Can Apple's Stock Recover Without Steve Jobs?

Apple's stock is going down like a plane in flames, sinking 12 per cent, its biggest fall since the 2008 Wall Street crash. That's $US60 per share just after it announced one of its best quarters in history, although it failed to meet analysts' expectations.

Analysts think Apple is slowing down because the markets are saturated — the markets Apple created. The problem now is this: will Tim Cook be able to create a new market that will allow Apple to grow wildly without Steve Jobs?

After looking at the numbers, financial companies are revising their estimates, arguing that Apple is slowing down. Morgan Stanley removed Apple from its best stocks list, while Jefferies has changed it from "buy" to "hold". Peter Misek, an analyst at Jeffries, says that there is indeed a slowdown in iPhone sales:

The slowdown in iPhone sales is real and material. While management was somewhat evasive on the call, it appears that demand in the second half of the quarter and into CQ1 was much weaker than management or we expected.

Apple's shares started going down after last September's high, when its shares closed above the $US700 mark. The Cupertino company has lost $US226 billion in market value since then. The times in which Apple closed above Exxon as the world's most valuable company feel very far away too. (Remember this?)

The bad news

But the worrying news is not that the stock is tanking. That happens all the time — stocks going up and down. Besides, the stock was probably over real market value to begin with.

The bad news is the fact that industry experts are seeing signs of slowdown for Apple products. They are still selling well, but they are stabilising (which is a slowdown). This may explain the iPhone parts order cut reported by the Wall Street Journal and the New York Times.

When asked yesterday, Tim Cook wasn't worried. He said that Apple has plenty of new products in the pipeline. But would any of the new products ignite a fire in the market the way the iPod, the iPhone or iPad did? Or would they fall flat? Perhaps this is the biggest question that every shareholder has on their minds now: Could Apple continue to thrive and be the world's most valuable company without Steve Jobs?

As I said in 2011, the answer is probably no. I still find it amazing that Apple's capitalisation went over ExxonMobil:

A couple of decades ago it was just an overpriced beige box manufacturer with an obsolete operating system. I remember because I was a Mac fanboy then, when everyone was using Windows and Michael Dell said that the company should be sold as scrap and the money returned to its shareholders. [Ironically, Microsoft is now buying Apple in parts.]

Then Steve came back.

After the iPod, Mac OS X, the iPhone and iPad, Apple has become the number one technology company in the world. Bar none. There's no company with better style, design sense, attention to detail, marketing and manufacturing precision. Apple is the best, and that's why most consumers crave its products. That's why the rest of the industry follows Cupertino too, even into entirely new markets.

It was Steve Jobs's unique vision and his strict command of a brilliant troop of engineers that made — and still makes — it all possible. Together, they created the future. Now Apple is the new Microsoft, and they control it all — from the hardware to the operating systems to the apps their operating systems run.

The same is true. Jobs had a vision that resulted in three new markets for Apple: iPod+iTunes, iPhone and iPad.

By creating these markets, Apple ensured themselves a lead in something completely virgin. And they made record numbers, which made the company's valuation skyrocket.

Now, as those markets have stabilised, they can't make such record numbers. And so they slow down. The stock market is now realising this — even while it was quite obvious before. But this is Wall Street, so they prefer speculation and exhilaration rather than looking at things with a cold head.

Time to create a new market

Now, to keep the behemoth breathing and killing, Apple needs to create a new market. Virgin territory, a new gold rush. It can no longer profit at the same pace in saturated markets. It needs to create new product categories.

And that's where Steve comes in. Or came.

Even while he probably left many projects running when he was still around, those have to be executed. They have to be turned from an idea into a flawless product.

So can Apple do that without the Wizard of Oz, the snake oil salesman, the brilliant Steve Jobs?

I know that Jonny Ive is brilliant. So are Tim Cook and many others at Apple. But I don't think they have the vision that Jobs had:

I used to think that Apple could live without Jobs. Back in 2008 I wrote about how he was preparing his farewell and why I thought that, if he left, the company would be just fine. I was wrong.

Back then, investors disagreed with me. When we broke the news of the return of his cancer back in 2008, Apple lost billions in just a few minutes of trading. Back then, Apple and its friends at CNBC tried to deny the news that later was confirmed by Jobs himself.

The investors were right, and now I'm convinced that Apple can't be Apple without Steve.

It's going to be hard for the company to grow at the same rate of yesteryear if it can't create new markets. And the possibilities of doing that without Steve Jobs are low. Very low. That's how important his vision was.

If Apple can't achieve that, then it may end like Sony. A great company, with good products and good design, but just another company fighting to sell phones, tablets and computers.

In the end, that — not the sightly disappointing but still record-breaking quarter — really is why everyone is selling. [href="http://www.foxbusiness.com/technology/2013/01/24/apple-on-track-for-worst-day-since-08-tarp-rejection/#ixzz2IvYvGESR">Fox Business]


Comments

    I heard on the news a couple of days ago that they were planning on using cheaper plastic bodies for upcoming products so they can compete with android. And yesterday (I think) they posted over fifty billion dollar profit for the quarter, so they can't be crying poor just yet.

    Last edited 25/01/13 11:36 am

      "planning on using cheaper plastic bodies for upcoming products so they can compete with android"

      ...yes, that makes perfect sense...

        Possibly meaning if they use cheaper plastics, then they can reduce the price of their products, and compete with Android devices on the pricing

        Well it kinda does.

          Yes, because that's a totally Apple kind of thing to do.

          They'll also make OSX for PCs, and allow people to install their own OSes on iPhones!

    I think they will be going back to the days when they fired Steve Jobs and couldnt get it together until Steve came back. Except it wouldnt as bad as they just made something likw 20 Billion dollars in profit so they got the money, they just need the that special something that Steve did that made them those billions of dollars.

    Maybe Apple should create their own Facebook and their own search engine?

      and then patent it .....................

        ... and then sue Google

    If you look Apple, Microsoft, Dell etc. - you could say that successful companies are successful because of the vision, drive and attitude of one leader (or at least it seems that way).

    I think of it like this: It takes many individuals to make a ship go anywhere - but it's the captain that steers it - or a general that leads the army. I think that while it's possible to run a company by consensus - it always seems to be much better when everyone falls in behind one 'brilliant' individual.

    I've never really been a fan of Apple products (their user experience and business model just don't suit my needs) but I can't deny that Steve Jobs brought a heap of innovation to the tech industry - which is awesome, because it makes my preferred manufacturers / companies compete harder to meet or exceed the standard.

    I've said it before, Apple has tremendous momentum and millions of loyal customers - it will probably take a long time for this train to slow down (as long as they don't make more 'Apple Maps' type mistakes on a regular basis).

    The title of 'best' can rarely (if ever?) be held on to by one company in any industry unless they have a literal monopoly on it. Has Apple had its day? Probably - unless it can do something new. The real question for me is, who's going to be the next behemoth? At the moment it's looking like it's Samsung's turn in the spotlight for a while - we'll see I suppose.

    It's always going to be hard for a consumer tech company, with an annual product refresh cycle, to keep coming up with things that keep it in front.

    As the article suggests, Apple needs to create a new category now. They could have had one if they made the previous Nano into a proper smartwatch.

    TVs and Google Glass type products are still there for Apple to exploit, if they get off their asses.

    hillarious. do you really think steve jobs "invented" those products?

      Apple has had it's time in the sun .http://en.m.wikipedia.org/wiki/Stock_market_bubble

    If they were just less conservative. That would be all it'd take. They have the billions, if they wanted they could experiment openly with heaps of new things like Google... But they won't even change the look of their iphone.
    It was sort of interesting when it first came out but since then it's been really safe variations on the same theme. All their stuff is like that- unfortunately it's a very, very short jump from stylish minimalism to bland, safe, and conservative, and that's where they are now.
    Ive needs a kick up the arse or maybe replacing with someone more dynamic.

    Great post... inspired me to write something about the world without Apple... would be interested in any comments or thoughts you have on it - http://strat-talking.com/what-if-apple-fell/

    Greg
    http://Strat-Talking.com

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