WSJ
"Designed by Apple in California" is a slogan familiar to anyone who has unwrapped an iPhone. But the U.S. technology giant's recent moves underscore its increasing dependence on overseas markets to fuel growth.
On Tuesday, Apple announced that Chief Financial officer Peter Oppenheimer will retire after a decade in the post. His replacement is Luca Maestri, who joined the company only a year ago after a two-year stint as the CFO of Xerox. He also boasts a long career of deep international experience at companies such as Nokia Siemens and the overseas divisions of General Motors. Apple took pains to emphasize both Mr. Maestri's overseas resume and the "seamless" nature of the transition, and it is noteworthy that the company chose to handpick an outsider rather than promote from within.
This came a day after The Wall Street Journal reported that Apple is in the midst of a hiring burst in Asia, luring engineers from companies such as HTC to speed up development of devices like the iPhone and iPad. Sources told the Journal that Apple's operations staff and engineers in China now exceed 600. China has gone from being less than 5% of Apple's quarterly revenue at the end of 2009 to 15% in the last three months of 2013.
Apple today is a much different company from the one it was when Mr. Oppenheimer took the CFO job. In fiscal 2004, Apple was primarily a computer company with nearly 60% of its $8.3 billion in revenue coming from the Mac. By fiscal 2013, which ended in September, revenue had increased more than 20-fold, with the majority of that coming from the iPhone. Mac sales were less than 13% of fiscal 2013 revenue.
But while Apple has become a global force, business in its own backyard has slowed. In 2004, nearly half of the company's revenue came from its Americas segment, and 84 of its 86 retail stores were located in the U.S. Now, the Americas segment constitutes about 37% of revenue, and 40% of its retail stores are in foreign countries. Revenue in the Americas segment actually declined by 1% year over year in the company's most recent quarter. And don't forget that about 78% of the company's $159 billion cash hoard now sits offshore.
A growing number of investors believe Apple has become a slow-growth tech giant that should milk its cash machine. So it is no surprise that the company is beefing up the foreign ranks of its workforce and its executive suite in an effort to capitalize on markets with better growth potential.
Ultimately, though, Apple's future rests on its ability to keep spinning up new gadgets that customers will want to pay top dollar for—no matter where they live.
Write to Dan Gallagher at dan.gallagher@wsj.com
