Friday, February 26, 2010

Apple Shareholder Meeting (2010)

Apple, Inc. (AAPL) held its annual shareholder meeting in Cupertino, California on February 25, 2010. Apple offered shareholders only coffee, tea, and water. Steve Jobs attended the meeting in his trademark jeans (with holes in the right knee area) and black turtleneck. Although he looked noticeably thinner than two years ago, he appeared healthy. Al Gore also attended the meeting, and he looked like he was in great shape (unlike previous years, where he appeared to be a tad overweight--perhaps recent Democratic victories have improved his health).

Much of the meeting focused on environmental issues. One person argued that if the science is right, then nothing else matters, and Apple needed to be more environmentally-conscious. Another shareholder summed up the issue by saying, "Pollution is waste, waste is inefficiency--it's as simple as that."

During the Q&A session, a shareholder mentioned Apple's $40 billion in cash, and asked whether Apple would issue a dividend. Mr. Jobs said that the cash provided security and flexibility, and Apple could take risks knowing that "the ground is always there if we miss." Mr. Jobs also implied that the stock price would stagnate if Apple issued a dividend.

Someone else mentioned that Nintendo was doing very well with its Wii and asked if Apple would consider a strategic alliance with Nintendo. Mr. Jobs said that such alliances take a lot of work, and Apple would need a big payoff to consider a strategic alliance.

I was tired of the environment-related questions. I explained that business-wise, it doesn't matter whether the science is right or wrong, only whether a majority of the American public believes that environmental issues are important. If the majority of Americans feel strongly about environmental issues, they will petition Congress or state legislatures to pass more stringent laws mandating certain corporate behavior. However, if Apple at least projects an image of being socially conscious, it will help stave off stringent legislation that might harm the company. In short, being ahead of the curve on environmental issues allows Apple to increase its chances of saving shareholders from potentially harmful and costly legislation. (It also makes little sense to criticize Al Gore whenever the Democrats control Congress, because Mr. Gore's presumed access to Democratic legislators allows him to provide input into legislation affecting Apple.)

Mr. Jobs responded by saying that it was even more simple--being environmentally-conscious "is the right thing to do." He then made several comments showing that Apple sincerely believed in environmental issues not just as a business issue, but as a philosophical issue.

I also asked what challenges Mr. Jobs saw for Apple, i.e., what keeps you up at night? Mr. Jobs first joked, "Shareholder meetings," but then became more serious. He said he was concerned about the overall economy, because if people were concerned about buying textbooks or putting their kids through school, then it would be more difficult for Apple to sell its products.

Overall, the meeting went well. Mr. Jobs was more pro-active in cutting off shareholders who would ramble on, but otherwise, it was a typical Apple meeting--people came to see Mr. Jobs and to get a piece of the Apple mystique.

Bonus: Mark Duncan has been a marketing consultant at askmar ( for over 25 years, focusing on helping early stage start-ups develop traction in their marketplace. Mr. Duncan's thorough notes on the shareholder meeting are below:

* The meeting started at 10 AM, the formal meeting ending at 9:25 AM. At that point, Steve Jobs took questions and answers to about 10:20 AM.

* Apple wants to do the right thing. We have reduced the size of our packaging because it benefits us both from an environmental and business standpoint. People are noticing, our reputation is pretty good. Can it be better? Yes, but we’re working on it. Our recycling rates are phenomenal.

* What is Apple afraid about most, what keeps you up at night? Fundamentally, we require stability in the world. People aren’t going to buy our products unless they can put food on the table and afford school. We are affected by things beyond our control. Accordingly, we try to do the best we can.

* Why not issue a stock dividend? It is part security and flexibility. It nice to know when you jump that the ground will still be there if we miss. Also, we never know what opportunities are out there. Sometimes you need to think big and pretty large. When you want to do something big and bold, it is nice to be able to write out a check and not have to borrow a lot of money. Our judgment and instinct is to keep out powder dry. Quite frankly, if we issued dividends or did a stock buyback, our stock price would still be in the same place. What really drives our stock price is our ability to grow and keep up with new products that everyone wants.

* Internationally, we opened our first store in China, and have 25 more stores planned for China over the next year.

* [On environmental issues.] We are more interested in walking the talk, than talking the talk. Lots of companies set goals and attend conferences, than don’t actually meet their goals. We are the first and only company to actually do something about it. Dell challenged us on our green statements to the Truth in Advertising board, which found that we were correct [in our claims]. We have audited 100 of our suppliers, and over half of them told us that they had never been audited before. We do it because it is the right thing to do.

* With respect to usability and accessibility. We have the most accessible products in production available today, with a few hundred million passionate users. I personally receive 6 to 12 emails each week about accessibility.

* When I run across a security problem, it would be nice to have a way to email Apple regarding the threat. We will look at providing an email for this purpose.

* Will the increased emphasis on mobile products result in a decrease in traditional Mac products? First, we have decreased our app approval time from 2 to 3 weeks to one week. Our customers are buying mostly laptops, followed by iMacs, Mac Minis, and towers. We listen to our customers. We love the iMac, we think it is the best product of its type in the world.

* Apple has no retail stores in Wyoming, Montana, and North Dakota. Would like to see more theaters in stores. It is hard to do this [take Apple classes?] in smaller stores, particularly with the higher noise levels.

* Apple ads are primarily targeted at the young and hip. Yet the products have a tremendous appeal to middle aged and older people. Jobs noted that often older people like to think of themselves as young and hip!

Update: other reviews of the meeting are HERE and HERE.

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