The first sure sign of Apple’s decline: Tim Cook is distributing dividends Steve Jobs always refused
Apple’s financial strength has never been greater. But Steve Jobs has always declined for 17 years to distribute dividends even while sitting on a pile of cash. The rationale given was that for the Company to stay ahead of competition for innovation he must be able to make small or big acquisitions at any time and of course invest in design without worrying about restricted budget – if you work in Corporate world you know what I mean. Above all he has always been suspicious with Wall Street and refused to undergo their financial pressure.
With Tim Cook, things has changed. For the first time since 1995 in Apple’s history, he announced not only dividends distribution but even a $10 billion share repurchase program.
The fact by itself is not condemnable and even understandable as Tim Cook himself doesn’t benefit from Disney’s dividends like Steve Jobs. But buyback program means lack of imagination. It may be the sure sign that Apple will be declining. This would seem like a bold claim but Edwards Deming has made a point that short term thinking is a deadly disease he directly attributed to Stock Market obligations in the United States:
“In this country, it’s all the short-term, the quarterly profit, the next 90-day appraisal. The American businessman is afraid to look beyond tomorrow because the bank and the stock market and the investors want results now.”
That doesn’t mean Deming was against profit he was rather for long term profit:
Nobody gives a hoot about profit. I mean long-term profit.
Tim Cook’s move is the proof that, unlike Steve Jobs, he’s not and will less and less be able to resist the “sharks of Wall Street”. Though Apple’s sale is still strong and even stronger, he’s just profiting from the momentum Steve Jobs had built with so many sufferings at the start when nobody did believe yet in him. Tim Cook has currently no merit because as Deming put it again:
“Any manager can do well in an expanding market.”
I takes longer to build a company that it takes to destroy it. Look at any stock chart growth. Even when it is steady the decline will be even sharper – due to some kind of gravitation law. In fact some financial analysts are already starting to worry by comparing Apple’s stock to Cisco’s tock in the 1995-2000 era. Technical analysis alone doesn’t make a sure prediction but combined with fundamental change it can be a good indicator. Tim Cook’s decision is a sign of such fundamentals. Not a good one – no financial analysts have yet commented on this but of course they will after the facts in a few years when things are already too late I guess.