While Apple’s stock did a very good job of absorbing the sad news that CEO Steve Jobs was stepping down (down just $2.46 or 0.65% to close at $373.72), the focus for investors will now quickly shift to how Apple continues to most effectively build shareholder value going forward.
While it is clear that the company has a very well-conceived product roadmap for the next few years, investors are already debating the longer term plan.
One concept being rather quietly floated both on Wall Street and on some message boards like The Mac Observer (www.macobserver.com) is the idea of the company splitting itself into two parts: its legacy hardware business spun into one company and its younger, but much higher growth iOS/iCloud business into another.
The wisdom of doing this would be to much better highlight the individual strenghts of Apple’s core operating units thus more effectively “unlocking” their value.
One train of though is to maintain the core Apple brand for its wildly popular consumer electronics product line—think iPhones, iPods and iPads—while spinning off another brand(s) focused on deploying and licensing Apple technology for other applications running the gamut from cars to thermostats.
While some believe Apple’s three-year-old iOS and now iCloud business could itself be valued well above Apple’s current total market capitalisation of $346 billion, others argue that all the company’s business units and the brand are simply too integrated to contemplate a split anytime in the foreseeable future.
Some believe a more pressing issue for the company will be to figure out something to do with the more than $28 billion of cash on its balance sheet. Both acquisitions and dividends have been bandied about from time to time with Apple showing very little appetite for either. (Apple spent less than $1 billion on acquisitions over the past decade compared to its rivals, which each spent on average more than $15 billion over the same period of time.)
One thing is clear: the concerns regarding succession at Apple–which some money managers believe were a significant drag on the stock–have now been removed, paving the way for Apple’s next era to begin as both a company and a stock.