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Tuesday, April 23, 2013

Why Tim Cook Is Like Steve Ballmer

On Monday, Matthew Panzarino of the Next Web, a tech news site, tweeted an ironic message that read “Fire Tim Cook!,” along with a link to a couple of charts showing the steady upward march of Apple’s revenue and profit over the last few years.

Looked at that way, the campaign by some of those who are bearish on Apple stock to unseat Mr. Cook, Apple’s chief executive, seems rather absurd.

It’s worth pointing out that Apple is not the only big tech company where there seems to be a disconnect, at least a superficial one, between the doom-saying of some investors and the company’s financial performance.

For many investors, Steve Ballmer, the chief executive of Microsoft, has long been one of tech’s favorite villains. His company’s stock has lost 43 percent in value since he got Microsoft’s top job on Jan. 13, 2000. Periodically, pundits, investors and even former executives call for Mr. Ballmer to get the boot.

During the 13 years Mr. Ballmer has led Microsoft, though, annual revenue at the company has grown 221 percent, to $73.72 billion, and profit has jumped 80 percent, to $16.98 billion.

Whenever he’s asked about the company’s poor stock performance under his leadership, Mr. Ballmer typically says there are two Microsoft numbers he is most concerned with â€" profit and revenue. The share price, he usually responds, is outside his control.

In comparison, during Mr. Cook’s relatively 20 months as Apple’s chief executive, the company’s annual revenue has grown 45 percent, to $156.51 billion, while profits have jumped 61 percent, to $41.73 billion.

Apple’s shares have been pummeled by investors, losing more than 43 percent of their value since last September. Apple’s stock is still up about 6 percent since Aug. 24, 2011, when Mr. Cook got the top job. It’s up even more than that if you consider Mr. Cook’s true start date as early 2011, when he filled in for his predecessor, Steve Jobs, during Mr. Jobs’s medical leave of absence.

Of course, the real reason both Microsoft and, more recently, Apple, have become sources of investor disgruntlement have little to do with how profits and revenue have fared in the past. In Microsoft’s case, the list of Wall Street’s grievances includes the billions of dollars the company has lost seeking to compete with Google in search, multiple missed opportunities in the mobile market and worries that Microsoft’s longtime profit engines will run out of gas.

In Apple’s case, the concerns are different. In January, Apple warned Wall Street that it expected its profit to decline about 20 percent during its fiscal second quarter, results for which the company will report on Tuesday. Slowing sales, a shift to products like the iPad Mini with lower profit margins, and a lull, whether real or perceived, in breakthrough new products are all weighing heavily on Apple’s shares.

It’s too soon to tell whether Apple can shake off the disaffection of investors. The case of Mr. Ballmer and Microsoft, though, suggests that a company can be stuck in investor purgatory for a long time even if it keeps up profit and revenue growth.