Most Americans are customers and/or shareholders (directly or indirectly) in Apple. Further Apple as an individual American company makes significant contributions to the GDP of the US. Apple is one of the great American brands and its continued success is key to the success of the US. Given the size and impact that Apple has, in our opinion it is important that it changes the way it communicates and creates value for its shareholders. This open petition contains recommendations to the Apple Board at the upcoming board meeting on Feb 27th. If you would like to personally sign it which we urge you to do, you can link to it below at change.org:
Thesis & Catalyst For Apple Inc. (NASDAQ:AAPL)
A Petition to the Apple Board of Directors - A Call to Action
Dear Mr: Levinson/Mr. Cook & the Apple Board:
This petition was initiated by Bet on America (a California non-profit) that has been founded by a long time Apple investor. We are joined by many of your faithful shareholders and customers in this initiative.
We want to thank the Apple board and all Apple employees who have worked so hard to make Apple the most valuable company in the world. More importantly you have delivered products that have truly made a difference to the every day lives of people across the world.
We also applaud your efforts to become a more shareholder friendly company (dividend/stock buy back programs), a more transparent company (programs to support better pay and labor policies by your vendors), and a company that wants to create more American manufacturing jobs by bringing some Mac line manufacturing back to the US.
However as loyal Apple shareholders (and customers) we have watched with dismay as Apple's stock price has taken a beating over the past 4 months - this at a time when the overall stock market is strongly bullish and a period during which the Apple team and you have been working hard to deliver record revenues and profits. While we understand that stock prices are inherently volatile and are not your main focus, we are deeply concerned about the negative impact this can have on Apple's employee morale, long term competitiveness and brand and reputation. We present the following recommendations and urge you to act on them and provide us with your plan of action and regular updates:
1.SEC/DOJ investigation: As shareholders in Apple an immediate concern is that Apple stock has been subject to illegal manipulation both on its run up and decline. We have read blogs and messages that this may be tied to the large quantity of Apple options being bought and sold on the options exchange. While the trading activity in Apple may very well be above board and legitimate, we urge the company to seek a SEC/DOJ investigation in trading of Apple stock and options and create a fund to provide legal support to anybody that comes forward with information that could help the SEC/DOJ in their investigation. The SEC/DOJ has a whistleblower program (www.sec.gov/whistleblower) but potential whistleblowers may need legal and other financial support. Bet on America has pledged US$25,000 to provide legal aid to anybody who is willing to come forward and work with Bet on America and provide material information that would help the authorities. Bet on America will explore other ways to support an SEC investigation such as filing a TCR (Tips/Complaints/Referrals) based on information and analysis we have available to us, but a request from Apple to the SEC will certainly help the cause. We would be happy to share information with and cooperate with Apple or anybody else in this effort. For example a recent Wall Street Journal article indicates that mutual funds sold a net of only 223K shares in December 2012 which does not seem to support the high volatility that Apple shares faced during that time leading to a decline of nearly 10%. This is important to Apple, its employees and shareholders because if true, the manipulation may have done more to damage Apple's brand and product image than the billions spent by your competitors.
2.Stock split/Dividend/Buy Back: We request you to consider splitting the stock so it is more affordable for smaller investors (many of whom are loyal Apple customers) to own, and therefore expand your shareholder base. We request you to consider significantly increasing the dividend and buy back program given that Apple will continue to generate strong cash flows in the near term. We understand while these actions do not constitute a long term panacea, they could certainly ease the short term gloom surrounding the stock.
3.Product vision/plans: While we understand Apple's secrecy regarding its product vision and plans has enhanced the Apple mystique and brand in the past, we believe given the significantly increased competition and scrutiny, it would serve Apple best to more explicitly spell out its product vision and plans going forward. This would also damp down rampant speculation and rumors that can be used to create volatility in the stock price. Further your competition disseminates a lot more information about their product ambitions and plans, and it is important to counter them particularly in mature product lines such as the iPhone and iPad..
4.Market share: We agree with Mr. Cook's comments on the latest earnings call that focus on building the best products and gaining market share are not mutually exclusive. However, we believe that Apple must expand its iPhone product line to better compete in emerging markets, and must avoid becoming a niche player and should communicate its product plans to expand its market share in these markets.
5.Focus on innovation: One of the main drivers in the financial press about Apple stock has been that Apple has lost its edge in innovation and is now producing incrementally better products that in some cases lag the competition. We urge you to look at creating a CTO office that could focus on next generation products and also use your cash hoard to support an aggressive acquisition strategy that could support your long term product vision.
6.Revamp advertising campaign / PR: We have watched with dismay as your copycat competitors have maligned Apple's brand with their negative ad campaigns, going so far as to make fun of Apple trying to protect its intellectual property in an ad in this year's Super Bowl. We believe Apple's ad campaign is too tame and does not aggressively differentiate Apple's history as an innovator and does not aggressively differentiate Apple's products from those of the competition. For example, a recent Apple ad is built around the Do Not Disturb feature which in the big picture is really not that big a deal. Instead, Apple ads should feature things like the originality of your products, your cohesive reliable ecosystem, ease of use, universal availability (icloud), communication capabilities (Facetime), etc. We need to go back to the way the "Think Different" campaign differentiated Apple because Apple was and will always be an original in your long time customer's eyes. On the PR front, we believe Apple needs to more aggressively respond to rumors about Apple's products and their success in the marketplace. For example the stories about the component order cuts and supply chain issues over the past quarter.
In closing, we urge you to do all you can to protect Mr. Steve Jobs legacy whose main focus was to create the most value he could for his customers. We believe the above recommendations will help this cause.
Bet on America
Disclosure: I am long AAPL.