Research

Apple’s Recent Management Moves: Addition By Subtraction

In our previous reports on Apple Inc (AAPL), we have been focusing primarily on the performance of its cutting edge, innovative, wildly popular iOS devices (iPhone and iPad). We have primarily focused on the iPad and iPhone because those products account for 72% of Apple’s revenue in its most recent quarter. In this report we will be focusing on Apple’s recent management moves. Apple’s management (especially the late Steve Jobs) has been instrumental in Apple’s comeback story however even great institutions like Apple can muck things up with bad management. We believe that the departure of Apple Retail’s boss John Browett and iOS SVP Scott Forstall will serve as addition by subtraction for Apple and we believe that while Apple’s CEO Tim Cook is no Steve Jobs, at least he isn’t Stephen Elop (Nokia’s (NOK) CEO).

In our October 5th report focusing directly on Apple Retail Stores, we were aghast at Tim Cook hiring John Browett as Apple’s Senior Vice President of Retail because of Browett’s less than stellar track record at Dixons’ Retail. We think Browett shared our level of surprise that Apple hired him as the head of Apple Retail Stores considering that Dixons’ sales flat-lined while Browett served as its CEO and its profits sank by 75% under his watch. Browett has had a charmed life in that despite graduating with a 2:2 degree in natural sciences, he was hired right out of school as an investment banker with Kleinwort Benson.

After five years of I-Banking and an MBA at Wharton, he became the CEO of Tesco PLC’s online operations in 1998. We concede that Browett did a good job with Tesco as Tesco’s sales and Browett left Tesco in 2007 in order to be CEO of Dixons. We were flabbergasted that Dixons did not terminate him even though the performance of the company was weak. We guess that Dixon’s doesn’t believe in “pay for performance” for its executives though.

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