Time to Stand Up for Steve Jobs
Why would anyone own Apple (AAPL) shares knowing that Steve Jobs' health may be in jeopardy? As Apple reaffirmed its official stance that the health of the company's CEO is a private matter, investors pushed Apple stock down into the $150s. As the potential health issue lingers, unanswered, will the stock continue to drop?
Here are two factors propelling long-term investors to not only hold through the short-term uneasiness, but to actually buy more shares on the dip:
1. Occasionally, someone builds a platform that lives on. The Mac operating system, which was fortunate enough to survive the era of Microsoft dominance, provides the Mac computer and the iPhone with a barrier to entry 100 stories high. Even if a new competitor came along and released a superior operating system, it would not be able to penetrate the market. Microsoft did such a good job of building a platform monopoly that it is a miracle the Apple OS even exists. Apple's cult-like following in the 80's and 90's kept software developers around during the lean years. Without software, an OS platform is irrelevant. This platform is why the Mac isn't just another computer and why the iPhone isn't just another gadget.
Mr. Jobs has built an economic moat around Apple that will flourish for years to come. Microsoft (MSFT) has owned the last 25 years, and Apple is poised to be the next Microsoft-only bigger. Not only does Apple produce the OS, it also produces the hardware for a generation built on technology. Twenty years ago, technology was a luxury, now it has evolved to become a worldwide necessity. Apple is ideally positioned to take advantage of the tech revolution. When analyzing Apple, the OS platform is the most important aspect of the company. It insulates them from short-term competition.
2. If there is anybody who deserves space, it is Steve Jobs - he's earned it. I've read every bit of Apple commentary over the last few days and it shocks me that nobody has stood up for the guy. Ignorant writers assume that his company is a one hit wonder that will wilt away once he is gone. I'm sorry but it's time to accurately report what this man has accomplished over the last ten years.
It's time to show some compassion in a world full of greed, greed, and more greed. I know that sounds naive, but every once in a while it wouldn't hurt to do the right thing. Let Mr. Jobs have some space. Investors have made too big a deal of his health and not a big enough deal about the one million iPhones that sold out in on opening weekend. This disconnect has created a classic buying opportunity.
These are the two reasons why I haven't sold any Apple shares over the last week, and why I've actually bought more on the dip. Ridiculously, his health scares investors like some kind of terrorist attack. This is an overreaction. Those still holding Apple shares understand the risk but also understand that any short-term drop due to Steve Jobs' health will quickly rebound because of the enduring strength of his company.
Disclosure: Long AAPL
Get Seeking Alpha Free Stock Alerts by Email!
Get Free Stock Alerts by Email!
ETFs In Focus
-
Editor's Picks
-
Most Popular
- Cap-and-Trade in the U.S.
- Of October CDS Auctions and Helicopter Ben
- Big Troubles for the Euro
- Asset Securitization Crisis: The Butterfly Effect
- @VIC: Top Hedge Fund Picks
- Can Google Reach Its Pie in the Sky?
- Full list of Editor's Picks »
- 36 Opportunities for the Beginning of the Bull »
- 25 Cash Cows to Ride Out the Storm- Barron's »
- 3 Stocks That Are Begging To Be Bought »
- iPhone Sales Drastically Surpass Q4 Consensus; Apple Reaches 10m Goal »
- Cramer: Dow Could Drop Another 14%, Oil's Going to $50 »
- Iceland: When Too Big to Fail Becomes Too Big to Rescue »
- Big Tech Prepares for Big Layoffs »
- Cash Position Best for Apple Investor »
- Why Is Everybody Selling as Buffett Is Loading Up? »
- Fannie and Freddie Did Not Cause This Crisis »
- The Cramer Crash? »
-
Long Ideas
-
Short Ideas
-
Cramer's Picks
- Attractive Values - Fast Money Recap (10/7/08)
- Another Analyst Likes Capstone
- Dell Looks Cheap
- @VIC: Jeffrey Schwartz of Metropolitan Capital Advisors- Taking What the Defense Gives You
- Fear, Panic & Opportunity in the Markets
- Borders: Interview with CEO George Jones
- Five Investment Principles To Remember Now
- Yesterday's Market: Advantage, Bulls
- Two Currency ETFs For the Resurgent Dollar, Yen
- Unintended Consequences - Fast Money Recap (10/6/08)
- Full list of Long Ideas »
- Michael Page International: Stock Down on Market Weakness
- Gaming Stocks Still a Poor Bet - Barron's
- After Coming Rate Cuts, Some Appealing Short ETFs
- M/I Homes: Common Share Price Perplexing
- Trading ERO This Week
- Talk Me Down From the Wells Fargo Ledge
- SKF Regaining Its Old Form?
- Continuing Haircut in DST's Investment Portfolio
- Fortis and Bradford and Bingley Banks Thrown Lifelines
- The Short Case on KBH Homes
- Full list of Short Ideas »
- Chocolate Lover - Cramer's Mad Money (10/7/08)
- Yield is King - Cramer's Lightning Round (10/7/08)
- Goldman Disses Solar - Cramer's Stop Trading ! (10/7/08)
- Time to Hoard Cash - Cramer's Mad Money (10/6/08)
- Buyers On Strike - Cramer's Stop Trading! (10/6/08)
- Still Bullish on RIMM - Cramer's Lightning Round (10/6/08)
- The Cramer Crash?
- Cramer: Dow Could Drop Another 14%, Oil's Going to $50
- Musical Chairs - Cramer's Mad Money (10/3/08)
- Not Much to Recommend - Cramer's Lightning Round (10/3/08)
- Full list of Cramers Picks »
Trading Center
Hedge Fund Jobs
Job Seekers: Search jobs by category, get job alerts by email or live feed, apply online See full list of jobs »
Employers: See all recruitment options, get applications online or by email Post a job »
This article has 37 comments:
Watching
a job?
Only I refuse to work for $1 per year. I'll have to have at least $2.
Effect
Many more fantastic innovations will come from the masterminds behind the doors @ AAPL. Apple is a tech LEADER not a follower or copier and that mindset has FINALLY paid off and paid off BIG TIME!
To be honest, even though MobileMe was EH HEM anything but a smooth launch it should serve Apple well into the future to learn and grow from the experience and make them a tad more humble. THEY WILL IRON OUT THE KINKS>They will make it happen.
So in closing Jason Thank You. Thank You VERY MUCH for having the gajungas to speak your mind and for ONCE telling the TRUTH.... A very rare occurrence in this day and age of the dimwitted half baked less than true analysis spin on APPL.
iJah420 smiles today because of Jason Schwarz.. Cheers!
I dont think I can name a company who is so clearly identified with its CEO. That is not the responsibility of Wall Street. This is a guy who is treated with bona fide celebrity. Apple has done very well on the strength of Steve Jobs personality...but there is a downside.
As for purchasing more Apple stock- I'm in the enviable position that any additional purchases at this point would nearly exponentially increase my average cost of shares. Wow, even my "problems" are a testament to the wealth and value Mr Jobs has created for me.
To be honest - a lot of market manipulation going on. Whisper campaigns. I am long on apple - and will continue to be so. Look at it this way - Apple stock is on sale !!! Now is the time to jump in.
Job's health is not a private matter.
He is the CEO of a public company, and reportedly has not reported major health issues to his board in the past during a previous health scare. If true, that's dubious ethics right there. As is the whole reported options backdating issue. If the market is skittery on his behavior, it's no wonder. There's been a deliberate lack of transparency into many aspects of Apple's business operations.
Add to that an apparent lack of succession planning (tell me who you think could step in and replace Jobs from the current management? I'm not seeing anyone. Ive has never run an org larger than a handful of artists, Mansfield lacks vision, Cook is great at execution but could not be described as a businessman, Serlet has execution problems, Schiller is a marketer without the tech savvy, perhaps the only possibility is Fadell). A group of SVP's mainly promoted beyond their abilities. A lack of execution.
For example iPhone 3G was a year after iPhone, one real tangible new feature (3G on a battery hogging infineon chipset), a $50 price bump $450 vs $400 with the $10 AT&T digital plan price hike. Have you upgraded an iPhone to the new software? That's been fraught with problems, and nothing in the press. Imagine if M$ or intel released such shoddy work.
Macbooks are appalling in terms of quality. The one I'm typing this on does not sleep approx 20% of the time. Close the lid, go home, battery dead. Fans stuck on. Screen does not come back. Quality issues?
Apple without Jobs takes a 50% stock price hit. Sorting succession will be a key issue. Execution ability will become a key issue (it's ignored currently).
Therefore Job's health is no longer a private matter. He cultivated the cult of personality. He made this all about him. Them be the consequences.
Cook is great at execution but could not be described as a businessman,
He's a great businessman, I meant to write technologist.
but not to the die hard investors.
I know someone that reads charts, but I don't listen. I'm into AAPL
for the long haul. I've been in technology since the 70s, and there
ain't nobody can tell me to sell my AAPL shares. They are golden.
Sell the stock of a lifetime so you MIGHT avoid higher taxes on the sale? That's like turning down a raise so you don't have to pay more taxes on the extra money, i.e. DUMB.
Investor
OS: author doesn't understand a thing. Current Mac OS is build on BSD Unix. Yeah, all eye candy is produced (and copyrighted) by Apple. But kernel is available to anybody. And competing OS exists: Linux. It's right in the datacenter near you (think Google). It's in your wifi router. It's in millions of computers, most of which were initially sold with Windows (I own one, there are about a dozen in the small network I manage and I know a lot of people owning some). And currently there are more developers for Linux than for Mac OS (oops!). Just take a look at sourceforge.net
Apple's strength is in excellent products, which combine great design, great functionality and great hype. Without Steve Jobs, Apple is going back into gray products. Not at once, but in several years for sure.
I wish Steve Jobs best health. I hope he has a lot of years of creative life ahead. But investments are not build on hope. That's why I'm trimming my Apple position now.
Disclosure: long Apple.
Grime
The problem for Apple seems to be that, having once pulled back from the brink(though the death-knell arguments were never very convincing), that they are now ripe for media destruction all over again, only to miraculously rise phoenix like from the ashes of the bonfires built by the media pundits themselves using the strawman argument.
I see a rocky road for Apples share price despite their present unparalleled good governance. It's almost as though Apple is expected to excel all the time - something that is never expected of any other company.
Cupertino I expect will just roll their eyes and carry on as usual - with or without Steve Jobs, there is just too much momentum in the company to suddenly fall apart.
Buy, like you never did before. When world financial equilibrium is restored, Apple will dwarf every other 900lb gorilla in their markets.
With Snow Leopard and OpenCL, Apple is putting in place a couple more tools to take Apple another 5 to 10 years forward. People, particularly analysts just don't see it. With or without Steve, Apple is the best positioned tech company for the foreseeable future.
Scottsdale
for crappletv:
Like most commentators, you're wrong; Steve Jobs' health IS a private matter unless ill health is affecting his role in the company. When a board member says, on the record, "Steve's health is a private matter", that statement alone tells you that there is no known issue with his health. Even SJ doesn't know more than that. If there is a known problem with SJ's health affecting Apple, this statement by Oppenheimer could put him in prison later.
Steve Jobs did not conceal his cancer from the board. The board concealed it from the world, because there was plenty of time to make a succession plan, and to defer drastic medical intervention while SJ worked on unaffected as CEO. When Apple was fully prepared, further medical action was evaluated, surgery performed and immediately reported to the public. The SEC has investigated the sequence of events and found it to be proper. I'd say it was exemplary.
Your Macbook sleep problems are to do with the software you are running. Other people don't have this issue. It's just laziness to simply blame Apple. Have you for example got HP printer drivers installed that didn't come with MacOS?
Steve Jobs does not "cultivate the cult of personality". He appears only twice a year, and makes a very professional product focussed presentation crammed with factual detail. He restricts his activities ruthlessly to doing his job. It's the media and followers that create the cult. SJ is a private person. For example he does not go in for the attention seeking public charitable contributions and activities popular with the rich and self-obsessed.
You're wrong. Jobs' health is a private matter. Period.
(Disclosure: Short crappletv.)
thank you, Jason, so much, for a great article!!
Long live SJ and AAPL.
>Like most commentators, you're wrong; Steve Jobs' health IS a
>private matter unless ill health is affecting his role in the company.
When Jobs was sick, all of his direct reports were moved under Peter Oppenheimer. I would say that that "affects his role in the company".
>Jobs did not conceal his cancer from the board. The board
>concealed it from the world, because there was plenty of time
>to make a succession plan
That sounds a lot like concealment to me. Jobs is on the board, he materially affects the decisions of the board. You can't have it both ways.
>it's just laziness to simply blame Apple. Have you for example got
> HP printer drivers installed that didn't come with MacOS?
Nope. It's not lazyness. It's a consumer product, full stop. I should not have to dive in and debug problems like this. Oh and by the way, this machine is as vanilla as they come. It's an admin machine, the only additional software on it comes from Apple (iWork). It's used for email, web browsing and keynote. Full stop. My work machine is a PC running ubuntu for software development. It's called coding, have you heard of it?
>Steve Jobs does not "cultivate the cult of personality". He appears
>only twice a year, and makes a very professional product focussed
>presentation crammed with factual detail.
Pray tell then why mainstream media refer to a "reality distortion field" at these events. Factual detail for a fanboy might also be seen as spin to an impartial observer.
>axe to gring against Apple
I have no axe to gring (sic) whatsoever, I'm just startled at the lack of objectivity in commentary about Apple. Google '+iphone +"2.0" +upgrade +problem' - around 215,000 hits, read mossberg's review of mobile me, Google '+macbook +graphics +chip +problem', again 275,000 hits. Are these people "lazy" too? No I think they are just trying to deal as well as they can with sub-standard product.
Nope not grinding (I suspect that is what you meant) just observing.
>anyone remember Walt Disney? they said his company would die
>with him. Apple isn't the Apple Jobs left and had to return to
>rescue. He not only rescued it (and those of us who hung on
>during the lean years) but built it into a huge, international
>company with multiple products, enormously talented staff,
>huge...HUGE profits and 'cushion' and no debt. there aren't
>many companies as healthy as this one, with or without it's
>visionary creator.
But is that not the point? Look, after Jobs was fired by Sculley, Apple began a long painful decline, that culminated in 1996/7 with two quarters in a 3 quarter period, both with a $750 million loss. Bear in mind that in 1994, the company was at it's localized peak in terms of market share (the LC, IIsi and Classic enabled Apple to lower costs and drive for Market share). It was an $11bn corporation, within 2 years it was a sub $4bn corporation in terms of market cap.
Levy speculated in his early 1990's history of Apple that the company ripped itself apart after the departure of Jobs, because in the absence of leadership, the senior managers all wanted to create fifedoms. The earthquake and subsequent delay to System 7.0 did not help and the Maxwell/Mac OS 8 debacle did not help.
No one denies that SJ made one of the most dramatic turnarounds in US business history, but that is not the point, is it? Wall Street has jitters precisely because there is a precedent of Jobs leaving Apple at the top of it's game and the company ripping apart in the years afterwards.
Walt left Disney and the company "survived". Survived is an interesting perspective, Disney more or less merged with Pixar, mainly because in it's "survival", Disney lost the plot on making the transition to new technology for the production of animated motion picture feature fims. Incidentally leaving one Steven P Jobs as Disney's largest shareholder.
So to bring it back around Wall Street is scared that if Jobs leaves again, the constant growth of Apple will turn into decline, and the stock will be devalued. Which is exactly why, for Apple's shareholders, Jobs health is not a private matter.