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Last week highlighted iPhone sales at Apple (AAPL - Analyst Report), leadership concerns at Microsoft (MSFT - Analyst Report) and leadership compensation at Cisco (CSCO - Analyst Report).
Apple Beat Samsung in September
Despite indications that Apple has become less innovative, the company appears to have played some cards right. A recent report from Canaccord Genuity indicates that Apple’s iPhone 5s and 5c models have both done very well at U.S. carriers. The report says that the 5s was the top selling device at all the big carriers: AT&T, Verizon, Sprint and T-Mobile. While the S4 from Samsung came second at Verizon and T-Mobile, it dropped behind the 5c at the other top carriers.
So what is Apple up to? The 5s model was a hit from the get-go, especially the new gold version that far exceeded Apple’s own expectations. The 5c, which had a shaky start, was helped by heavy discounts on trade-ins. The credits received for the trade-in could be used to buy a 5c. It is possible that as the trade-ins continued at Apple, Wal-Mart and RadioShack, carriers were driven to discount the product in order to push inventory.
iPhones have good resale value and Apple can sell the devices in emerging markets.
Cisco Rewards John Chambers
Cisco just more than doubled its CEO compensation, taking John Chambers’ pay from $375,000 to $1.1 million. Chambers also got $15.2 million in stock awards for fiscal 2013, up from the $7.3 million that he earned for fiscal 2012. The company said that growth at Cisco and the lack of compensation revisions since 2008 warranted the distribution.
Cisco has been a huge innovator with significant market share and cash flows. The company is currently in a transition of sorts as its core hardware business has fallen prey to new-age software defined networking (SDN).
Cisco has a plan in the works and is also likely to make strides on the Internet side of things, but the going could be rough in the near term. In the last quarter, the company managed to beat expectations, but a significant job cut saw shares plunge. Cisco intends to reallocate resources to faster-growing areas, but it’s obvious that all is not well.
Gates Could Win the Confidence War
Microsoft is undergoing a metamorphosis to emerge as a devices-and-services company. The last few months have seen great upheaval, as the operating structure was reorganized, a devices and services strategy framed, Nokia’s handset business brought in-house and Ballmer’s retirement announced.
Microsoft has reigned supreme in the PC market, but its mobile efforts have failed miserably. With the PC market giving way to tablets and smartphones where Microsoft has had next-to-no success, its Windows franchise is at stake. Its S&T and business solutions remain in strong demand and Microsoft is banking on this success to build a position in mobile.
Given the amount of change the company is seeing, it is necessary that there is a steadying influence. Irrespective of the fact that Gates is reducing his holdings in the company, the founder remains a good choice to complement the efforts of a more dynamic CEO.
Additionally, Ballmer and Gates together hold a significant percentage of the voting power, so it would take an overwhelming opinion against them to remove Gates. This does not look likely, since Gates retains some clout.
The Board has recommended Ballmer and Gates for re-election to their current positions and shareholders will vote on Nov 19.
Other stories you may have missed -
Icahn Talks to Cook: Last week, activist investor Carl Icahn met with Apple CEO Tim Cook to discuss a $150 billion share buyback program. While no plan was announced, the discussion itself raised hopes and Apple shares jumped. Investors have for some time felt that Apple should distribute some cash. The company generates very solid cash flows and Moody’s estimates that it now hoards 10% of all corporate cash.
Cisco and Facebook Tie Up to Offer Free Wi-fi: Cisco and Facebook (FB - Analyst Report) have entered into an agreement to provide free Internet access for customers entering a store. The customer has to sign in to Facebook after entering the store’s Wi-fi zone in order to enjoy free Internet access. Facebook will then display the store’s promos/ads. Cisco will provide the networking gear and Facebook the traffic. The store will pay for Internet access.
Intel Launches Galileo: Intel (INTC - Analyst Report) recently released a development board called Galileo, powered by its newly-launched low-power Quark chip and supported by the Arduino software development environment. The board is available to the do-it-yourself community and in order to spur innovation, Intel is giving away 50,000 units to 1,000 universities over one and a half years. Similar boards from ARM are priced lower than the $60 Intel intends to charge starting November.
Yahoo Sued Over Email Scanning: Yahoo (YHOO - Analyst Report) users have filed a case against the company alleging that it scanned email content to push targeted ads. The case is currently seeking class action status and regulatory bodies are not likely to take it lightly. Google has been charged similarly and its plea to dismiss was recently set aside by Judge Lucy H. Coh in San Jose, CA.
Google Adds Hulu Plus to ChromeCast: Google’s (GOOG - Analyst Report) $35 dongle has been a runaway success, being sold out at Amazon.com, Best Buy and others soon after it launched in July. It became a top-selling product on Amazon last week. Google has now added Hulu content to Chromcast, which is in addition to Netflix, YouTube and Google Play that existed from the start. The promised addition of Pandora has not been announced yet.
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