The Forbidden Apple: NY Times Reports on Company Secrecy

The New York Times has a feature article on Apple corporate culture and secrecy that is both fascinating and a little disturbing. It also may raise questions about how Apple handled the disclosure of Steve Jobs’ illness.

Regarding corporate culture, the New York Times illustrates just how secretive Apple can be, describing multiple checkpoints for those working on top-secret projects, and security that doesn’t end at the cubicle, either.

Work spaces are typically monitored by security cameras, this employee said. Some Apple workers in the most critical product-testing rooms must cover up devices with black cloaks when they are working on them, and turn on a red warning light when devices are unmasked so that everyone knows to be extra-careful, he said.

Does anyone else think this sounds like something out of a Half-Life expansion? Of course, internal security is just part of the equation. The other side, the public one, includes actions like providing analysts with potentially misleading statements. Gene Munster of Piper Jaffray describes the company as a “a total black box,” relating the story of a senior Apple executive who told him four years ago that Apple “had no interest in developing a cheap iPod with no screen.” This was shortly before the iPod Shuffle was unveiled.

Less oblique have been Apple’s efforts to deal with leaks, not just those who reveal information, but those who publish rumors. The story of Think Secret and the “Asteroid” breakout box for GarageBand, in which Apple sued and ultimately lost, is related. Of course, as part of the settlement Think Secret was effectively shut down, and a lot of other rumor sites were effectively shut up.

This is not to say there is anything wrong with the culture of secrecy at Apple, except possibly relating to Steve Jobs’ health issues. The New York Times cites divided opinion as to the amount of legal disclosure required, noting that day-to-day operation of the company had been handed off before Jobs’ leave of absence for a liver transplant. However, Cult of Mac interviewed Paul Argenti, Professor of Corporate Communication, who did not hesitate to give his opinion.

“The difference between a nutritional imbalance and a liver transplant is huge,” said Prof. Argenti to CoM by phone. “If this is not a legal issue and a Regulation FD issue, I don’t know what is.”

“The law is very clear — full disclosure of material information,” said Argenti. “If a CEO’s liver transplant isn’t material, what is? But whether the SEC has the balls to do something about it, we’ll see.”

What Professor Argenti does not go on to to say with his colorful use of language is that the SEC is ultimately tasked with protecting shareholders. Barring any breaking of actual law, in the coldest fiduciary terms the question then becomes whether Steve Jobs’ actions increase or decrease company value. Apple stock was valued at around $85 a share in January when he left, and is now approximately $135. Does anyone really see shares of Apple declining now that Steve Jobs has returned?

For Apple, the bet on secrecy is one that always seems to pay off.


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