A version of this article appeared at Inc.com
Financial journalists are pretty much agreed that Apple blew it out of the water with last week’s earnings announcement. Higher than expected revenue and profits, increased dividends (and a promise of increases each year in the future), a seven-for-one stock split, a $90bn share buyback program – what’s not to like?
The answer – if you’re a short- to medium-term investor – is probably ‘nothing’. But if you’re a business owner (or a long-term investor), the answer is ‘a lot’.
Why? Well, a number of reasons – attractive sales and earnings, yes, but from an increasingly crowded and price-sensitive market, increasingly high market saturation, and ever-restricted opportunities for cost savings being just a few.
The main cause for concern however, is the flip side of the so-called ‘shareholder-friendly’ stock split and share buyback program. Here’s the blunt truth: A company uses its cash reserves to buy back shares when it can’t guarantee a higher return for investors by doing anything else with it. In other words, by giving money back to its shareholders, Apple is in effect saying “Here, you take this cash – we don’t know how to turn it into value for you.”
All of which doesn’t augur well for an innovative product pipeline. And, while I’m not one of those who believes that Apple has a duty to revolutionize an entire industry every three years, I do believe we’re seeing the answer to an important question being played out in the negative.
The question is this: Did Steve Jobs succeed in driving his vision deep into Apple before his death?
With Cisco CEO John Chambers talking up a $14 trillion market for what he calls ‘the Internet of Things‘, it’s frankly hard to imagine Steve Jobs even contemplating the return of $90bn of his war-chest to shareholders at this stage in the global economic recovery. So the question has to be asked: does Apple have a deep-seated, institutionalized visionary culture, or did the vision die with its founder?
Seeing vision leave with a visionary CEO has happened many times before, after all – not least the first time Jobs was pushed out of Apple, but also, for example, when Howard Schultz tried to step down from Starbucks and when Michael Dell left his eponymous computing company.
We’ll discover the answer to the Jobs/Apple situation in due course, but in the meantime, here’s my question for you: If (or when, as is most likely) you eventually leave your company, will your vision for it leave with you?
Or are you mentoring and coaching others to make sure this doesn’t happen? Are you hiring, developing, training and deploying people to both understand and instill your vision into their day-to-day management and operations?
If so, good. If not, what are you waiting for?