Apple Repurchases $14 Billion of Own Shares in Two Weeks

CEO Cook Says Company Wanted to Be 'Aggressive' and 'Opportunistic'

Apple Inc. has bought $14 billion of its own shares in the two weeks since reporting
financial results that disappointed Wall Street, Chief Executive Tim Cook said in an
interview.
Mr. Cook said Apple was "surprised" by the 8% decline in its shares on Jan. 28, the
day after it reported lower iPhone sales than projected and warned that revenue in
the current quarter might decline from the same period a year ago. Mr. Cook said he
wanted to be "aggressive" and "opportunistic."
With the latest purchases, Mr. Cook said Apple had bought back more than $40
billion of its shares over the past 12 months, which Mr. Cook said was a record for
any company over a similar span.
"It means that we are betting on Apple. It means that we are really confident on
what we are doing and what we plan to do," said Mr. Cook, speaking in a conference
room at the company's corporate headquarters here. "We're not just saying that.
We're showing that with our actions."
Those purchases are part of Apple's previously disclosed plan to repurchase $60
billion of its own shares, Mr. Cook said. He said Apple bought $12 billion of the
shares through an "accelerated" repurchase program, and $2 billion on the open
market. He said Apple plans to disclose "updates" to its buyback program in March
or April.
The revelation about the recent share purchases comes a few weeks before Apple's
Feb. 28 shareholder meeting, where activist investor Carl Icahn is pressuring the
company to be more aggressive with its $160 billion cash pile.
Mr. Icahn, who owns roughly $4 billion in Apple shares, is asking shareholders to
vote on his proposal that Apple buy an additional $50 billion of its own shares by the
end of September, above its current plan.
Responding to Mr. Cook's statement about his confidence in Apple, Mr. Icahn said,
"So am I."
Apple's Mr. Cook said he wants to "be able to adjust for the long-term interest of the
shareholders, not for the short-term shareholder, not for the day trader.
"We may see a huge company tomorrow that we want to acquire or something may
happen in the stock market that's unpredictable," he continued.

Historically, Apple hasn't made big acquisitions; the company has never spent more
than $1 billion on a single deal. Mr. Cook said Apple has bought 21 companies over
the past 15 months.
That track record is a contrast to Google Inc., which has been snapping up
companies across the technology landscape, most notably its $3.2 billion acquisition
of Nest, a maker of connected home devices founded by former Apple employees.
The Apple CEO said its history of opting for smaller deals doesn't mean that the
company won't pull the trigger on a big acquisition if it makes sense.
"We've looked at big companies," said Mr. Cook. "We have no problem spending 10
figures for the right company, for the right fit that's in the best interest of Apple in
the long-term. None. Zero."
Apple is fighting the perception that its best days are behind it. Revenue growth has
dropped to less than 10% in the last three quarters, while net income fell 11% in the
past fiscal yearits first annual decline in more than a decade.
An often-cited factor is that the company hasn't broken into a new product category
as it did with the iPod and iPhonesince introducing the iPad in 2010.
Thursday, Mr. Cook reiterated that Apple plans to enter a new category this year.
Apple watchers are speculating about wearable devices or a new television
platform.
"There will be new categories. We're not ready to talk about it, but we're working on
some really great stuff," Mr. Cook said. When asked whether a new product category
could mean an improvement on an existing product like an iPad Air, a lighter version
of its tablet computer, or new services such as mobile payments, Mr. Cook declined
to comment.
He said that anyone "reasonable" would consider what Apple is working on as new
categories.
Mr. Cook said he still considers Apple to be a "growth company" with significant
opportunities to expand the position of existing products including the iPhone.
Apple has been losing market share in smartphones as the market grows. In 2013,
Apple accounted for 15.5% of all smartphones shipped world-wide, down from
19.4% in 2012, according to Strategy Analytics. By comparison, manufacturers
running Google's Android operating system accounted for 78.9% in 2013, up from
68.8% a year earlier.
Mr. Cook has said repeatedly that Apple aims to produce the best phones, not
necessarily the most. That has fueled concerns that the iPhone will become a niche
product, much as Apple's Macintosh was a niche product during the personalcomputer era.

Mr. Cook said Apple has the largest or second-largest market share for true
smartphones in nearly every country; he excluded smartphones that are used as
feature phones because of their limitations.
"In the other places where we are number two, I'd rather be number one. And you
can bet that we're working on that," said Mr. Cook.
He said his statement that Apple doesn't aim to make the most phones has been
misunderstood.
"I don't view that as being satisfied with being small or however you want to define
it," he said. "I just want to say that the macro thing for us is making a great product
and we must do that. If we can't do that, we're not going to force ourselves to hit a
price point that makes us produce a product that we're not proud of because we
lose who we are in that. We're not going to do that."

1. I would agree with the statement that Microsoft should hire an insider to replace Steve
Ballmer.
I say this especially because of the fact that Microsoft has not had a good track record of
bringing in high-profile outsiders, although there are obviously some exceptions , the flameouts
outnumber the successes by a wide margin. After decades of stability under Gates and Ballmer,
it's important that the next CEO not come and go quickly since such a turnaround could be
perceived as evidence of the firm's continued fall from prominence.
Satya Nadella is a well-spoken and brilliant engineer who has already navigated the transition
from software to services in one of Microsoft's biggest and most important businesses. He will
provide Microsoft with the leadership it needs at this important moment in its history, and will
help the firm finish its transition from its software past to its devices and services future. Mr.
Nadella is the right choice for Microsoft's next CEO.

2. Mr Nadella has a lot of items lurking on his agenda. Below are few important items he needs
to build strategy on:
1. Integrate Nokia's mobile devices business:
Microsoft currently boasts of 100,000 employees while its $7.3 billion acquisition of Nokia will
add roughly 30,000 more employees.Nokia that run Microsofts Window's phone software on
most of its devices is planning to launch an Android-based phone soon enough. The development
of the same began prior to the acquisition. Now the burning question is whether Microsoft will
go ahead with this project?

2. Fix windows and bring the company's various operating system together :
We expect that Microsoft would merge its windows phone and windows operating system for
light weight tablets into a single system.
3. Form a startegy to resurrect profit generated by selling hardware:
Despite increased sales of Microsoft's surface tablets, they have been loosing money. Xbox one
is expected to be unprofitable until game sales begin to make up for costly hardware. Also
Nokia's phone shipments fell heavily last quarter. So it is a matter of time to wait and watch if
Nadella could develop a strategy to overcome hardware issues.
4. Working in Sync with the board including Bill Gates : Nadella has asked Mr.Bill Gates to
increase his involvement in the company's technology and products. It would be very interesting
to see how Nadella would balance his vision with that of Gates'.
3. While Nadella brings experience running cloud and enterprise businesses, hell need to boost
Microsofts presence in consumer markets, where rivals have seized the lead. The first question
on the minds of critics is whether the Microsoft veteran of 22 years can deliver the same fresh
thinking as an outsider.
Much will also depend on the role of Microsofts board, where former CEOs Gates and Ballmer
remain directors. Thompson, the former Symantec Corp. CEO and International Business
Machines Corp. executive, will also bring a new perspective as chairman.
The transition at Microsoft follows the worst decline on record for PCs in 2013, when shipments
dropped 10 percent and are projected to languish through 2017. Microsofts revenue growth has
averaged 9.4 percent in the last 10 years, compared with 24 percent during the prior period. In
the past decade, Microsofts stock has gained 88 percent including dividends,compared with a 91
percent rise in the Standard & Poors 500 Index.
Satya Nadella will also have to oversee a sprawling empire of 130,000 employees once the
Nokia acquisition closes in the next few months. Microsoft is seeking to remain relevant as
consumers turn to mobile devices and the Web to check e-mail and access data, putting the
brakes on sales of PCs, the main driver of Microsofts Windows and Office software. The
acquisition of Nokia is aimed at speeding up the transition to device and services.
So I feel that Satya Nadella having all the support and expertise would help Microsoft to grow as
expected.