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Apple's Tim Cook Won't Be CEO For Much Longer

|About: Apple Inc. (AAPL)


Steve Jobs refused to pay dividends, repurchase stock, or waste Apple's R&D expenditures.

Jobs could have created $510 billion in cash for Apple by 2017; currently Apple has $230 billion.

Tim Cook has allowed Apple to spend $22 billion in R&D, since 2011, in order to create the Apple Watch.

Steve Jobs truly was a visionary and he left a remarkable impact on not just Apple (NASDAQ: AAPL), but the entire technology and innovator landscape, as a whole. Like many of the greats, Jobs certainly had his quirks. For instance, under Jobs' rule, Apple never paid a dividend; this was and still is quite rare for large companies. In fact, in 2013 it was found that 81% of the S&P500 companies paid out dividends. Furthermore, Jobs never allowed Apple to repurchase its stock due to Jobs' belief that the company could generate greater value through other capital deployment methods. More importantly, Jobs realized that the company did not need to overspend with respect to research and deployment (R&D). This management style allowed Apple to hold an enormous reserve of cash on the balance sheet, while creating arguably one of the most influential companies on the planet.

After Jobs handed the wheel over to Tim Cook, the story looks vastly different. Since implementing a dividend program in 2012, the company has provided shareholders with ~$40 billion in dividend payments. Moreover, Apple has also bought back roughly $130 billion in its stock. This has resulted in Apple's balance sheet that holds $230 billion in cash and $70 billion in debt.

If Jobs were to still be steering the ship, Apple should have (conservatively) $510 billion in cash on the balance sheet by 2017. This number is the amalgamation of a projected 'Steve Jobs'-led 2015 cash balance ($350 billion) and Apple's conservative (no growth) 2016 and 2017 cash flow from operations figures ($80 billion and $80 billion). Considering that Apple's current market capitalization is $530 billion, it appears as though Steve Jobs could have provided shareholders with more value.

More importantly, Steve Jobs was a phenomenal capital allocator with respect to R&D. The table below highlights the vast difference in effectiveness between Jobs and Cook.



R&D Expense



Steve Jobs

$500 million

iPod, original iTunes Store, and new Macs


Steve Jobs

$750 million



Tim Cook

$8 billion

Apple Watch

To make matters worse, Apple has spent upwards of $22 billion on R&D since Jobs' passing in 2011. Remember that the original versions of the iPod, iPhone, iPad, Macs, iTunes Store, and Apple TV had all been released prior to 2011.

Frankly, it looks like Tim Cook has been unable to create any real significant value at Apple, and I'm willing to bet that, unless he pulls a rabbit out of his hat (the recent WWDC event did not show any such indication), he will lose his CEO position within the next 5 years.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.