Apple crisis another test for Cook

Tim Cook’s tenure at the helm of Apple has been a crash course in crisis management.

In almost two years since Cook became CEO, Apple has lurched from one reputation-threatening public- relations predicament to the next — from criticism of its labour practices in China, to faulty mapping software that marred the release of the iPhone 5.

Cook yesterday testified before the US Congress to defend Apple against allegations that it dodged $9bn (€6.96bn) in taxes in 2012. In two hours of testimony, Cook calmly parried questions from a Senate subcommittee, urged reform of the US corporate tax code, and even shared a laugh with Senator John McCain about the hassles of iPhone updates.

Even so, continually coping with crises threatens to divert management’s attention from building better products and reversing a share slump.

The accusation that Apple shifted billions of dollars to offshore affiliates to avoid paying taxes threatens to alienate consumers, said Jack Ablin, chief investment officer of BMO Private Bank in Chicago.

“There is a reputation risk,” Ablin said. “Being in the news, testifying before Congress and sound bites about avoiding billions of dollars in taxes has the potential to ruffle their customers’ feathers. This issue is on the front page, not the business page.”

That helps explain why Cook went to Washington to face questioning by the Senate Permanent Subcommittee on Investigations, which said that Apple relied on loopholes and a web of offshore entities to avoid paying US taxes.

“It’s important to tell our story — and I’d like people to hear it from me,” Cook said in testimony. “We pay all the taxes we owe — every single dollar.”

The remarks exemplified how Cook has handled other crisis — quickly and personally — when they crop up for Apple.

Cook is attempting to put a fresh public face on Apple after the 2011 death of Steve Jobs, said Regis McKenna, a marketing consultant who worked with Apple through several crises in the past.

“The company has put its mark on so many social and economic aspects of life,” said McKenna. “It’s a huge, huge job. I think he’s the right person for the moment.”

— Bloomberg