Following today’s release of Apple’s quarterly earnings report, Tim Cook has sent a letter to employees praising the company’s growth and the dedication of Apple employees to the development of new iPhones, iPads, and Retina iMac. Cook calls the iPhone 6 and 6 Plus launch the “most successful” in the history of the device.
Cook also talks about the Apple Pay launch and reiterates the points made during today’s earnings call, saying that the purpose of introducing a payment system was to ensure that customers have a “simple, secure and private way to pay.” He also commends the software development teams on the consistent cross-platform experience introduced in iOS 8 and OS X Yosemite.
Cook closes by saying that he will be traveling to Beijing to talk to employees in a meeting that will be recorded and posted the company’s internal website. Employees from across Apple will be able to submit questions beforehand to be asked during the Q&A session.
Alongside the release of Apple’s supplier responsibility report today highlighting working conditions within its supply chain, Apple’s Senior Vice President of Operations Jeff Williams has also sent out a letter to employees. In the past, CEO Tim Cook has been known to send out an email to employees following the supplier report. In today’s letter, Williams went over some of the key points from the supplier responsibility report and noted, “to drive accountability, we are now publishing a quarterly list of the names, countries, and participation status of the smelters and refiners in our supply chain.” Williams also mentioned new education programs, the launch of the Apple Supplier Environment, Health, and Safety Academy, and more.
The full letter from Williams only accessible to employees is below: expand full story
Following a precatory proposal from billionaire investor and Apple shareholder Carl Icahn urging Apple to vote on a larger buyback, Icahn today announced on Twitter that he thinks Apple “is doing great disservice to shareholders by not having markedly increased its buyback.” He also said that he would soon send Apple another in-depth letter regarding his proposals and confirmed that he has purchased another $500 million in Apple shares bringing his total investment to $3 billion. expand full story
The biggest questions many are still asking are related to why and how the group made a deal with Taig, an app store of sorts that was installed on jailbroken devices in China, while not including an updated Cydia store in the release. While the group cleared up much of the situation in its first letter and removed Taig following piracy concerns, the latest letter addresses questions specifically regarding if any money was exchanged with Taig. It also expresses disappointment that the company released a cracked version of the jailbreak.
The full letter is below:
Privacy and Taig
First and foremost, and of utmost concern, is privacy. No one’s data was ever sent anywhere. Of course, as a member of the community whose work frees devices, it would be against everything we’ve worked for the last 7 years to jeopardize the security of the users of our software. To reiterate, no Taig software was installed unless the computer’s language was set to Chinese. Furthermore, no Taig software would run unless the user opened the Taig application.
After rumors abound of encrypted data being sent for users in China who’ve installed Taig, we decided to do what we do best – reverse engineer the code of Taig to understand what was being sent. Taig transmitted data similar to what Cydia transmits. Unique device identifiers were transmitted in encrypted form similar to how Cydia uses SSL to protect the privacy of its users. Taig did not transmit any private user data from the devices at all.
Piracy and Taig
Our written and verbal agreement with Taig banned it. They assured us it was not in there. We did not check every package in their store but a cursory examination before release found no problems. However, after investigation and after notification from the community, we found examples, including pirated tweaks, Apple App Store apps, and even pod2g’s PodDJ app. We dropped the ball on this. While we at first did not believe Taig purposefully violated our agreement, the depth of the transgression against the software developers and the jailbreak community cannot be overlooked and we could not move forward after that even if it were fixed. We terminated our relationship with them. We are very disappointed that they have decided to put up a cracked version of the jailbreak on their site that installs Taig. We did not give them any permission or source code.
We have refused all monies from Taig
There have been a lot of rumors listing various amounts we’ve been paid. We have received no monies from any group, including Taig. We will not be accepting any money. Our donations are being given to Public Knowledge, Electronic Frontier Foundation and Foundation for a Free Information Infrastructure to help protect jailbreaking as your legal right.
We are working hard to fix the problems with the jailbreak. Unfortunately, it’s the holidays and we would like to spend time with our friends and family. The events of the last couple of days have been extremely stressful for us and we need some time to recover. We will work as hard as we can to resolve any remaining issues. Thank you for your understanding.
We worked very hard to bring this jailbreak free of charge to the community. We hope you can all enjoy it.
The S&P 500 trades at roughly 14x forward earnings. After backing off net cash, Apple trades at just 9x (not factoring into account that the company has a significantly lower cash tax rate than the rate Wall Street analysts use). This discount (cash adjusted) becomes even more compelling given our confidence that Apple will grow earnings per share at a rate well in excess of the S&P 500 for the foreseeable future. With such an enormous valuation gap and such a massive amount of cash on the balance sheet, we find it difficult to imagine why the board would not move more aggressively to buy back stock by immediately announcing a $150 Billion tender offer (financed with debt or a mix of debt and cash on the balance sheet).
While this would certainly be unprecedented because of its size, it is actually appropriate and manageable relative to the size and financial strength of your company. Apple generates more than enough cash flow to service this amount of debt and has $147 billion of cash in the bank. As we proposed at our dinner, if the company decided to borrow the full $150 billion at a 3% interest rate to commence a tender at $525 per share, the result would be an immediate 33% boost to earnings per share, translating into a 33% increase in the value of the shares, which significantly assumes no multiple expansion.
In the letter Icahn adds that if the proposed $150 billion buyback was executed immediately, Apple would experience “further stock appreciation of 140% for the shareholders who choose not to sell into the proposed tender offer.” Icahn also agrees to not participate in the buyback by withholding his shares to “ invalidate any possible criticism” regarding the long term benefits of the proposal.
Icahn also noted that he has increased the size of his position in AAPL from 3,875,063 shares to 4,730,739 shares, a value of around $2.5 billion, and that he intends to buy more.
While there isn’t a ton of new information regarding Icahn’s new website, it is already accepting sign ups and a description on the website explains it as “a platform from which we can unite and fight for our rights as shareholders and steer towards the goal of real corporate democracy.”
Icahn says that Cook will call him after the October 28th earnings announcement.
Tim Cook will call Icahn after earnings on Oct. 28…Icahn says. $AAPL
On the eve of the second anniversary of the passing of Apple co-founder Steve Jobs, Apple CEO Tim Cook has reflected on the moment in a company-wide email. A source has provided a copy:
Tomorrow marks the second anniversary of Steve’s death. I hope everyone will reflect on what he meant to all of us and to the world. Steve was an amazing human being and left the world a better place.I think of him often and find enormous strength in memories of his friendship, vision and leadership. He left behind a company that only he could have built and his spirit will forever be the foundation of Apple. We will continue to honor his memory by dedicating ourselves to the work he loved so much. There is no higher tribute to his memory. I know that he would be proud of all of you.
Last year, Apple honored Jobs with a tribute video on its homepage. The video is embedded above and it is a delightful look into the legacy of the man who changed the lives of so many people.