When Apple shares were plunging amid a broad market rout yesterday, Apple CEO Tim Cook penned a short email to Jim Cramer, host of CNBC’s “Mad Money,” to provide reassurance about Apple’s business in China. The shares promptly rallied. It’s not always that easy to quell a panic, but there are a few important lessons here.
It’s Apple’s business of course to make difficult things look easy. But that usually applies to its phones and tablet computers, not gyrations in its stock price.
Apple shares are down about 20 percent in the past month and had fallen another ten percent on Monday before Cook’s announcement. It rallied to end the day 2.5 percent lower. In just a few short paragraphs, Cook’s email restored some $80 billion in Apple’s market value.
When you’re the most valuable company on the planet and a widely held stock, what your CEO says gets special attention. That’s one lesson from Cook’s email. The other is that a timely morsel of communication can be very effective.
For most companies, making a comment about the business outside of a scheduled earnings announcement is an arduous and heavily lawyered process. The resulting statement usually is vague and does not do much to calm the market.
It was a smart bit of crisis management by Cook, who is fond of tearing up the standard communications playbook from time to time. (Recall, for instance, his personal and candid essay in BusinessWeek about his sexual orientation.)
His message had enough substance to be credible and a tone that was positive but measured. Above all, it was brief and timely, coming early in the trading day.
(Interestingly, Apple hasn’t yet filed Cook’s email as an 8-k with the SEC as would be expected when material information is conveyed. It’s possible Apple violated SEC rules on fair disclosure by not promptly informing all market participants.)
Will emails from CEOs to prominent journalists become the norm? Not likely. But Tim Cook showed how useful they can be in just the right circumstance.
Here’s the full text of Cook’s email to Jim Cramer:
“As you know, we don’t give mid-quarter updates and we rarely comment on moves in Apple stock, but I know your question is on the minds of many investors.
“I get updates on our performance in China every day, including this morning, and I can tell you that we have continued to experience strong growth for our business in China through July and August. Growth in iPhone activations has actually accelerated over the past few weeks, and we have had the best performance of the year for the App Store in China during the last 2 weeks.
“Obviously I can’t predict the future, but our performance so far this quarter is reassuring. Additionally, I continue to believe that China represents an unprecedented opportunity over the long term as LTE penetration is very low and most importantly the growth of the middle class over the next several years will be huge.”