Today you will hear about Apple’s (AAPL) problems, and chances are the company’s stock will suffer a significant loss (and so will my current trade on Apple). How do I know? No, I don’t have a crystal ball and did not consult a psychic of any kind. But if you have been anywhere near the Internet or news media in the recent hours, you know that Steve Jobs, Apple’s CEO, announced that he will be taking a leave of absence for the second time because of health problems. It remains unclear how serious the issue is and how long Jobs will miss, and out of respect for him we will restrain from speculating over what the issue is exactly. Suffice to say that he will be out for some time.
The 'Jobs Premium'
It’s not a surprise to see the stock suffer losses, it’s unfortunately not the first time that shareholders have lost money as scared investors sell their shares. How much are we talking about here? No, it’s not just a few dollars. While the announcement was made in the U.S. on Monday, the markets were closed because of the Martin Luther King holiday. However, Apple also trades overseas and the stock lost 8% of its value on German stock exchanges. 8%… is that big? Just to put it into context, 8% represents over $25 billion.
Click to enlarge
Is Steve Jobs Worth $25 Billion?
The truth is that no company has as much of its value dependent on its founder. HP (HPQ) suffered a big loss last year when Mark Hurd was ousted from the company, but it doesn’t even come close to Apple’s situation. If $25 billion is wiped out because Steve Jobs will not be running day to day operations for some time, imagine if he could not help at all, was seriously ill or even worse? It’s easy to imagine the stock continuing to drop much, much lower if things get worse. Why? There are so many different reasons but Jobs is seen as the force behind the return from the dead of Apple over a decade ago as he led the force that saw the different iPod models, the iPhone, new Mac lines and the recently launched iPad. All of these products have been wildly successful but also have been seen as extensions of Jobs’ innovative mind and his vision of the market not for what it is but for what it can be. Is he the only person capable of running day to day operations? No, of course not. And many, including myself have said what they would do if they were CEO for some time.
There Is No Way to Replace Jobs, Though ...
It does not seem like anyone could even have a shot at replacing Jobs. The founder inspires workers, executives and even customers. How can you not admire a man who does what he is exceptional at, working for a salary of 1$ per year, all for the sake of making Apple the best at what it does. Steve Jobs also has the power and connections to take Apple in whatever direction he deems necessary and that has always been the right one in recent years as he was the captain that led Apple to the very top of the tech space. No other tech executive (or any other executive for that matter) is as important to a company as Jobs is to Apple.
No Short Term Impact
That being said, it is important to know that Steve Jobs’ replacement, Tim Cook, will be more than able to take Apple in the coming months for its upcoming iPad2 and iPhone5 launches in the coming months. Those will be wildly successful and will generate even more cash for the already rich Apple. The upcoming arrival of the iPhone on Verizon’s (VZ) network will be a great day for Apple shareholders and give the company even more market share and power in the smart phone market.
But What Happens Next?
The bigger issue is what comes next. It’s unclear what Apple’s plans for the next few years are, but Tim Cook is likely not ready to take Apple in risky directions as Steve Jobs has been so good at doing. Can Apple remain the leader if it loses a lot of its innovation?
Let’s Not Panic Just Yet
The reality is that while we do not know when Steve Jobs will return, nothing indicates that he will not be back (apart from rumors which were expected). And it’s critical for shareholders and Apple employees and customers to remain calm and keep their hopes high. Steve Jobs will be back and will continue to assist current management in taking the company in the right direction.
Disclosure: Long Apple.
No comments:
Post a Comment