Tim Cook (Photo credit: Wikipedia)
With that simple statement, and several others, Apple CEO Tim Cook had some hardened U.S. Senators swooning like 13 year-olds receiving their first iPhones.
As you undoubtedly know, Mr. Cook and other Apple officers were “grilled” Tuesday by the “Senate Permanent Subcommittee on Investigations.” (see CNNMoney video)
The run-up to the appearance was particularly contentious, as Senators Carl Levin and John McCain were quite vocal in their criticism of Apple’s tax strategies. Levin accused Apple (AAPL) of seeking “the Holy Grail of tax avoidance” and McCain called Apple “among America’s largest tax avoiders.” (Forbes)
But while there were certainly many intense moments, and some which were farcical, Cook’s calm demeanor and certitude that “Apple has paid every single dollar of taxes owed” (Forbes) by general consensus “won the day.”
Fortune, however, did note the dichotomy in the day-after headlines reporting on the hearing, saying “metaphors of (confrontational) violence” competed with those positioning Cook as essentially a “Wall Street Hero For a Day.”
Many compared the Senatorial “fawning” to that showed some Major League baseball players at the infamous steroid hearings of 2005, when “after the hearings, congressional staff members crowded around the sluggers, asking for autographed baseballs.” (NY Times)
Another Times piece noted, “By the time he (Cook) walked out, the big cats on a Senate committee were practically eating out of his hand,” with even Sen. Levin saying by the end, “We love the iPhone and the iPad.”
Perhaps the most “priceless” moment (cultofmac.com) came near the end of Sen. McCain’s questioning, according to Business Insider:
Senator John McCain just interviewed Apple CEO Tim Cook about the company's taxes and offshore profits. But the kicker came at the end, when McCain stopped his line of questioning by asking, 'Why the hell do I have to keep updating apps on my iPhone all the time?'
Cook responded, 'Sir, we're trying to make them better all the time.'
But Cook was far from the only “superstar” dominating headlines last week, as markets finally showed they could indeed have a red week (though not much of one, with the Dow off -0.3% and the SPX and Nasdaq Comp down just over -1%).
FOMC Chair Ben Bernanke rattled markets by saying in effect, “Yes, No, Maybe” to the possibility of tapering the rate of bond purchases. Traders especially honed in on the non-scripted Q&A statement, “…in the next few meetings, we could take a step down in our pace of purchases.” (Reuters)
JPMorgan’s (JPM) Jamie Dimon rather handily won the fight over his dual role of Chairman/CEO, and tried to put aside any potential battle scars by writing in a memo to employees, "I love coming to work here every day and hope to be doing it for years to come." (nymag.com)
Bloomberg reported that “Dimon received backing from a roster of high-profile investors including Home Depot Inc. founder Ken Langone and Warren Buffett,” and noted that seven of the ten largest JPM shareholding institutions were also run by companies featuring dual Chairmen/CEO’s.
The market’s slight pullback this week may have been much worse had the Cook and Dimon sentiment-boosting performances not helped to overshadow both the Bernanke “jitters” and some weak growth data coming out of China (where the preliminary Manufacturing PMI fell to 49.6 in May from 50.4 in April). (Barron’s)
The truly remarkable market story of the week, however, was Thursday’s impressive snapback rally. How often do the markets see all of a day’s 12-point decline in the Dow after a -7.3% sell-off in Japan’s Nikkei and European markets headed to 2% plus losses? Japan’s bond market remained “incredibly volatile” and “BOJ Governor Haruhiko Kuroda promised to monitor the volatile bond market and respond with flexibility in its bond purchases and market operations.” (CNBC)
A string of almost uniformly better than expected economic reports did not hurt Thursday, nor did Dow component Hewlett-Packard’s (HPQ) fairly stunning “14%-plus after hours surge.” (USA Today). Although HP’s earnings numbers were not all rosy, CEO Meg Whitman said, “We have a long way to go, but we are on track to deliver.” (Forbes) For the week, HPQ shares posted an advance of +13.8%.
Yahoo’s (YHOO) appetite for further acquisitions under Marissa Mayer also grabbed headlines, with Forbes calling the $1.1 billion purchase of Tumblr “a no-brainer for the Yahoo brand.” Not all market observers agreed with this assessment, and certainly not the “tens of thousands of Tumblr users signing a protest petition,” noted in the same Forbes article.
But hey, Yahoo did promise “not to screw it up” (Business Standard) and Tumblr’s founder and CEO David Karp greeted the announcement fittingly in a blog post by saying:
Our headquarters isn’t moving. Our team isn’t changing. As always, everything that Tumblr is, we owe to this unbelievable community. We won’t let you down. F*ck yeah, David. (theindependent.com)
According to a story at The Register, it appears “Mayer's buying spree shows no signs of abating,” with the further acquisition last week of gaming site PlayerScale (and its reported 150 million users worldwide). The story detailed Mayer’s aggressive strategy to have Yahoo “get younger”:
Since taking over the reins of the ailing web portal in July she has bought news aggregator Summly, mobile recommendations app Stamped, youthful video chat firm OnTheAir, and would have had DailyMotion if the French hadn't complained. At the start of the week she closed the deal with Tumblr for its 300 million users and at the launch on Monday explained what she was up to.
'Our users are older,' she acknowledged during a question and answer session, and Mayer knows it's a problem she's got to fix. There are 18 years-olds graduating from high schools across the land who weren't even conceived when Yahoo.com first went live on people's desktops and its core user base is aging fast.
Some other stories making news this week:
“Here's Why Wall Street Loves The Return Of P&G's Old CEO” --Business Insider on the return of former CEO A.G. Lafley, which prompted a 4% pop in Procter & Gamble (PG) stock.
“Goldman Sachs is taking an ever increasingly bullish view on the S&P 500.” --MarketWatch, on GS raising SPX targets for 2013-2015, according to a note dated May 20th:
We are raising our S&P 500 dividend estimates and index return forecasts for 2013 through 2015. We expect S&P 500 index will rise by 5% from the current level to 1,750 by year-end 2013, advance by 9% to 1,900 in 2014, and climb by 10% to 2100 in 2015.
Forbes reported on the big Microsoft (MSFT) news this week in a piece headlining, “Microsoft Throws Down The Gauntlet With Xbox One.” The piece expands on this theme, saying:
Microsoft promises the Xbox One will be more than just a game console, but a 'living room' with a TV tuner and cable box. Users will be able to switch between watching TV and gaming instantly through the Kinect device.
“It’s long past time to move on and talk about golf.” --Tiger Woods, taking a bit of the high ground in his ongoing very public spat with Sergio Garcia, who was roundly criticized for his “racially insensitive remark.” (Golf Channel)
And both Abercrombie & Fitch and hedge fund manager Paul Tudor Jones were on the “sensitivity hot seat.”
ANF’s CEO Mike Jeffries was being roasted for rather ancient remarks on the brand’s exclusivity and lack of larger sizes for women, having said in 2006 (!), the company markets to "cool, good-looking people." (HuffPost) A very funny rant by Ellen DeGeneres apparently helped bring the issue to the fore again, with Ellen wondering does Abercrombie’s “size double zero” mean “my butt is invisible?” (Huffpost)
Well-known investor Jones said at a University of Virginia symposium, “You will never see as many great women investors or traders as men. Period. End of story.” (ABCNews)
But all of these outrageous comments perhaps did not reach the controversial heights of words not spoken, as IRS official Lois Lerner “took the Fifth” in front of the House Oversight Committee. (CNN)
We will close it out there this Memorial Day holiday weekend, with our thoughts going out to the tornado victims of Oklahoma, U.S. veterans and current armed services personnel, and all of those affected by the Boston Marathon bombings.
An emotional "final mile" run was held Saturday in Boston, which USA Today covered:
On Saturday morning, about 3,000 runners and bombing victims gathered in light rain to run the final mile of the world's oldest annual marathon, said Kathleen McGonagle, spokeswoman for those organizing the event known as OneRun.
OneRun honors victims and emergency workers and allows runners to reclaim the final mile, McGonagle said. 'For the runner that didn't get the chance to finish the marathon, this is the chance for them to experience the final mile that was taken away from them,' McGonagle said. For many runners, it was also a chance to heal from the events of that harrowing day.
Have an enjoyable and safe Memorial Day. It will be quite interesting to see if the remarkable streak of the market's “Terrific Tuesdays” can continue in the upcoming shortened trading week.
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