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Just how Close Is Apple's Tim Cook to Being Fired?

Tom Kaneshige | April 29, 2013
Apple CEO Tim Cook needs to show investors where the company's future growth is coming from. If he fails this fall, then he might be in big trouble, say industry analysts.

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 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.

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.

 

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