Posts Tagged ‘Microsoft’
Siri, What’s “sustainability”?
“Man is the creator of change in this world.” — Steve Jobs
How will Apple speak to its growing audiences, sustainability issues and public perception?
Just sustain it
Define “change”.
Admit it.
Sometimes, you just scan the headlines, right? And they impact on you, right?
Take a look at this one:
Siri, Do You Use Slaves?
Would you want this headline related to your product? Even if you are the biggest company in the world by market cap — or maybe, especially because you are.
Heinrich’s headline (it’s a link) made very clever use of John Stewart and The Daily Show. As Apple’s market cap has grown, so has the target placed on its brand.
And why not? Didn’t Apple make its marketing focus Microsoft (the market cap leader at the time) for years? When you become the biggest company by market cap in history right now (see below article), you have to expect this.
(By the way, The Daily Show’s taken on Apple before.)
Heinrich understood how to reframe Apple advertising well. She used a guerrilla headline to attract attention to her cause.
Expanding. Digital. Universe. There are a lot of target audiences out there.
Apple’s stepped away from greening its brand. It’s supply chain has been held up as wanting.
It doesn’t matter if Apple’s competitors are using the same supply chain (some aren’t and others are paying a lot more attention to sustainability issues.) As concerns over its closed system, sustainability, patents, etc., increase regarding the Apple brand, it’s likely we’ll see more media stories, more anti-Apple posts, challenging, satirizing or taking a negative position on Apple.
Right now, it’s hype season. The iPhone 5’s coming out. Biggest market cap in history a few days ago — ok, so that wasn’t correct, but …
When you become the biggest corporation, you’d better consider the competitive threats. Big market cap means big target audiences. Audiences have opinions.
Remember BP? Remember “Beyond Petroleum”?
When BP CEO Tony Hayward began massive cost-cutting at BP, it’s focus on sustainability went out the window. What happened in 2010 with the Deepwater Horizon Oil Spill will go down in history as one of the greatest of environmental disasters.
The disaster is now synonymous with the BP brand and a 50 per cent drop in stock price. It could have been avoided with proper risk mitigation. Sustainability leads to risk mitigation.
While Apple doesn’t face the same obvious dangers to its business that the oil industry does, it’s decision-making processes regarding sustainability may be moving in the same direction as BP. They’ve both spent a lot of time and resources in court.
Is innovation better done in the lab or in court?
Above image sent out on Twitter in response to Apple v. Samsung
iPhones have supply chain and waste issues, don’t they?
The big time: Siri, What’s “market cap”?
Audiences have opinions. Apple worked a philosophy that countered Microsoft’s, but Apple’s history isn’t going to fade away. It’s going to be subverted and used against the Apple brand. Apple doesn’t exist in a vacuum.
It’s made the big time.
Apple is awash in cash. It’s sheer size makes the company’s margins and business seem unsustainable. Doesn’t it make sense that Apple would move more toward sustainability? That it would want to improve its image from a sustainability/CSR perspective?
Isn’t that what leaders do?
Or do they litigate endlessly?
Sent by user on Twitter under #boycottApple
How does such litigation reflect on brand?
Apple has almost $117 billion in cash. Exactly the reason why people like John Stewart are taking on Apple. It’s not the “little guy”.
It’s a behemoth.
Like it or not, when you’re the biggest company in the world, stakeholders expect accountability. They expect a leader. Not just in innovation. Not just the “cool” of the product you’re creating.
But a leader in best practices, too. Across the board.
And “browning” your brand isn’t that cool. Especially when you spend cash litigating aggressively.
Stakeholders want what’s open and honest.
While Apple v. Samsung wasn’t related to Apple’s de-greening, it shows how aggressive audiences embrace issues and attack a brand accusing it of “brandwashing”.
What of a company’s own employees?
… organizations should maintain their commitments to
customers, the environment, human rights and
communities or risk significant decreases in
employees’ perceptions of their organization’s CSR
commitment …
Leaders?
Business leaders ranked the top three benefits of investing in or pursuing socially and environmentally responsible
practices as follows:
- Positive organizational reputation;
- Higher or sustained employee engagement; and
- Eliminate/reduce impact on the environment.
Does momentum last forever for the largest company by market cap? Not usually.
Global research conducted by Hewitt revealed that organizations with high engagement generated total shareholder returns that were 29% above average.
Above quotations from:
CSR as a Driver of Employee Engagement — Hewitt
As Costco CFO Richard Galanti has said about CSR:
It’s not about applying to the ‘beauty contest’.
Sure it’s about great products and profits, but it’s also about a corporate vision of a sustainable future — a sticky, feel-good sensation that stands for something beyond profit. It’s about who you are as a corporate citizen. About what your vision is for humankind.
After all, isn’t “man the creator of change in this world”?
With great power comes great responsibility.
— Stan Lee (creator of Spiderman)
- Samsung’s image doing just fine after Apple verdict, poll finds
- Did Samsung verdict hurt Apple’s reputation?
- Security researcher says Apple gadget hacking is a “privacy catastrophe” (economist.com)
- Apple’s rot starts with its Samsung lawsuit win (guardian.co.uk)
- Misleading and incomplete coverage of Apple’s ‘record’ value (cjr.org)
- Apple jurors grappled with complex patent issues that some say should rest with judges (washingtonpost.com)
- BP: “Grossly negligent and engaged in willful misconduct” (financialpost.com)
- It’s More Important to Be Kind than Clever (HBR.org)
- Wait! Now Someone’s Saying Apple Is NOT The Most Valuable Company Of All Time (AAPL, MSFT) (businessinsider.com)
The rise and fall(?) of Apple
It had become almost sacrilege to say anything negative about Apple.
Obviously, Apple was going to continue growing and would soon reach $1 trillion in market capitalization. Forget that no company has ever done that before. Think different.
Five companies had previously reached the $5 billion mark. They’re all worth less than that now.
Microsoft, GE, Cisco, Intel and Exxon Mobil, were the others.
Some Apple aficionados don’t want to hear anything negative about the company or the potential of its stock. It’s different this time. (That thought alone should give an investor pause.)
Apple stock has done extraordinarily well. There’s no disputing that. In fact, everyone’s on board, and it’s been almost impossible to hear comments to the contrary about Apple’s future.
But that’s changing.
Facts are emerging.
Stories on Apple have turned negative this quarter despite earnings.
Is the momentum honeymoon over?
Generally, if everyone’s thinking the same, then how much innovative thought is really going on? How many investors are thinking about competitive threats to Apple?
The near-religious zeal Apple fans hold for the company and its products is as much a detriment as it is an advantage. It’s been an advantage during the long stock price appreciation and the booming sales of Apple products.
But it’s a disadvantage now.
The problem with manic activity is that as Apple stock was reaching its riskiest time in the markets nobody wanted to hear about the risk. There wasn’t much listening going on.
It wouldn’t be the first time a company or stock was supposed to defy the odds, the averages. It’s hard to think in the face of such momentum.
Apple investors have done so well over the last few years, it’s hard for them to think that they’re wrong.
They are believers.
Ask not for whom the bell tolls …
Strong belief in brand is incredible. But from an investor’s point of view, it should make contrarian bells toll at this level. Open and honest communication with stakeholders includes discussing threats to the organization.
Doubt that? See the ongoing Wal-Mart story in Mexico, it has potential for great reputational fall out.
Apple?
Investors would do well to remember momentum buys can end badly.
Here are some competitive threats to Apple:
Fly us to the moon
The stock went straight up recently. It was worth over $6 billion at the time I started making notes for this entry. The Wall Street Journal reported that out of 465 large-cap growth funds Morningstar tracks, 400 own shares of Apple.
So, who’s thinking different?
Have a look at the stock chart below comparing Microsoft and Apple. Pay special attention to how and where both stocks rocketed upward.
What happened to Microsoft over the last ten years until very recently? Will it be different with Apple?
Microsoft’s done better than Apple over its history. Is Apple really that different? Do companies reach a time in their history where they’re too big and too mature for their previous growth trajectory?
Since inception: Apple and Microsoft
A one-year chart on Apple shows a meteoric rise. Not a good sign, perhaps. Might some investors be thinking about taking profits?
What happens if there’s a slip-up in earnings?
Apple’s down more than 10 per cent since its peak in early April. At that time, headlines were shouting about its market cap daily. Admidst all the noise, would it have been better to buy Apple or wait?
Meanwhile, it’s dividend is miniscule.
Steve Jobs is gone
Whether you liked him or not as a person or a manager, it’s hard to argue that Apple’s growth would have been as strong without him.
Do you really need a new iPad?
The iPad accounts for about 20 per cent of sales. What if customers decide upgrades aren’t worth the cost of a new iPad?
When the iPad came out, it was innovative and new. Now, competitors are everywhere, and they’re bent on catching up.
What happened when the PC was introduced to the market? Did things get more competitive or less?
iPhone subsidies
The iPhone is anything but cheap.
If phone companies decide to stop subsidizing iPhones, will iPhone sales grow? What if smartphone sales fall?
What of supplier issues?
The iPhone makes up 50 per cent of Apple product sales. For a good discussion on iPhone subsidies, and the threat a suspension of subsidies would pose for Apple, go here.
Think different this time?
What are Apple’s competitors doing? Have they given up the ghost?
Maybe they’re creating an operating system that boots up in seconds on a 5-year-old Dell laptop?
And Microsoft’s numbers weren’t exactly awful recently.
Labour abuses, CSR and sustainability
Most people have heard something about Apple’s supply chain labour abuses. Apple’s working hard to redirect attention away from what’s already happened toward what it’s doing to improve the situation. Yet criticism continues to mount.
The following New York Times article and the comments left by readers are a threat to Apple’s reputation. The headline alone is damaging.
Apple’s tax strategy has also received negative attention recently. And guidance came out below analysts’ expectations.
The New York Times recently ran another less-than-flattering story on Apple retail stores. Shortly after, Apple decided to go from “green” to “brown” citing design direction. Great design isn’t green?
Think critically: Critical thinking is a positive exercise
The pace of change in tech is a lightning bolt. Sheer momentum favours Apple, but … eventually momentum stops, or investors sell on earnings.
When it comes to Apple stock, think about the future, think different:
- Are we closer to the top or to the bottom?
- Are most investors in Apple practising sound portfolio strategies?
- How will activity in Apple affect the market generally?
- If an overweight in Apple was an advantage to indices like the Nasdaq on the way up, what happens on the way down?
- Are investors in Apple involved in short-term or more long-term thinking?
- Are there hedge funds playing Apple as a momentum trade, and will they do it in both directions?
Will ignoring competitive challenges to leap on to the Apple bandwagon pay off? Is the past a good indicator of the future, or is this the beginning of a new paradigm?
Whatever happens critical thinking is anything but negative. Critical thinking is the lifeblood of all creativity and innovation. It shouldn’t stop with remarkable success.
If you’re active in Apple, consider that risk went up significantly when the stock shot straight up. Will Apple get anywhere near the $1 trillion market cap an analyst at Piper Jaffray & Co. forecast? Or the $1,001 stock price another at Topeka Capital Markets sees? Will it become the only company to reach these levels?
That’s a more than 40 per cent increase in the stock price.
The ride may be bumpier from here.
Investor be informed.
Related:
How Apple blew it on the iPhone
Business/IT professionals say they’ll buy Android tablets
The New MacBook Pro: Unfixable, Unhackable, Untenable
Apple issues guidance below analysts’ expectations for Q3
Cash, corrections, the end and feeling fine
It’s all about the cash (and being able to sleep at night) when it comes to the stock market correction: Finding optimism in the insomnia of the moment
Didn’t the Twist go out a long time ago?
Somebody should tell the U.S. government that half-measures hardly ever satisfy anyone. Doing the Twist may be the middle ground, but now is the time for leadership and focusing on one’s convictions.
Is the glass still half-full?
Cash on Corporate Balance Sheets
In “Too much cash on corporate balance sheets: So, does this mean we can expect higher payouts?”, I wrote about the Everest of cash sitting on balance sheets. Today, Thursday, September 22, as I write, markets are moving down aggressively suggesting the Fed’s doing the Twist wasn’t what the markets wanted. There’s still one overwhelming fact that we shouldn’t overlook:
• Corporations are sitting on mountains of cash
What are they going to do?
Since they’re not in the business of becoming money market funds, (though some companies are starting to look like balanced funds by the mounds of cash they’re hording [more on this in a moment], these corporations need to do something with all this cash. After all, just like investors sitting on GICs, corporations sitting on cash aren’t going to get much of a return on it.
Now, let’s Think Apple, for example.
Seems the apple’s full of cash. But Apple’s not a balanced fund. It’s a company. Not everyone’s enamoured of Apple’s strategy.
While a lot of this cash hording relates directly to our current economic times, it still raises the ire of many people. High unemployment, especially amongst students, doesn’t make people rejoice when they hear you’re sitting on $76 billion.
With that amount of cash on the balance sheet, it seems management at Apple’s got the Mayan calendar out and are waiting for the end of the world. If that’s their forward-looking scenario, an iPhone or iPad won’t be much use …
“Hi … Mom, dad, I just thought I’d say bye … The end is coming …”
Perhaps investors in Apple have more confidence in Apple’s future than Apple management does?
But let’s revisit what’s most important to remember:
• Corporations have to do something with all this cash
• And some are
Microsoft recently raised its dividend: One of many companies to do this. It’s about sharing the wealth.
The fact that Apple hasn’t issued a dividend seems like a strategic mistake. It will be interesting to see how long investors will tolerate so much cash on Apple’s books.
Since opportunity appears in times of crisis, it’d be foolish to forget that all this cash has to go somewhere eventually.
Where?
- Dividends
- Mergers, acquisitions
- Buying back shares
- Towards hiring the most important resource, people, as the economy improves
Part Two is here.
Amidst all the hoopla: Dell, IBM vs. Apple — Surprise, surprise
Dell and IBM continue to beat Apple over six months
Reality check:
Amidst all the hoopla over Apple earnings, what many have missed is that, if you look at a six month chart of Apple in comparison to Dell and IBM, Dell and IBM have outperformed. In fact, Dell is the standout at an almost 30 per cent return, nearly double Apple’s return.
With the Apple marketing machine and great earnings, Apple’s still not outperforming Dell and IBM. Hmmmm …
Of course, it will now take $40 billion dollars of new investment to show a 10 per cent return on Apple.
Will Apple’s size slow it down? Will Dell and IBM continue to outperform?
One thing’s for sure, it’s tough to stay on top and over the last six months investors have seen more reward in Dell and IBM.
Stay tuned. 
Privacy issues: Update on “Three digital considerations for the year(s) to come”
Is Big Brother following you?
Security issues revealed regarding iPhone
In a piece I wrote a little while ago, “Three digital considerations for the year(s) to come”, I discussed how privacy concerns may continue to gain momentum in our increasingly digitized world. I focused on social media, however, the mobile tools that enable such communication are important.
The Guardian recently published an article, “iPhone keeps records of everywhere you go”, which could be explosive in its revelations. You can watch the video of researchers discussing the “tracking” here.
Coming in the face of RIM being criticized as the most secure mobile network, how will iPhone users respond to Apple? What about policy-makers? How will consumers considering an iPhone purchase respond?
Apple marketing used to use the image of “Big Brother” to portray the competition (Microsoft) in a less than flattering light. But you can’t argue against the fact that this data-gathering of user information seems a lot like the “Big Brother” Apple once targeted in its advertising.
So far, Apple has “declined to respond”. However, communications best practices would suggest that a response should and must come soon.
Will corporate decision-makers take a chance on a product that has such a security flaw? Will RIM’s more secure network look more appealing than ever for the enterprise market?
Will iPhone users look at their phones differently? Will they think differently?
Update: Senator Franken chairs committee on mobile technology and privacy — Apple and Google have been “invited” to discuss issues related to tracking software and smartphones
Goliath gets a dose of realism: Does the average investor understand how Nasdaq’s re-evaluation of Apple’s weighting could affect markets?
Nasdaq had to reshuffle. It hadn’t touched weightings since 1998. Nasdaq decided it’s not in investors’ interests to have one holding representing over 20 per cent of the index. And it’s right, such an over-weighting doesn’t represent an investors’ best interests.
It’s been said before, and it’ll be said again, one company’s over-weighting in an index counters the principles of proper asset diversification. Think Nortel and what happened when it was hugely dominant in the Canadian stock market. When Nortel got crushed in the tech bubble so did Canadian investors — many watched their portfolios bomb.
Investors have definitely benefited from Apple’s meteoric rise over the last few years, however, at some point, rational thinking has to prevail. Do you really want the extra risk associated with an enormous weighting?
How many investors buying the Nasdaq know how overweight Apple is? In slashing Apple’s weighting about 8 per cent down from 20 per cent, Nasdaq’s doing the responsible thing.
Apple has been getting an enormously disproportionate share of the market due to its dominance of the Nasdaq. Apple’s been profitable but so have other companies. In comparison, Microsoft, posting profitable quarter after profitable quarter, hasn’t been getting its due. And it pays a dividend!
Perception often rules over reality in the markets. But reality often comes back with a smack.
In the short-term, there will definitely be re-weightings of Nasdaq stocks in portfolios the world over. These re-weightings should benefit Microsoft, Cisco, Oracle and Intel. Apple stock should experience some interim pressure as managers adjust their portfolios over the next month.
What the future holds is as yet unwritten, yet Nasdaq’s re-weighting of the benchmark will be a wise long-term move for the index.
While the Nasdaq is nowhere near the valuations of the tech bubble, Apple has done almost nothing but go up since the financial crisis. However, during the volatility of the crisis, it got hammered.
Portfolio managers are measured against the indices that are their benchmarks. A benchmark should never be overweight one stock. It forces managers who want to compete with the index to buy more of the very stock they should be cautious about.
Here’s a graph and story of what happened to the Nasdaq after the tech bubble, when mania overcame rational, strategic thinking.
Making rain in the mobile device market
RIM reports Q3 — Who was listening?
Research In Motion Ltd.’s earnings should not come as a surprise. Apple’s success is obvious. It’s almost impossible to escape Apple hype. Is the mobile device war over as some analysts have said?
Who will be the rainmaker?
The other day I was down on a street corner on Bay Street. It was a warm day, and I watched the people hurrying along.
Several paused to check their mobile devices. While this was in no way a scientific study, I noted that every person I saw checking their mobile device was using a RIM product. Every one of them.
Every person writing on their mobile was using a RIM product. I was waiting for someone and stood there for about ten minutes. During that time, the only devices visible were RIM products – in the centre of the financial cyber ether in Canada, during a ten minute window of mobile device observation, the only thing I saw was branded RIM.
Without a doubt there are iPhones around, but there were none around at that moment.
Then RIM began a long line of disappointments ending in recent guidance. New announcements at RIM are about preserving the enterprise business. RIM is the most secure device out there. But what will the consumer demand? Is it about security?
Once RIM started issuing profit warnings, analysts that had previously supported RIM flipped in a hurry.
The future?
The space is going to be ruthlessly competitive. I haven’t even mentioned Google’s Android, a discussion for another day. Apple’s not getting the headlines it was in the summer, but the company’s still experiencing strong sales.
Of course, the focus should be on the future rather than the past. But let’s take stock for a moment …
So, who’s the winner right now?
The consumer.
Choice benefits the consumer, and competition drives innovation. Like many things, it pays to survey the market with an unprejudiced eye and use a device for the way it can most benefit you.
Some have said that the mobile device war is over.
Really?
Maybe, it’s barely begun …
Remember when everyone was talking about the death of Apple before the Microsoft cash injection into Apple (many don’t even remember this! See here.) And a few years later, what happened? Apple became an enormous corporation.
Things change.
The tablet war is just starting. Mobile devices and the sector are liquid. Hold on to your hats. It’s going to be raining mobiles and tablets in the very near future, and Apple, RIM and Google are all going to be major precipitation in the device storm.
But who will be the rainmaker?
JohnBlog 