OT: Tim's Cooking

During his time at the helm, Apple’s annual revenues have ballooned from $108bn in the year he took over to $365bn in 2021. Net profits have grown 3.7 times, from $26bn to $95bn.

Wall Street loves Cook for two reasons. One is buybacks. Apple’s sharecount in the past decade has been cut 37 per cent, from a split-adjusted 26bn to around 16bn today. As a result, earnings-per-share are up 5.6 times. So while Apple’s market cap has grown nine times over 10 years, share prices are up 14 times in the same period.

Second, Apple started paying dividends in 2012, following a 17-year gap. So on a total return basis, shareholders in the Cook era have earned 33 per cent a year for a decade. If someone had invested $10,000 the day Cook was anointed CEO, and reinvested all dividends, that sum would be worth more than $200,000 today.

Cheris adds that the senior team around Cook are largely executives from the Jobs era, rather than people he has brought into the company. Of Apple’s 12 top executives, only three came to Apple after Jobs passed away. “He didn’t build this team, he mostly inherited it,” Cheris says.

“Tim’s job, every day, is to say ‘what are we not going to do?’” he says. “It’s not what they can do. There are so many choices. I mean, Apple could buy Ireland tomorrow. That’s how ridiculous it is. That level of maturity and stewardship that Tim Cook has exercised is statesmanlike.”

https://www.ft.com/content/17ecb0a0-8e60-4d02-b1fc-f497c9e31… (subscription required)

Here is hoping that, when the time comes, Buffet’s successors are equally able (or is it Abel) chefs as Cook.

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Apple’s annual revenues have ballooned from $108bn in the year he took over to $365bn in 2021. Net profits have grown 3.7 times, from $26bn to $95bn…

Those are surprisingly similar ratios:
Revenues up 3.38x, profits up 3.65x. (giving the 12.5%-13.3% annual growth range)
So, it would not seem unreasonable to suppose that the value of the firm (not a share) has risen in the rough neighbourhood of the same ratio.

Yet market cap is up a remarkable 8.35x in the same stretch (22.7%/year compounded).
So, to a first approximation, the company as a whole is about 2.3 times as expensive as it was when Mr Cook took over.
It wasn’t screamingly cheap back then. Multiple of then-current earnings was a bit over 20, I believe.

By comparing market cap rather than share return, it correctly cancels out the effects of buybacks.
That is, the share total returns have been more than the rise in market cap, and justifiably so.
About 29.8%/year compounded, assuming no tax and a DRIP.

Jim

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