Thomas White Global Investing
Global Players

Global Players

April 2011

Timothy Cook, COO and Acting CEO, Apple Inc.

Timothy Cook

Image Credit: igrec on Flickr under a Creative Commons license

“I am where I am in life because my parents sacrificed more than they should have, because of teachers, professors, friends and mentors who cared more than they had to, and because of Steve Jobs and Apple.”

— Tim Cook at Auburn University, 2010.

It’s not always easy being number two. Like the famous “We try harder” tagline of the car rental company that promised better service than the market leader, it seems Timothy Cook made good use of his behind-the-scenes time working hard and honing his skills, before stepping into the limelight as the top man. Now after a decade of being second-in-line to CEO Steve Jobs, it looks like Cook is all set to take over as CEO of Apple Inc. When Tim Cook began his journey at Apple in 1998, the company was teetering on the brink of bankruptcy, but soon he will head the most valuable technology company in the world, one even ahead of Microsoft.

Cook has come a long way from his roots growing up in the working class town of Robertsdale, Alabama to Apple’s swank Silicon Valley headquarters in Cupertino, California, and has himself described his journey as “improbable.” The son of a shipyard worker and homemaker, Cook broke out of small town life to receive his degree in Industrial Engineering from Auburn University in 1982 and his M.B.A. from Duke University’s Fuqua School of Business in 1988. During the initial days of his career, he served as COO of the computer reseller division of Intelligent Electronics and then worked for 12 years as the Director of North American Fulfillment for IBM’s personal computer business. Cook landed at Compaq as Vice President for Corporate Materials for just six months before he met with Steve Jobs, and the rest, as they say, is history.

When Steve Jobs met Cook for the recruitment interview, he is said to have been impressed with his “unflappable demeanor”. But it was not an easy decision for Tim Cook. At the time, he was working for the market leader in personal computers, Compaq, while Apple was faring badly. The synergy between the two was immediately felt, though, and Cook chose to go with his gut- he joined Apple as Senior Vice President for Worldwide Operations. That decision not only changed his life but also charted an alternative course in technology history.

With Jobs and Cook at the helm, there was a sea change in the tide of Apple’s fortunes. The company, which had reported a $1 billion loss in the fiscal year 1997, declared an unexpected profit in fiscal year 1998. Cook had streamlined the product lines, cut down unnecessary links in the supplier chain, and shuttered several factories and warehouses by outsourcing part of the product manufacturing. This cut down bloated inventory to one fifth of the level in the previous year. Gross margins, which stood at 19 % in 1997, surged to 25 % in 1998 and had rocketed to 39.4 % by fiscal 2010.

Describing him as a “demanding yet fair” boss, one colleague recalled, “I got calls at 4:30 in the morning, expecting something to be done,” he said. “But other times he’d say ‘You’ve been working hard, here’s two tickets to something, get out of here.’”

Once Tim Cook trimmed off Apple’s manufacturing inefficiencies, the company was able concentrate on the marketing of its popular products like the PowerBook. Cook took over as Head of Global Sales in 2000, and was chosen to lead Apple’s Mac division in 2004. The following year, he was promoted to COO, the number two slot, at the computer giant. Cook’s adept management of the Mac unit and his foresight in securing access to flash RAM, a critical component, through a $1 billion worth multiyear contract, won him acclaim throughout the ranks at Apple, from top-tier management to lower level employees.

Tim Cook had first played the acting CEO role in 2004, when Steve Jobs underwent surgery, and then in 2009, when Jobs had to have a liver transplant. In January 2011, Steve Jobs left on another extended leave of absence due to medical reasons, leaving Tim Cook to yet again handle most of the duties of the CEO. That Jobs has repeatedly chosen Cook to take his place in his absence is seen as a vote of confidence. Still there is no doubt that shareholders, investors and the business world, in general, will be scrutinizing his moves closely for the months to come.

Often described as a workaholic, notorious for sending emails at 4:30 a.m. and holding Sunday night staff meetings over the telephone, it is obvious that Cook is dedicated to his work. He is known to be the first to step into the office and the last one to leave. But then it is no easy task running a corporation that has climbed to the top of the nation’s publically traded companies, second only to ExxonMobil. But then again, Tim Cook is accustomed to trying harder, and this time around, he might not settle for Apple taking second place.





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