(iChinaStock News) The following answers are from an exclusive Q&A with Dr. Eric Jackson, the founder and president of Ironfire Capital, a private investment management company based in Naples, FL, with a focus on China tech stocks. Questions were contributed by users of the iMeigu microblog (iChinaStock’s Chinese-language sister-site). Follow @ericjackson on Twitter.
Eric Jackson also discussed “Google’s (NASDAQ:GOOG) Desperate Move in Mobile and Chinese Internet Stocks”
Q: Are you confident about the future of Apple? (some say they will be fine in the next 2 yrs, some say 5 since the ‘plans’ are all set…) And do you think either Page or Bezos would be next Jobs?
A: I think the next 5 years are set. Page is nothing yet. He hasn’t shown anything. Bezos has done a great job but he’s not in the category as Jobs. No one is. Jobs is the best CEO of the last 100 years. Zuckerberg is nothing compared to Jobs.
Q: On the day Steve Jobs resigned, Apple fell by as much as 5%. Is Steve Jobs worth that much to the company?
A: Yes, but look at the final stock price today. It closed down only 0.6% while the NASDAQ was down 2% today. The market likes Cook.
Q: Despite lots of talk, Apple has only fallen 0.65%. Was the news of Jobs’ departure already accounted for in the price?
A: Yes. This was Jobs’ 3rd medical leave. The market has had an opportunity to get used to the idea of Steve leaving. I just wrote a post on Forbes a few hours ago where I said I believe there’s been a “Steve Jobs Discount” on Apple for the last 3 years. The market doesn’t like uncertainty and Steve’s health was a concern. Most thought they would pick Cook but they didn’t know. Now they know.
I also expect that Steve will still be actively involved as Chairman. He will still have influence. He reportedly lobbied China Mobile in the last weeks.
Q: Who do you think will be the next Jobs? Or is he unique?
A: There will never be another Steve Jobs. There cannot be. He was truly special and will probably be the spirit of Apple forever in the same way that Walt Disney is for Disney.
Q: Will Tim Cook and Apple be able to continue the innovation after Jobs?
A: I like Tim Cook. He is very strong and good with details on the earnings calls. He’s obviously done an amazing job with the supply chain. I believe the product tracks are now probably set for the next 4 years. You are asking what about innovation after that. It is hard to say, however, I believe that Jobs has likely spent a lot of time thinking about institutionalizing innovation at Apple. Tim Cook sees the big strategic opportunities that Apple can move into, he’s good on operations and details. He’s a great communicator. I don’t know his creativity or sense of deisgn and product.
I think that Steve Jobs’ legacy will be the company he leaves behind and not any one product. We will see. Mobile phone companies have to keep innovating. Windows Phone looked dead a year ago but now it is rising in strength.
Q: Will Apple be as capable of breakthrough innovation rather than just incremental from now on?
A: What is the definition of “breakthrough” and “incremental”? What made iPad a breakthrough was that they took an existing form (tablet) and made it something the public said was a must have (but they never would have said that before). I think it is possible to keep doing that.
Q: What’s next disruptive innovation do you believe the new leader of Apple could make following the iPhone iPod and iPad created by Jobs?
A: Most expect it to be Apple TV. I believe it will be a success. I think they will also get into payments which will be something very different. It will be the next new product that everyone will be watching though… That will be Cook’s real test.
Q: After Jobs, is it possible that other top execs will also now depart?
A: Well, Ron Johnson – who was the head of Stores – left a few months ago. He knew Cook would get the top spot. That was too bad. However, I don’t think many others will leave.
Q: Will Apple be able to expand or gradually decline in the long-run?
A: I own Apple, so I’m biased. I see many large growth opportunities for Apple — especially the prepay market in China!
Q: How do you view Apple’s growth outside of the U.S.? Should it be more aggressive in China, for instance? Apple announced plans for 25 mainland stores by Feb. 2012 but now still has only 4.
A: I think China is one of the major growth plans for Apple. They have grown their revenues 6x in China in the last year. It is crazy they only have 4 stores now in the mainland. I don’t know why they don’t open many more soon. Prepay market in China is also huge for Apple.
Q: Some investors take AAPL’s strategy of selling cheaper iPhones as a defence of the empire, just like Nokia did years ago. So they’ve started to sell AAPL. What’s your opinion?
A: Apple is a $300 billion market cap company. To grow their market, they need BIG growth opportunities. I think the prepay market in China is 1 such market. China Mobile has 600 million subscribers alone. If they can sell a cheaper version of the iphone and make money, they should
Q: Are you thinking of buying more Apple?
A: Yes. It is a core holding for us. We didn’t buy more today but are thinking of buying more because we know think a weight has been lifted off the stock because of the clarity now.
Q: Can you draw any examples of company in a fiercely competitive industry out-performing after the departure of a charismatic leader that built the empire? The Chinese history and proverbs has taught us a lot of things, and a few particularly stand out in this situation: that the flower cannot blossom for one hundred days, and trees won’t grow indefinitely. IBM suffered a period of loss after Watson’s departure, HP went through a period of pain after Hewlett and Packard both left the company, and Microsoft stagnated in stock price as Bill left his role. Do you foresee AAPL being a 400Bn, 500Bn, or even 600Bn company in the post-Jobs era?
A: In technology, there aren’t so many examples. But I think Wal-Mart is a good example of a great company that got even better and more sophisticated after its founder left/died. I think that Apple can easily be a trillion dollar company in the next 5 years. I don’t think 2 trillion is unrealistic in 10 years.
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