: shareholders and customers. Producing compelling products pleased the customers who bought them in huge numbers and the growth those customers drove pleased shareholders too. “Especially as Apple introduced the iPhone, growth exploded, profits increased even faster, and shareholders made out like bandits.”
“But over the last two years we’ve seen a de-coupling of the previously closely aligned interests of customers and shareholders,” Dawson writes. “As growth has slowed, and the stock price has followed, Apple is faced with a critical decision: whether to start doing things that will make sense financially in the short term even if they’re not what’s best for its customers and for Apple’s long term success. So far, Apple has dealt with this situation exclusively through financial mechanics, with stock buy-backs, dividends and now a stock split. These actions have boosted the share price even in the absence of massive growth, major new product categories or other drivers in the core business. But unless it keeps increasing the size of buybacks and dividends, there’s only so much Apple can do to appease shareholders hungry for the kind of exceptional growth the iPhone drove.”
“Apple’s challenge over the coming months is to demonstrate what it’s doing to secure the long term performance of the company. That will start with WWDC in a couple of weeks and continue with the new product categories launched there and/or later in the year,” Dawson writes. “If Apple gets it right, the interests of shareholders and consumers should be brought back into balance, resolving the tension. If it doesn’t, the tension will just continue to increase and with it, the temptation to do something Apple shouldn’t.”
Much more in the full article – recommended – here.
MacDailyNews Take: And, if you’re both, as are many Apple shareholders, then you likely have quite the lovely internal conflict.
