Just how close Is Apple's Tim Cook to being fired?
- 26 April, 2013 16:55
Apple's embattled CEO, Tim Cook, promised "amazing" new products and services later this fall during the company's earnings call earlier this week-and he better nail it.
For Cook, the timing can't be more critical: This US fall will mark a little more than two years since he took over the reins as CEO, and he desperately needs to show investors where future growth will be coming from. So far, he hasn't articulated a compelling growth strategy, at least not well enough.
"Within the first two to three years, if the board views the executive as unable to continue or change the firm's strategy in a way that pleases customers and shareholders, then your time is short," says Jason Schloetzer, assistant professor of accounting and an expert on CEOs, succession management and corporate governance at Georgetown University's McDonough School of Business.
Cook has been criticized as a poor communicator-a supply-chain master, not a master marketer-who has silently watched Apple's stock slide from over $700 per share to below $400. He has apologized profusely for an error-riddled Apple Maps app, as well as bowed down to China's orchestrated attack on Apple. These are not the traits of a no-holds-barred leader.
Prior to Apple's earnings call, rumors began to surface that Apple's board of directors was looking to replace Cook, according to a Forbes.com story. Tech analyst Rob Enderle checked off a laundry list of Cook's shortcomings compared to the strengths of his predecessor, Steve Jobs:
Yet Cook has been Apple's CEO for only 20 months. Schloetzer doubts Apple's board is looking for a replacement after such a short time. A year to 18 months down the road, however, the board's position might change. If Apple's future growth plans still haven't materialized, Cook might be in trouble.
By then, Cook will have been CEO for three years.
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The average CEO of a large American company sticks around anywhere from eight to 10 years. But the tech sector doesn't always follow the rules of mainstream companies. Hewlett-Packard, for instance, has shown to have a hair trigger: Leo Apotheker lasted only one year.
"If HP was going through this kind of pressure right now, then HP might fire somebody after a year and a half," Schloetzer says. "I don't see the same thing going on at Apple."
On the flip side, Microsoft's Steve Ballmer has been CEO for 13 years-some would say, too long.
"From what I've been reading, it seems Ballmer might be actively scaring off internal talent to the point where he might be able to maintain his position a little bit longer, because there are fewer alternatives to choose from," Schloetzer says.
To Cook's credit, he's been able to get out of Steve Jobs' shadow. It was a difficult position to be in: Cook has faced a lot of pressure from shareholders, customers and the media simply by being the guy who has had to follow a legend.
"Cook has done a good job of being himself, not trying to be Steve Jobs," Schloetzer says. "He has been able to put his own branding, his own management style on Apple. Whether or not this management style is a good fit for Apple, I think we'll find out in the next 18 months."
Another bonus point for Cook was this week's Apple earnings report. Wall Street had been dreading the numbers, but they weren't all bad.
Sure, there was an 18 percent drop in quarterly net income, but Apple beat targets with $43.6 billion in revenue. Apple sold 37.4 million iPhones and 19.5 million iPads; in the same quarter last year, Apple sold 11 million iPads. Cook also made a decision about what to do with Apple's enormous cash pile, with plans to dole out $100 billion to shareholders.
On the downside, Apple's guidance for next quarter didn't impress Wall Street.
Why the lowered guidance? Cook said new products wouldn't be coming until the fall. All of this puts a white-hot spotlight later this year on both Apple and Cook. New products will set the stage for Apple's future growth.
"Without being able to point to investors that this is where future growth is going to come from, then I think Mr. Cook will have difficulty retaining his position," Schloetzer says.
Tom Kaneshige covers Apple, BYOD and Consumerization of IT for CIO.com. Follow Tom on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn. Email Tom at firstname.lastname@example.org
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