Apple’s $1 Billion Profit

Did someone forget to tell Apple CEO Steve Jobs that we’re in a recession.

Companies are laying off. Food prices are escalating. You know about gas prices. GE missed its numbers. Home sales are down. Times are bad.

But Apple just released its second quarter profits and they’re up again on strong Mac sales (50 percent increase).

That can’t be.

Who buys a Mac when gas is almost $4 a gallon and the economy is starting to hurt?

Well, whoever they are – Jobs found them. I made my donation this quarter when I replaced my laptop with a new MacBook Pro.

Jobs makes a lot of money with stock options and I am sure he deserves every bit of it – as long as he continues to perform for his shareholders. At $162 a share -- he is meeting or exceeding expectations.

In the radio industry, top CEOs get rich as their companies tank each quarter. It makes no sense.

Farid "FaGreed" Suleman empties out the coffers of Citadel to the tune of $11 million in 2007 salary and his taxes are paid by the company. Al Liggins over at Radio One is commanding retroactive pay raises and bonuses and his stock is in the dumpster. I could go on, but you already know.

Citadel closed at 126. No, not $126 a share. They wish. But $1.26 -- that's spelled one dollar and twenty-six cents.

Radio One $1.06 a share.

I know. They're not in the same sector. Not fair to compare Apple with oranges (or should I say, lemons?)

The record labels are also in never-land and their very top officers appear to be insulated from the bad job they are doing adapting to the digital age. It’s almost as if they are arrogantly saying to everyone, “let them eat vinyl”.

There are other differences between a company that performs and one that does not.

Growth companies grow their ranks. They hire people instead of fire them – unlike the radio and records industries. I know some argue that companies like Verizon and AT&T cut payrolls, but they are hardly the example that Apple sets.

While the labels and consolidators are trimming salaries, Apple hires. Ever go into an Apple store and have to wait very long to be approached? Young sales associates descend on you like locusts in Utah. And they're happy. How is this possible? Happy?

Apple also knows what music-related media companies should learn – that meaningful long range planning delivers performance. Not quarter by quarter tap dancing.

Jobs didn’t come up with the Apple Air from panic. It’s part of a well-orchestrated schedule of planning to keep generating revenue as evenly as possible. Unlike radio and records which waits until the red ink is bleeding from their bottom lines, Apple continues to develop products and services according to a plan.

What is radio’s plan?

Cut personnel?

Raise CEO salaries?

Use more national programming to replace local shows?

Promise its investors that things will get better – every three months?

Apple defies the economy but some of the stumble bums running the media business frankly think planning ahead is reserving NetJets for their next trip.

If you’re wondering why the mighty radio industry and the all-powerful record industry can’t seem to get its groove back, look no further than the man at the top.

No vision.

Inadequate long-range planning.

Failure to invest in critical assets – like people.

I’m not saying that Apple is perfect. What is impressive is that the CEO sees things like this and adapts to the marketplace:

1. The eventual decline in iPod sales someday – so Steve Jobs gets into the mobile phone business with cool devices. In fact, the first successful year of the iPhone isn’t enough to sustain growth on the popular model he first introduced which is why you’re likely to see an iPhone with push technology and maybe even a flip down keyboard to compete with the Blackberry. You can’t expect momentum to continue without planning.

2. Computers are beginning to get long in the tooth – so Jobs develops smaller, more powerful or even lighter ones. Remember a lot of Apple’s quarterly growth came from Mac sales. Computers! Someone had to see computers as a growth market when just about every other company did not. Dell hasn't been able to.

3. Personal hand-held devices that are not phones – so word is that Apple is looking at producing a modern day version of its pioneer Newton. Treo doesn’t look like it is setting the world on fire. Certainly not Palm. What does Jobs think he knows that the others don’t?

This brings me back to radio and records – two businesses that never change -- and therefore do not plan ahead.

So, let’s look at some big opportunities:

1. Podcasting fits the M.O. of the next generation – so radio CEOs stay away from that business. Instead they think some new youth format will come along to save the day. It won’t. I think they’re even believing their own PR that HD radio technology will be the new radio. What would Jobs do? Invent the genre. Determine what a podcast was going to be, come up with a new way to market it and then hire the people to develop it.

2. Mobile content has been hard to develop by manufacturers of cell phones – so radio sits by while a big market waits for radio’s talent and marketing skills to be used. Just because it doesn’t air on a terrestrial signal is no reason to think terrestrial talent cannot supply content to mobile users – better content than is now offered.

3. Internet streaming is the hottest thing around – so what do the record labels do? Discourage growth by imposing unfair royalties on the entrepreneurs who are revving up the market segment. And what does radio do? Broadcast their existing terrestrial streams online when an opportunity to innovate for the first time in 25 years comes screaming at them.

So, tip your hat to Apple for an amazing accomplishment.

You don’t break records in the midst of a serious economic downturn without having the courage to do the opposite of what the losers are doing.

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