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5 Takeaways from the Apple Shareholder Meeting
By: Wyatt Investment Research
Once a darling of both Wall Street and Silicon Valley, it has been a rough ride for Apple ( AAPL ) since its stock peaked in 2012, down around 24% since then. CEO Tim Cook faces criticism from consumers over a lack of innovation and from investors over a lack of cash management.
With around $160 billion in cash and reserves on the books at the end of 2013, there is a reason investors like billionaire Carl Icahn are agitating for Apple to return some of that capital to shareholders.
At Apple's annual shareholder meeting, held last week in Cupertino, California, we gained some clarity about the issues affecting the company.
Five Key Takeaways from the Apple Shareholder Meeting
1. A plan for cash management is coming.
Tim Cook confirmed that within the next 60 days, Apple will announce plans for how to spend and distribute its massive cash hoard.
Tm Cook didn't elaborate, however.
"If you're only in Apple for a week … or two months, I would encourage you not to invest in Apple." Apple, he says, is "in it for the long term" and it will be interesting to see how this translates into its pending cash management plan.
2. No new products since iPad is getting very awkward…
When it comes to Apple, the elephant in the room is the lack of new products. Since the original release of iPhone and iPad we have only seen upgrades to hardware and different form factors for existing products. iPad mini and iPhone 5s may look different than their predecessors, but they are still just iPads and iPhones.
Tim Cook started the meeting by cracking a "joke" about how he was going to introduce new products. But after a causing a brief stir in the crowd he said thatelep he was just kidding. The episode struck some audience members as strange but it just feels awkward to me.
Apple is known for glib humor and "one more thing" surprises. But until Tim Cook has new products to show off, I doubt he will raise the topic in such an uncomfortable way.
3. …and new products are coming.
When discussing the 32% increase in research & development spending in 2013, Tim Cook was understandably vague. "We're working on some things that are extensions of things you can see and some that you can't see." The rumored Apple iWatch is likely one of the things we "can't see."
He did, however, specifically address Apple TV, another product rumored to be in the pipeline.
In its current version, Apple TV is a set-top-box making any TV an internet-connected TV via its HDMI port. Apple has long referred to Apple TV as a "hobby," but Tim Cook stated "it's a little more difficult to call it a hobby these days." Maybe he's referring to the fact that this "hobby" accounted for $1 billion in revenue in 2013, roughly 0.6% of Apple's revenue from a project that hasn't really changed in years.
Or maybe he's referring to a brand new Apple TV product. Tim Cook left us with this: If investors could see developments in the company's engineering labs, they wouldn't be concerned.
4. Investors are not revolting against Tim Cook and Apple board
At the Apple shareholder meeting investors rejected the shareholder proposals opposed by the board and approved all of those supported by the board. Despite the criticism from analysts and shareholders over innovation and cash management, this is a clear sign of confidence in both Apple management and the board's oversight.
This may not seem significant, but in such a battleground stock and with high-profile investors raising serious issues, it is. Tim Cook retains investor confidence and that may buy him time to prove his naysayers wrong
5. Apple is still a money-making juggernaut
As Tim Cook said at the meeting, revenue growth at Apple is "greater than any other technology company." He also reminded us that Apple "made more money than any technology company has ever made" and that, other than oil companies, he's "not sure that anyone has ever made more."
With a plan for cash management and distribution likely in April and new products in the pipeline, I'm eager to see what Apple offers us in 2014. And as an Apple shareholder, I remain convinced that the company has several new products up its sleeve, which he alluded to in the Apple shareholder meeting. Only time will tell.
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