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Apple’s Overture to Blackstone CFO May Presage Deals

Apple’s Overture to Blackstone CFO
Steve Jobs, chief executive officer of Apple Inc., speaks about the company's retail store in Shanghai. Photographer: David Paul Morris/Bloomberg

Apple Inc.’s approach to Blackstone Group LP Chief Financial Officer Laurence Tosi about becoming finance chief may be a sign Steve Jobs is ready to pick up the dealmaking pace.

Apple talked with Tosi about becoming its CFO, three people familiar with the situation said yesterday. Tosi told Blackstone Chief Executive Officer Stephen Schwarzman that he plans to stay put, two of the people said.

Tosi, 42, would have brought a background in corporate acquisitions. Blackstone, the world’s largest private-equity firm, made more than 30 purchases last year, compared with four for Apple, according to Bloomberg data. Apple’s profit has increased more than fourfold in the past three years, helping it amass a $25.6 billion cash pile that could be used for purchases.

“If you’re trying to hire someone whose DNA is deals, you’re signaling to the public markets that you’re considering changing your portfolio,” said Peter Crist, chairman of Crist/Kolder Associates, a Hinsdale, Illinois-based executive-recruiting firm that has conducted CFO searches for such clients as General Motors Co. and Sunoco Inc.

Steve Dowling, a spokesman for Cupertino, California-based Apple, said the company is “not conducting a CFO search.” Current CFO Peter Oppenheimer “loves the company and is extremely happy in his role,” he said.

Apple rose $2.39 to $336.12 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares climbed 53 percent last year.

Balance Sheet Management

A change in Apple’s top finance post would be the first since 2004, when the company appointed Oppenheimer, now 48, to replace Fred Anderson, who later co-founded private-equity firm Elevation Partners. Since then, Apple has become the world’s second-largest company by market value as its stock has surged more than 20-fold. None of the 55 Apple analysts tracked by Bloomberg rates the shares “sell.”

While Oppenheimer has drawn praise from investors for his management of the company’s finances, investors and analysts -- including Toni Sacconaghi of Sanford C. Bernstein & Co. -- have called on Apple to return some of its cash to investors in the form of a buyback or dividend.

“They have been managing the balance sheet well,” said Giri Cherukuri, a portfolio manager at Oakbrook Investments LLC in Lisle, Illinois, which holds Apple shares. “They have had a lot of products and the cash position has growth, and they are being smart about spending that money wisely.”

‘Strategic Opportunities’

Jobs, Apple’s 55-year-old CEO, said in October that the company has a good track record of using its cash and is reserving it for one or more “strategic opportunities.”

Oppenheimer, who has been with Apple since 1996, didn’t respond to a request for comment. Christine Anderson, a spokeswoman for New York-based Blackstone, declined to comment.

Apple’s holdings of cash and short-term investments climbed to $25.6 billion as of Sept. 30 from $15.4 billion three years earlier. When including long-term holdings, the amount is $51 billion.

A new CFO would have “a lot of money to spend,” Cherukuri said. “They have a big cash pile that you need to decide what do with.”

The finance chief at an electronics maker such as Apple would also have to handle such complicated tasks as managing a manufacturing supply chain. That mastery would only come from experience at another technology hardware company, said Brian Marshall, an analyst at Gleacher & Co. in San Francisco.

Apple’s approach to Tosi is therefore a “head scratcher,” Marshall said.

‘Surprising Development’

Apple furthermore doesn’t make the kinds of expensive acquisitions that take the company into new businesses and might necessitate a change in the top finance job, he said.

“This is certainly a surprising development, considering the financial performance of him and his team,” said Marshall, who has interviewed Oppenheimer as part of his work for Gleacher, an investment bank.

With a market value of $306.1 billion, Apple is second only to Exxon Mobil Corp. among the world’s largest publicly traded companies. Blackstone has a market value of $16.4 billion, after a 7.9 percent increase in its stock price last year.

At New York-based Merrill Lynch, which was the largest brokerage and third-biggest U.S. securities firm before its 2009 acquisition by Bank of America Corp., Tosi served as chief operating officer of the trading and investment-banking division. A graduate of Georgetown University with a law degree and an MBA, Tosi joined Merrill in 1999 from CNBC, where he was head of business development.

Oppenheimer joined Apple from Automatic Data Processing Inc., where he was CFO of one of four strategic business units. Before that, he was a consultant at Coopers & Lybrand LLP. He holds a bachelor’s from California Polytechnic University, San Luis Obispo, and an MBA from the University of Santa Clara.

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