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Moves, mistakes prove Steve Jobs era at Apple over, say analysts

Gregg Keizer | April 29, 2013
Apple is clearly not Steve Jobs' company any longer, analysts said this week, citing examples from Tuesday's earning calls with Wall Street.

"What was very telling from the series of questions with the CFO about gross margins was that Apple essentially mapped out its strategy," said Moorhead. "They basically said that they'll use penetration pricing on new products to scare competitors out of the marketplace. Apple will show up in a market, get a grip on it, then take lower-than-average margins on that product to drive the competitors into the sea.

"After a time, when everyone else has left the market, Apple will be able to milk it for profit," Moorhead said.

Moorhead based that interpretation on Oppenheimer's acknowledgment that Apple's margins had fallen, and would fall even further. In the next quarter -- as far ahead as Apple's willing to forecast -- Oppenheimer said gross margins would run between 36% and 37%.

First-quarter margins were 37.5%, down a fourth from 2012's 47.4% in the same period. In the 2012 quarter that ended June 30 -- the comparable to what Oppenheimer said would have a 36%-37% margin this year -- Apple reported gross margin of nearly 43%.

Jobs was adamant about pushing for high margins, not that he was always successful.

And he was dead set against returning revenue to shareholders via dividends or stock buy-back programs, both of which Cook has instituted.

In fact, on the financial side, the big news from Apple this week was that it will expand its stock buy-back plans to spend $100 billion by the end of 2015, more than doubling the original program's target expenditure of $45 billion over three years.

And Apple will borrow to fund part of the buy-back, even though it has huge cash reserves, something the anti-debt Jobs would never have brooked. Analysts explained that move as meant to avoid U.S. corporate income taxes applied when overseas funds, of which Apple has a sizable amount, are repatriated.

None of the analysts, even Gottheil who cited the mistakes under Cook's watch, felt the current CEO is in over his head, or is running Apple off the tracks. But because he's different, so is Apple.

"I certainly can't fault him," said Carolina Milanesi of Gartner when asked her take on Internet critics of Cook. Some of the most aggressive have called for his head as the company's stock price plummeted. "He has a more sober communications style, which is very different from Jobs."

Milanesi's only complaint? Cook and Oppenheimer constantly referring to IDC, Gartner's research firm rival. The two executives cited IDC seven times in the earnings call, Gartner -- Milanesi's employer -- once.

"I thought, 'You mention IDC one more time...'" Milanesi said, laughing.


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