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My take on Jobs' resignation

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August 25, 2011 – Comments (1) | RELATED TICKERS: AAPL

Full disc: Long AAPL since 1981, as well as lifelong Apple and Mac user.

It's a sad day for Apple fans.  Steve Jobs is our hero and he built a company from nothing to the largest-capitalized company in the US in a short 35 years.  This resignation at the age of 55 means he's gravely ill, I think.  You can read a deposition he gave regarding options backdating - it's floating around the Internet - where he said he never really wanted to be Apple CEO; he was appointed 'interim CEO' and couldn't find someone he felt would be a better candidate.  He was right; his reign as CEO was possibly the most successful of any in history, ever, by nearly any metric you care to name.

At this point I don't think Steve gave up the reins willingly.  As a doctor, let me tell you a story:  A 50 year old guy gets pancreatic cancer.  His pancreas and duodenum are removed in a ghastly operation called the Whipple procedure.  He is deemed 'cured' but, like all Whipple survivors, he lives with severe nutritional issues.  Then a few years later he undergoes a liver transplant, and 2 years after that becomes gravely ill and dies.  As a doctor, I say, "No kidding; that's how that story goes."  Amazing that someone could run a company at all with that story.  To be clear, I think Steve is dying and I think a dying man's future contributions to running a Fortune 1 company will of necessity be minimal.

I lived through the Amelio era, dutifully buying products as an Apple fan does, and watched as the advances Apple had made in design and UI stagnated, and were displaced in the market by better-managed competing products of demonstrably inferior quality. Steve came back and turned it around.  He truly had the magic touch.

I don't really think a guy on immunosuppression after a liver transplant is firing on all cylinders.  That means much of the success of Apple in the last two years was either good momentum, or the team Jobs put in place is good enough to replace him.  I think probably the former.  Apple's enjoying huge success with the iPhone and iPad, both conceived during the early part of this decade; but Steve's next pet project, the AppleTV, has pretty well been beat to market by Netflix.  I don't think a hale and hearty Steve Jobs would have permitted that, because Steve is all about the long term strategy and he has learned from long experience what happens when you lose the early adopters.

So, having been an Apple bull since 1981, I am not throwing in the towel just yet.  Others have said that Apple could coast on momentum of projects currently in pipeline for 5 years.  Worst case scenario, that has been going on for 4 years already; I think 2 years is probably closer to accurate.  Best case, Apple's new team, led by Tim Cook (a widget manufacturer), shares the genius vision that Jobs seemed to have been born with.

I think Apple might be a hold for another 2 years - I expect them to roughly continue their explosive market share growth in phones and tablets over that time - but if they are to continue along the path they have blazed so far, they must introduce another blockbuster product - not just a revision, iPhone 7 or iPad 4 - during that time.  If they do not do so, then the dream dies here and AAPL stagnates into a slow growth dividend payor. 

Sorry to say it, too.  Ave atque vale, Steve. 

1 Comments – Post Your Own

#1) On August 25, 2011 at 12:19 PM, EnigmaDude (88.53) wrote:

Good post.  Steve Jobs is an amazing guy and deserves to be recognized for his incredible accomplishments, which include Pixar (which made him a billionaire), as well as his contributions to Apple. 

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