Steve Jobs Resigns, but Investors Still Ride Apple's Bandwagon

   on August 25 2011 6:55 PM
Apple Chief Executive Steve Jobs speaks on stage, with the Shanghai Apple store displayed on screen, at Apple's music-themed September media event in San Francisco, California
Apple Chief Executive Steve Jobs speaks on stage, with the Shanghai Apple store displayed on screen, at Apple's music-themed September media event in San Francisco, California September 1, 2010. Reuters

Steve Jobs on Wednesday resigned as chief executive of Apple Inc., marking an end to his 14-year reign at the consumer electronics giant he co-founded in a garage.

While the future of the company is not immediately known, investors are still positive about the direction Apple is taking, especially given that Jobs was involved in the current five-year plan guiding the company.

Our view has been and remains that Mr. Jobs' reduced involvement does not change the long-term fundamentals, explained Bill Shope of Goldman Sachs.

Apple's platform is now stronger than ever and can be successfully managed by Mr. Cook and Apple's deep bench. Apple should enjoy a rich set of near-term catalysts, including a new iPhone and fully available iPad 2 as we head into the peak consumer season.

Investors took the shift in stride, with shares recovering from most of the after-market sell-off last night to close down less than one percent on Thursday.

They also expressed confidence in Apple's team, and the new CEO, Tim Cook, who promised the company would stay the course.

I love Apple and I am looking forward to diving into my new role, Cook wrote to staff. I am confident our best years lie ahead of us and that together we will continue to make Apple the magical place that it is.

Jobs' resignation isn't the first time that Cook has had the helm. In recent years, Jobs' battle with pancreatic cancer and other ailments has forced him to take a leave of absence three times.

Each time, then COO Cook took the reigns, leading the company through successful milestones, such as the launch and continued success of the iPad.

We believe new CEO Tim Cook is well qualified for the role as he has led Apple as interim CEO on two occasions during Jobs' medical leaves of absence, said Mike Walkley of Canaccord Genuity.

Mr. Cook is a universally regarded as a strong leader and supply chain expert, and we believe he is well suited to lead Apple to significant growth over the next few years due to Apple's leading iOS developer and application ecosystems and differentiated products.

Analyst compared the departure to that of Henry Ford, and Walt Disney - unique creative forces whose companies carried on for years after they left.

But the retirement doesn't mean that Jobs will go on vacation. He will also continue to serve as the company's chairman, a role that insiders have characterized as active, with input still given to products and trajectory.

His reduced role could even help the stock, according to Mark McKechnie of ThinkEquity.

Steve Jobs' health issues have been weighing on the stock in our view for several years, he told investors. We argue his departure removes a significant overhang on the stock.

 

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