Markets

Apple Fails to Mention Steve Jobs' Death in Annual Report

By Jim Edwards

Updated on: October 27, 2011 / 9:54 AM EDT / MoneyWatch

Just 20 days after Apple founder Steve Jobs died, and it's as if the guy never existed, if you listen to the company's corporate finance department. The death of Jobs -- mourned worldwide by consumers, competitors and colleagues alike -- was not mentioned in either the company's Q4 2011 earnings release on Oct. 18 or, more seriously, in its annual 10-K report to the SEC, filed last night. Apple's failure to mention the words "Steve" or "Jobs" in its year-end regulatory disclosure is all the more bizarre for three reasons:

It was, again, a banner year for the company based on products planned or approved by Jobs himself. The company had net sales of $108 billion, up from $65 billion the year before, on vastly improved sales of iPhones and iPads.
Apple's management risk disclosure states that "Much of the Company's future success depends on the continued availability and service of key personnel, including its CEO, its executive team and highly skilled employees." Both official SEC earnings releases mentioned new CEO Tim Cook by name. Jobs was still officially Apple's board chairman when he died. He only resigned as CEO in August this year.
This is a technicality, of course. Apple has venerated the memory of Jobs aplenty, with store closures, an unprecedented homepage pre-emption, and an Oct. 19 memorial event at the Cupertino, Calif., HQ. But there's also a legal requirement that companies disclose to the SEC material events that may effect their performance. The death of a founder, recent CEO, current chairman and spiritual inspiration ought to count as such.

Cook, no doubt, knows he has massive shoes to fill. It was well-recognized that Jobs was as much a marketing genius as he was a visionary new product developer, but the 10-K puts some hard numbers behind that: Over the last three years, Apple's ad budget has grown to almost $1 billion a year, from $501 million in 2009.

At many companies, that adspend would lead to inefficiency, bloat and waste. Not at Apple. As this chart shows, Apple's ad budget has become 36 percent more effective since 2009. Every single dollar spent on ads by Apple now returns $116.02 in sales:

That's a staggering result. (For comparison, most drug companies struggle to get more than a $3 return on their entire marketing spend, and they have legal monopolies on individual chemicals.)

It stands as a testimony to Jobs the corporate strategy genius. Surely it was worth a mention in the company's official year-end coverage?

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