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Happy talk. That’s what you get when CEOs pass the baton, and so it was with Apple’s long-anticipated announcement that Tim Cook would give up the top job, effective in September. “I love Apple with all of my being,” Cook said in the announcement (he’s sticking around as executive chair). “I am filled with optimism about what we can achieve in the years to come,” said Cook’s successor as CEO, John Ternus, currently a senior hardware executive. The truth is that Ternus should be terrified.
After all, it’s going to be tough, if not impossible, for Ternus to top Cook when it comes to delivering shareholder returns. While Steve Jobs set the stage for Cook with his development of such iconic products as the iPhone, Cook turned those products into a well-tuned cash engine. (For more on the transition, see here).
Apple’s revenues quadrupled to more than $400 billion from 2011, when he took the top job, and last year. Free cash flow tripled to about $100 billion annually. Apple stock is up about 2,322% in that time, according to Koyfin. That’s a bit below the appreciation in Google and Amazon over the same period, but above that of Microsoft.
But Apple’s glory days may be behind it. Ternus is inheriting a company whose top line has grown a mere 3.4% on average per year since 2022 (although this year is looking much stronger), which is behind in potential new categories such as smart glasses. It remains massively dependent on the iPhone, a product now nearly 20 years old, which is two or three lifetimes in tech. Apple shares are virtually flat for the year—a worse performance than for all other big tech stocks except Microsoft.
The worry for shareholders is that Ternus, who has spent most of his life at Apple and who described Cook in today’s announcement as a mentor, will continue on the cautious course Cook has been pursuing. In this report about Apple’s succession, we cited critics saying Ternus was too risk averse. As good as Cook has been for Apple, the company arguably needs fresher blood.
Amazon Puts More Chips on the AI Table—for Anthropic
Talk about hedging your bets. On Monday, Amazon said it would put another $5 billion into Anthropic and committed to investing a further $20 billion in the future “tied to certain commercial milestones.” Amazon previously invested $8 billion in Anthropic, back in the 2023–24 era when it appeared to be lagging the industry leader, OpenAI.
Just a few weeks ago, Amazon invested $15 billion int Anthropic’s biggest rival, OpenAI, and committed to putting another $35 billion into the ChatGPT creator “when certain conditions are met.” Since the two companies reach that agreement, OpenAI’s star has fallen, as Anthropic appears to have taken the lead in revenue.
In that context, it makes a lot of sense for Amazon to put more money into Anthropic—as part of a deal in which the AI firm would commit to spending $100 billion on Amazon Web Services technology in the next decade. Whichever of the two AI firms comes out on top, Amazon will do just fine.
In Other News
• Predictions site Polymarket is in discussions with investors about $400 million in funding at around a $15 billion valuation, which would add to the $600 million Intercontinental Exchange recently invested in the company, The Information reported.
• Vercel, a cloud development platform, on Sunday said a security breach had allowed an attacker to gain unauthorized access to data for a “limited subset of customers.”
• Andreessen Horowitz said it had backed a new media company, MTS—an abbreviation for Monitoring the Situation—which will publish on Elon Musk’s X, “interviewing the main characters of the moment all day long.”
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