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Cook's challenge at Apple: Be Steve Jobs

Tim Cook faces the challenge of keeping up Apple Inc.’s product development and girding the iPhone and iPad maker for rivalry with Google Inc.
Image: Apple COO Tim Cook and CEO Steve Jobs  at news conference at Apple headquarters in Cupertino
Apple COO Tim Cook, left, and CEO Steve Jobs remove their microphones after a news conference last year. “He’s a star, just a different kind of star from Steve,” says one analyst of Cook.Reuters
/ Source: Bloomberg

Tim Cook, stepping in for his boss Steve Jobs for the third time in seven years, faces the challenge of keeping up Apple Inc.’s product development and girding the iPhone and iPad maker for rivalry with Google Inc.

Cook, 50, Apple’s operations guru, took charge yesterday after Jobs, who has been receiving treatment for cancer and a liver transplant, said he was taking another medical leave. In an e-mail to employees, Jobs said he would remain chief executive officer and be involved in major strategic decisions, yet didn’t say when he might return.

As chief operating officer, Cook runs day-to-day operations. When he stepped in for almost six months in 2009 during Jobs’s transplant leave, Apple shares climbed 70 percent. While Jobs, 55, sets the creative vision for Apple’s products, Cook’s oversight includes sales, manufacturing and distribution. He can ably take over again, said Peter Misek, an analyst at Jefferies & Co.

“He’s a star, just a different kind of star from Steve,” said New York-based Misek, who recommends buying Apple shares and doesn’t own any himself. “He’s arguably one of the best supply chain managers in the world, if you look at working capital management, cash-flow management, cash conversion cycles — all those great metrics.”

Jobs’s health has been deteriorating in recent weeks and he has been coming to the office a few times a week, according to a person who knows the Apple founder and didn’t want to be identified because the matter is private. Messages left for several of Apple’s six outside directors weren’t returned.

'One and only'
Apple fell $17.68, or 5.1 percent, to $330.80 at 9:33 a.m. New York time on the Nasdaq Stock Market, after losing as much as 6.5 percent for the biggest intraday drop since May 7. U.S. markets were closed yesterday for Martin Luther King Jr. Day.

While Cupertino, California-based Apple hasn’t publicly named Cook a successor to Jobs, he is the heir apparent, said Avi Greengart, research director of consumer devices at Current Analysis, a market research firm. He said while Apple will continue to succeed in its current markets, he questions how the company will fare finding new directions without Jobs.

“Jobs has an almost magical ability to see markets that are small and niche, and to understand what it would take to make them big businesses,” Greengart said. “Steve Jobs is the one and only Steve Jobs.”

Cook is taking charge of a company that has more than doubled to $321 billion in market capitalization since he last took over for Jobs. The expansion was fueled by the iPhone mobile device, which almost doubled its sales in the fiscal year ended in September, and the iPad tablet computer, which went on sale in April.

Android rivalry
“Tim Cook can obviously operate,” said Michael Yoshikami, chief investment strategist at YCMNet Advisors in Walnut Creek, California, which owns Apple shares. “The question is: Can he be a visionary? That we’re not sure of yet.”

Apple also now faces a formidable competitor — smartphones based on Google Inc.’s Android operating system. Android has become a top-seller in the U.S., according to ComScore Inc., accounting for 26 percent of the smartphone market in November, compared with 25 percent for the iPhone.

The company is playing catch-up to Mountain View, California-based Google in the area of mobile advertising. Google was expected to grab 59 percent of the U.S. mobile-ad market last year, while Apple may have finished with less than 10 percent, research firm IDC said last month. The two companies also compete in the market for software that puts Internet content on TV.

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New devices
Jobs pays meticulous attention not only to product design and development but also how new devices are introduced and marketed. He rehearses presentations five to 10 times before doing them live, according to a former manager who worked with Jobs. Cook has yet to prove his ability to unveil new gadgets with the same success, said the person, who asked not to be identified because he’s not authorized to speak about Apple.

Cook needs to groom one of his top managers to replace him as operating chief were he to become CEO.

Nine senior vice presidents are listed on Apple’s website under Jobs and Cook. One is Jeff Williams, who was promoted to senior vice president of operations in July. The company has sought to strengthen its top ranks, three people with knowledge of the matter said this month.

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Apple approached Blackstone Group LP Chief Financial Officer Laurence Tosi about becoming its own finance chief, the people said. Tosi remains at Blackstone.

The Socratic method
Cook, who consumes energy bars to take him through marathon meetings that can run late into the night, is a master of the Socratic method, probing executives who report to him and revealing when they’re unprepared, Mike Janes, who worked with Cook for five years running Apple’s online store, said in a 2009 interview.

Born in Mobile, Alabama, Cook, who is single, earned an engineering degree from Auburn University in his home state and a master’s of business administration from Duke University in North Carolina. Apple hired him in 1998 to help catch up with the efficiency of rivals Dell Inc. and Hewlett-Packard Co.

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Cook has proven himself as a strong operations executive and can rely, in the short term at least, on Apple’s pipeline of products as well as talented product development and marketing managers in the company’s ranks, said Charles Golvin, an analyst at Forrester Research in Cambridge, Massachusetts.

“If there is an impact on Apple’s competitive position and openings for competitors, it’s something that plays out in that kind of three- to five-year timeframe,” Golvin said.

Cook got total compensation of $59.1 million in Apple’s fiscal 2010, including a special bonus of $5 million and $52.3 million in stock awards, received in recognition of “his outstanding performance” in the period, Apple said.

This article, originally appeared in