Thoughts on Apple
The NY Times reports that Steve Jobs is taking a leave of absence, as his health issues are "more complex" than originally thought.
Apple is down about 7% in aftermarket trading, Tomorrow, the stock is probably going to trade as if Steve Jobs is dead. There, I said it.
Of course, not only is Steve Jobs not actually dead yet, but even if he does die, there are still reasons to buy Apple. First, the company has strong momentum in a number of product lines. The company also has its own base of strong management talent. The question will be whether or not they can sustain the vision that has guided them to considerable profits. I think they can, but there's certainly the risk that they can't. Additionally, Apple gets a D grade for disclosure on its succession plan. We don't even know if they have one.
The bottom line is, I think Apple is a hold. In valuation terms it's a definite buy. I believe more in long term analysis than short term, but in Apple's case, investors shouldn't overlook the succession risk with Steve Jobs. Apple will certainly be able to attract a skilled CEO if he dies. However, Steve is undeniably a visionary CEO with a superb vision. If Apple's vision and innovation stall, the stock will suffer. A lot.