Apple Inc. (NASDAQ:AAPL)’s large cash hoard has received more attention since David Einhorn sued the company. Many analysts believe this is a positive development for the company. A new report from analysts at Barclays, discusses the positives of Apple Inc. (NASDAQ:AAPL) having regular analysts day, in light of the increased discussions of how to use the cash. Barclays is out with a research note today that suggests another idea, as well. They believe that Apple Inc. (NASDAQ:AAPL) should host regular analyst days as the company likely is now in the ‘“mature state” (AKA old tech) now. Barclays goes on to state that Apple Inc. (NASDAQ:AAPL) can learn some lessons from IBM. First, we discuss why Barclays believes that Apple should have regular analyst days.
At any analyst day for a company of Apple Inc. (NASDAQ:AAPL)’s stature, the analysts would assume that the company would handle things like views on product philosophy, social responsibility and recap the company’s history of innovation. Investors are eager to get more color on the following five things from Tim Cook and his team at some point soon: 1) how Apple is a consistent platform company, with historical data to prove it – and how it could result in some kind of revenue stability; 2) what Apple views as its total addressable market or TAM – what markets it feels it plays in and/or what are the sizes of markets it looks to create; 3) a margin philosophy that brackets a gross margin range of 35%+ – and how it can be sustainable; 4) how Apple views cash – and how it can be used to drive dividend growth; and 5) how it views itself vs. other similar companies.
Apple Inc. (NASDAQ:AAPL) hasn’t had an analyst day since 2003. the analysts note that they remember it well since it took place at headquarters and the late CEO Steve Jobs participated in Q&A (the Barclays analysts were able to ask him a question along with a handful of other analysts). With Apple Inc. (NASDAQ:AAPL) reaching an arguably “mature state” (according to the analysts), and revenues approaching $200 billion per year investors could use some guidance from the company about how its business model can deliver steady returns. Apple could be well served by outlining the tech giant’s strategy since the brand is also linked to the stock price. The meteoric rise of Apple’s shares since 2003 has captivated the US and the world. Many “regular folks” bought shares after seeing unique innovations and huge crowds gather at Apple stores.
Want an example? Look at IBM
Over time other great American companies, like International Business Machines Corp. (NYSE:IBM), have come to realize this fact as well – leadership in the stock market creates an aura around the company. International Business Machines Corp. (NYSE:IBM) perhaps spends the most time in the tech sector honing its message and asking shareholders what they want to see – and actually listening. The company has constructed a board of mostly industrial company heavyweights and seems to get the most it possibly can out of its business model. In reality, the International Business Machines Corp. (NYSE:IBM) as we know it today took several years to create – even after the departure of Lou Gerstner.
Investors might be so patient with Apple Inc. (NASDAQ:AAPL). No company has accumulated this kind of cash or garnered this much attention in history. People realize that it is not Apple Inc. (NASDAQ:AAPL)’s style to conduct itself like IBM. However, Apple Inc. (NASDAQ:AAPL) can likely convey a philosophy and guidance that maintains its secrecy and mystique.