On Monday Apple announced that its CEO Steve Jobs is taking an indefinite leave of absence. Apple shares promptly fell 2.25%, although they recovered about half that in after hours trading. The question of course is whether or not Apple can continue to hold on to its place as the second largest company behind Exxon Mobil without its visionary founder.
In a word, no. Just as Microsoft has stumbled after Bill Gates's absence, so too Apple is basically built around Steve Jobs's direction. Jobs happens to be that rare combination of techno-geek and artist; Apple's success hasn't been due nearly as much to technical innovation as it has been to its founder's unique ability to make technological innovation accessible to the masses. Apple didn't invent the GUI, the mouse, the MP3 player, the smart phone, or the tablet computer. What it did was perfect all of those things. When we first heard about the iPad, we thought dismissively, "Why would anybody want this? It's the Jitterbug of laptops." And that's when we truly understand Steve Jobs's genius; he had created a computer that the least technologically savvy people could use with ease.
Apple does have a commanding lead in the smartphone and table computer markets, but as we've posted before, it faces stiff competition from Google and other players. The company won't suddenly go bankrupt if Jobs does permanently step down from the CEO position, but we are looking at a situation where Apple becomes what Microsoft currently is. After all, look at what happened when Jobs was first fired from the position.
Still, in the short term we're bullish on Apple stock. It has a relatively low PE, and its Price to Sales Ratio looks very good as well.
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