Public Perception of Cook Starting To Shift After Impressive Washington Performance
Tim Cook officially started his role as CEO of Apple, Inc. on August 24th, 2011.
Cook had some pretty big shoes to fill, as he was taking over the role left by Steve Jobs, who is one of the most highly regarded CEOs of the modern era. In addition, Cook was taking over when things were very, very good for Apple, as profits were soaring and the stock was going through the roof. It was a bit of a lose/lose situation for Cook, who had previously filled in as CEO when Jobs was suffering from illness. If Apple continued to soar, nobody would give Cook much credit, if any at all. If Apple stumbled, all of the blame would be laid at the feet of the new CEO.
Things started off in a pretty rocky fashion for Cook. On the day that Cook officially took over as CEO of Apple, shares of the company were trading at around $663. Over the next 20 months or so, shares of Apple would fall to below $400 as investors fretted over increased competition and a seeming lack of new eye-popping products.
Things were so bad for Cook that shares of Apple seemed to fall every time that the CEO opened his mouth to make a public comment. Apple will be fine, investors said, as long as Cook can manage to keep his mouth shut.
Apple shareholders were understandably a bit nervous when Tim Cook agreed to appear in front of the Senate permanent subcommittee on investigations earlier this week.
Apple is alleged by Congressional investigators to have used a "highly questionable" tax minimization strategy to "avoid" paying billions of dollars in taxes. Apple, according to Congressional investigators, uses Irish subsidiaries in order to minimize their annual tax bill. Apple Sales International (ASI), for instance, reported over $20 billion of pre-tax earnings in 2011 but paid a tax rate of just 0.05%.
Cook was stepping into somewhat of a hostile environment but managed to come across very well.
Was Apple dodging taxes? According to Cook, not so at all, as the company has paid "every dollar" of tax that it owes.
According to Cook, the United States simply has a very antiquated tax code that doesn't properly account for companies that are operating in the "digital age". Bringing capital back into the United States, Cook argued, is very expensive, which is why the company has approximately 70% of its cash sitting outside of the country.
Cook also stressed the positive impact that Apple has had on the US economy over the past number of years.
At the beginning of the hearing, the general theme seemed to be "Apple is avoiding paying its proper share of taxes and is a bad company." By the end of the hearing, many of the participants were raving about how great of a company Apple is.
In short, Tim Cook turned in a great performance and Apple managed to leave the hearing largely unscathed. It was almost certainly Cook's best performance since being named as Apple's CEO nearly two years ago.
Photo: Mike Deerkoski
Filed under: General Market News