There were no startling revelations in the Q&As. The biggest? 25 stores are planned for China. Apple somehow rises above limitations that bedevil other companies. Apple is notorious for maintaining tight control over its technology and markets for monetary, security, and reliability reasons. It will be interesting to watch this secretive company expand its operations in a secretive society.
Other impressions and notes from the meeting on Thursday:
The average age of the attendees must have been 2-3x that of the average Apple user. Despite their gray hair the crowd isn’t tech-illiterate: half of them had iPhones. The audience had the look of upper-class California-casual: Dockers, pullover sweaters, comfortable shoes—but not Nikes or Adidas. The racial make-up was overwhelmingly Caucasian. Phrases overheard from the pre-meeting chatter: Fairchild, hypercard, Los Altos Hills, Palo Alto, iPad, golf. Many attendees appeared to be retired veterans of Silicon Valley’s first generation, the millionaires next door.
The room seats between 400 and 500 people and was filled by 9:45. I don’t know how many were in the overflow room(s). 9:55 a.m.– the Board enters and quickly fills in the front row, facing the stage. The men are wearing sports jackets, no ties. There is only one woman member, Andrea Jung, a fact which is remarked on negatively by some of the questioners later.
Steve Jobs is skinny but not emaciated; he moves energetically and his voice is lively. He turns the meeting over to general counsel Bruce Sewell , who keeps the business session moving. Speeches are made for and against Al Gore being seated on the board, and in favor of two separate environmental sustainability measures. Board recommendations to elect the slate of directors and to reject sustainability motions are approved. Apparently, Apple has a sterling environmental reputation but like everyone else,wants to do good voluntarily and not be compelled to do so.
One speaker in favor of sustainability stumbles over the title of Al Gore’s book, finally settling on “An Inconceivable Truth.” No one laughed.
The business session was over at 10:25, after which the management triumvirate of COO Tim Cook, CEO Steve Jobs, and CFO Peter Oppenheimer took the stage. Most of the questions were fielded by Steve.
On Tim Cook’s leadership while SJ was convalescing: “Tim took the helm and Apple didn’t miss a beat.” [applause]
With a $40 billion cash hoard why doesn’t Apple help the environment by investing in electric-car maker Tesla? “We were thinking of a toga party.” [laughter]
Why doesn’t Apple start paying a dividend? “Cash gives us security and flexibility. We want to take risks.” Apple wants to be able to “write a check for big and bold things” but if we take a leap we want to know that we can “land on the ground.”
On Google CEO and former-Board member Eric Schmidt’s access to Apple’s secrets: “Eric conducted himself appropriately and recused himself.”
Apple has more ideas than it can pursue. Why not license technology to others? TC: Apple is “not in the business of licensing ideas.” Apple “focuses on very few things” and puts all its efforts into those things. All of Apple’s product offerings could fit on one table.
Back to the dividend question, Steve makes some financial assertions. “Our stock price is based on our ability to continue growing. If we dividend out all our cash the stock price will be the same. If Apple buys back the stock, the price will be the same.” [A change in dividend or stock-buyback policy will send meaningful signals about Apple’s prospects, making share price changes extremely likely. Also, to claim that Apple will have the same market capitalization of about $180 billion whether or not it dividends $40 billion is doubtful, to say the least, but if that were true there’s no question that shareholders would be better off with the dividend.]
But Steve’s allowed to opine about finance, just as he can expound whatever he wants to about the environment. He’s made a lot of people rich, and if he wanted to say that the moon was made of green cheese everyone in the room would indulge him.
iPhone is a great videogame platform so why doesn’t Apple produce first-party software like Nintendo, Sony, and Microsoft? “There are never enough great software engineers to go around.” With all the projects on their plate-- iPhone/iPad OS, Mac OS, iWorks, and iTunes-- 26,000 game apps shows that games are not a problem that Apple has to solve.
Steve seemed quite animated about Apple’s environmental record. SJ and TC: Apple was the first to demand that its suppliers eliminate toxic metals and chemicals from the products. Apple has conducted environmental audits of over 100 vendors, about half of whom said that no one bothered to audit them before. Apple has reduced its packaging equivalent to many cargo planes’ worth of shipments over one year. But Apple doesn’t publish comparisons with competitors like HP and Dell; that’s for others to do. [Steve’s irritation was in evidence. Apple is a leading corporation on environmental matters, but it’s never enough for the single-issue folks.]
Steve confirmed that Apple’s corporate facilities are no longer open to user groups. [Yes, there’s a price to becoming a big-time corporation.]
What is Apple afraid of, what keeps Steve Jobs up at night? “Shareholder meetings.” [laughter] Seriously, it was “stability in the world” and “things that are not in our control.”
After nearly an hour of Q&A, the meeting was over.
iPhone's strength is not its camera!
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