03.05.2014 1

Is Apple rotten to the core?

Rotten_AppleBy Rick Manning

Apple CEO Tim Cook blew a gasket at a shareholder meeting when someone had the audacity to ask him a pretty basic question about whether he would commit only to projects that are explicitly profitable.

His answer should be an instructive warning sign to anyone who chooses to own part of the company, as Cook angrily declared that Return on Investment was not the primary consideration when it comes to engaging in “sustainability programs.”

Apparently, a shareholder attempting to hold a company accountable to the bottom line is an offense to Apple’s left wing Cook.

There is absolutely nothing wrong with Cook’s decision to take Apple down the path of pursuing social welfare goals rather than developing great products for a reasonable price.  However, no matter how many geniuses you have at your bar, if customers decide that Samsung’s product rocks and yours is just a rock, Apple dries up.

It is unlikely that Cook can kill off Steve Jobs’ legacy company, after all it survived Steve Scully – barely, but there are few more volatile consumer areas than the personal entertainment product field, and a company can go from hot to cold in a nano-second.

That is why shareholders should be extremely concerned with Cook’s vehemence in defending his decision that promoting sustainability trumps return on investment.   This appears to be his personal mission.  He has hired former EPA head Lisa Jackson to oversee it, and it is highly likely that Apple will be investing heavily in the idea, while attempting to use D.C. ties to get taxpayers to offset their green foray costs.

What Cook and others sometimes forget is that shareholders buy stocks to increase their personal portfolios allowing them to retire at some point in their lives.  They don’t buy stock so a wealthy dilettante can play social crusader, and when they discover that the company no longer meets their investment needs, they sell it driving the price downward.

It is within Cook’s and the Apple Board of Director’s rights to use whatever metric they choose to run their company.  However, if Apple lobbyists, with Ms. Jackson in tow, urge that the federal taxpayers subsidize this choice to throw profit out the window in search of sustainability, then the iconic company will become nothing more than another crony corporatist entity looking for the rest of us to pay for the political whims of their multi-millionaire CEO.

Now that Cook is out of the closet, investors need to take a hard look at Apple’s policy agenda and determine both whether a company that puts profits second still makes sense as an investment.  And those Members of Congress who lead the limited government charge would be wise to put Apple on their watch list of companies that may be converting from a great American success story to a corporate rent seeker.

The author is vice president of public policy and communications for Americans for Limited Government.

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