Tim Cook became Steve Jobs' successor apple's (AAPL 0.86%) Appointed CEO on August 24, 2011. Just six weeks later, Jobs died of pancreatic cancer. At the time, many investors thought Jobs' death was the end of his era.
Mr. Jobs returned to Apple on September 16, 1997, exactly 12 years after being forced out of the company he co-founded, and revived the company's flagging business with the iMac, iPod, iPhone, and iPad. Under Jobs, Apple transformed the computer market with sleek designs and easy-to-use products: PCs, MP3 players, smartphones, and tablets.
From fiscal year 1997 to fiscal year 2011 (ending September 2011), Apple's annual revenue grew from $7.1 billion to $108.3 billion at a compound annual growth rate (CAGR) of 22%. From the first day of Mr. Jobs' return until Mr. Cook took over as CEO, Apple's stock price rose 6,760%. A small investment of $2,000 would grow to $137,200.
Image source: Apple.
There was a temptation to take cash from Apple after Mr. Jobs handed over control to Mr. Cook, who was primarily known for expanding the company's production capacity rather than developing hardware products. But that would have been a big mistake.
Why did Apple continue to grow under Tim Cook?
Apple's stock price has risen 1,150% since Cook's first day as permanent CEO. And after reinvesting the dividends that Cook reinstated in 2012, the total return was 1,380%. Mr. Jobs' $2,000 investment on his first day back at Apple would have grown to $2.03 million under Mr. Cook's watch, including reinvested dividends.
Even if he hadn't bought Apple stock during Jobs' tenure, he could have made a fortune betting on Tim Cook's ability to expand the company. If Mr. Cook had simply invested his $2,000 in Apple on the day he took over and reinvested the dividends, your investment would be worth more than $20,000 today.
From FY 2011 to FY 2023, Apple's revenue grew at a CAGR of 11% to $383.3 billion. Most of that growth came from iPhone, which will still account for more than half of its revenue in FY2023. Also, with over 40% stake repurchases, earnings per share (EPS) also increased at his 16% CAGR. .
Under Cook, Apple launched new hardware products such as the Apple Watch, AirPods, HomePod and Vision Pro. However, he only had two products (Apple Watch and his AirPods) that were considered hits. HomePod had a hard time gaining ground Amazon In the smart speaker market, the Vision Pro remains an expensive niche gadget for early adopters. Apple also recently abandoned plans to make electric cars after spending billions of dollars on the secret project for a decade.
Cook also directed Apple to expand its services business with new subscription-based services such as Apple Music, Apple TV+ and Apple Arcade, although the track record has been mixed so far. This ecosystem also includes the App Store and iCloud platforms, and currently serves more than 1 billion paid members. Apple will generate more than one-fifth of its revenue from these services in fiscal 2023, and could capture more users, curb long-term dependence on the iPhone, and challenge companies like: Netflix and spotify In the growing streaming media market.
Does Apple still have room to run?
Apple may not pull a rabbit out of a hat like it did every few years under Steve Jobs, but it's still expanding, making big profits, and putting much of that cash into its own stock. It returns money to investors through purchases and dividends. Additionally, the company remains one of the few consumer electronics brands that is also considered a bona fide luxury brand.
Apple ended its latest quarter with $173 billion in cash and securities, so there are still plenty of ways to expand its ecosystem through major investments and acquisitions. Perhaps that's why Warren Buffett continues to allocate more than 40% of his shares. berkshire hathawaytransfer its entire portfolio to Apple.
Apple's stock price has dropped to 10 this year as investors spook over declining iPhone sales in China, regulatory headwinds to the App Store, lackluster launch of the Vision Pro, and sudden end to electric vehicle dreams. It fell by more than %.
But in the long term, Apple's business is likely to recover as it rolls out new hardware products, expands its services ecosystem, and offers generous dividends and stock buybacks to patient investors. . So before you decide to let go of Apple, remember what happened to investors who rushed to sell their shares when Tim Cook took over nearly 13 years ago.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Leo Sun has positions at Amazon and Apple. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Netflix, and Spotify Technologies. The Motley Fool has a disclosure policy.
