SAN FRANCISCO: Apple Inc Chief Executive Tim Cook is in an enviable position - market leading products, a $98 billion warchest and a seemingly gravity-defying stock price.
But as he gears up for the annual face-to-face meeting with shareholders, a few issues may be causing him angst. Chief among them are in China, where poor labor conditions are in the spotlight and Apple's iPad trademark is under attack.
The meeting this Thursday comes days after Apple touched a new lifetime high of $526.29 before receding slightly. The stock may get a boost next month, when Apple is expected to unveil a new version of its best-selling iPad.
Apple shares have seen a blistering rally in the past seven weeks, gaining $100 and making Apple the most valuable US company, with $468 billion in market capitalization.
But as much as Apple's shares rally, working conditions at the company's manufacturing contractors in China have also attracted attention this year.
Recently, Apple has been trying to redirect the spotlight on its efforts to force its partners to treat their employees better and the iPhone and iPad maker may use Thursday's meeting to repeat it commitment to improve labor conditions in its supply chain.
"The Fair Labor Association and the audit they are doing of all their (supply) firms is a corporate governance issue that will probably be a reasonably active discussion at the shareholder meeting," said Tim Lesko, portfolio manager at Granite investment Advisors. Apple share account for about 3 percent of Granite's equity assets.
The US non-profit labor group Fair Labor Association has begun a study of the working conditions at Apple's main contract manufacturers, including supplier Foxconn Technology Group's plants in China, which has been in the news for worker suicides, a plant explosion and poor working conditions.
Another thorny issue that has now started attracting attention from shareholders is the trademark battle moves in China where troubled technology company Proview is seeking to halt the sale of iPad tablets, claiming it owns the iPad trademark in china.
Connor Browne, portfolio manger of Thornburg Value Fund -- another Apple investor -- wants to see the trademark case settled.
"Apple has positioned itself well in China," he said. "I would hate to slow the momentum there because of court issues."
Cash to come up again
A perennial issue that shareholders zoom in on is Apple's enormous cash pile. The company now boasts of over $100 a share in cash and securities.
Cook said earlier this month that the company is in very active discussions at the board level about what to do with its cash, asking shareholders to be patient as Apple decides the way forward, stoking speculation that Apple may return some of that money to shareholders through dividends or share buybacks - even if it is only a one-time deal.
Apple's cash balance is the largest among US technology companies, and many analysts think the company should put at least some of the money to work. The company last bought back shares in 2001 and scrapped its dividend in the mid 1990s.
A dividend could give Apple stock a short-term boost as institutional investors - who typically own only stocks that pay dividends - may buy it.
"It certainly would increase the potential owners for the stock," Lesko said.
Apple's annual meeting rarely yields any financial forecasts or product-related news but corporate governance could be part of the discussion.
Last year, in a rare show of strength, Apple shareholders voted for a non-binding proposal to require board directors be elected with a majority vote but Calpers, which put it forward, is reintroducing the measure as Apple has not acted on it.
The largest US pension fund says that policy would better protect investors' interests but Apple had urged shareholders to vote against the proposal.
The company's board has long been criticized for its lack of disclosure, particularly about leadership succession while Steve Jobs battled illnesses whose details were not made public.
No comments:
Post a Comment