Apple's New CEO Reports to a Board Chaired by His Predecessor
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Apple's new CEO reports to a board chaired by his predecessor.
Yesterday was John Ternus’ first official day as CEO. He joined the product design team in 2001 on the Cinema Display and spent 25 years building hardware. Craig Federighi, who runs software engineering, was long considered the front-runner.
So the board answered a software challenge with a hardware engineer.
Apple pays Google roughly $1 billion a year to license a custom Gemini model that powers Siri. That dependency is the binding constraint on the next five years, and Apple does not own it.
On hardware execution, he's proven. He led the engineering for the Mac's exit from Intel. Announced in June 2020 on a two-year target, first M1 five months later, full line closer to three.
On software and artificial intelligence, he's untested. On capital allocation, he's unproven. Apple returns roughly $100 billion a year to shareholders, and its largest acquisition ever is still Beats, at $3 billion in 2014.
Arthur Levinson chaired Apple's board for 15 years as an independent director. Today he becomes lead independent director, and Cook becomes Executive Chairman. Apple swapped an independent chair for its former CEO on the day the Ternus started.
At Eagle Talon, we read a succession against three things.
1. Fit of the leader to the pressing challenge.
2. What the board actually decided.
3. The authority the handoff transfers. Ternus is a partial fit on the first. The second and third both point to continuity, with Cook present on the board.
Two things would change my read, either one inside Ternus's first four quarters. A material step-up in capital spending for artificial intelligence. Or an acquisition bigger than Beats. Either one means the board wants a change of direction. Neither means it wants continuity.
Would you rather Ternus break with Cook’s strategy during year one, or prove he can run Cook's playbook better than Cook did?
🔗 Source: John Ternus to Become Apple CEO
