Wednesday, January 14, 2009

A Bite Out of Apple

Steve Jobs

What is Apple thinking?  I am going to take a slight detour from my new blogging pattern to talk about Apple's announcement after hours.  It was announced that Steve Jobs is going to take a leave of absence to take care of health issues.  These issues surfaced months ago, and Apple dismissed it.  As recently as a week ago Apple said there was nothing seriously wrong with Jobs and today they come out and say, "Oops we were wrong".  What could have materially changed in one week?

If there is one thing I know, is that you really need to set expectations correctly, especially with things as important as this.   A week ago, Apple should have either said they had nothing to say or that they did not know the full extent of the problems.  Many people who have seen Steve Jobs recently have said that he is looking pretty bad.  Reports are that several people who have talked with him say he is actually somewhat delusional about the current state of his own health.  That is not good to hear if you are an Apple investor.

Whatever the case may be, this is pretty bad news for Apple.  While I do not think any one person is the key reason for the success of a company as big as Apple, Steve Jobs comes pretty close.  I could argue that he is more important to Apple than Buffet is to Berkshire, and that is saying something.  I don't think I know the name of even one other employee at Apple, and that is pretty rare for me.  Especially at a technology company as important as Apple.  Do you think this is a big blow to Apple, or am I just overreacting?


  1. I think it is a big blow to Apple. Said a friend of mine who used to work there, "Jobs is someone that the employees really look up to an admire as a leader." It's rumored that Tim Cook, who was announced yesterday to be stepping in for Jobs, has been running things for years, so we'll see if things change materially.

    On the trading side, I think investors had been trading the stock down for a long time on thoughts that Jobs might be leaving as CEO so I think the downside from here is minimal... after the initial shock that is.

  2. I agree, I think from a trading perspective the downside of the stock is minimal. It will trade only slightly down or neutral initially, and it might even bounce after the initial shock is done.

    However, I think if your horizon is over the next year or longer, I think Apple is down.

  3. I have to agree with Andy from above. Steve Jobs' could not have just started to affect him at work. I am sure the leadership group has stepped in or at the very least taken on more CEO responsibilities months before the formal announcement of Jobs' leave of absence. I do not expect much change in the company's direction.