Steve Jobs Was ‘Henry Ford’ of The Computer Industry

By James Brightman

Steve Jobs’ announcement late yesterday that he’s stepping down from his CEO role at Apple has left many wondering what the future will hold for the world’s most valuable company. Jobs has been a true visionary, and the fact that he won’t be very actively involved in the company’s day to day affairs could be cause for concern, but analysts IndustryGamers contacted have the utmost confidence in Apple’s management.

“Steve Jobs will go down as one of the greatest CEOs of all time.  From the invention of the personal computer to the iPad he has been an inspiration to myself as well as manyIndustryGamers readers for most of our lives.  His resignation sent shockwaves through the stock last evening as it dropped to $350/share in after-hours trading, but as I write this the stock is down a little more than 1%.   That is not that bad of a response considering the Henry Ford of the personal computer industry has just stepped down,” remarked Asif Khan, CEO of Panoptic Management Consultants.  

“I believe that much of Apple’s already depressed valuation can be attributed to the overhang of Jobs’ health.  The stock trades at 11.6 times forward earnings and continues to grow earnings at a 60% or better pace.  This is quite different than Apple in December of 2007 when the stock had a forward multiple of 50 at $200/share.  Regardless of the CEO, Apple is a growth at a reasonable price stock (GARP).  I believe that much of the Steve Jobs Premium had already been discounted by shareholders.”

Part of the reason that Apple should be fine is that Jobs left the company in a good position, Khan added. “Companies that are in peril need a Steve Jobs or a Lee Iacocca to help turn them around.  When Jobs returned to his CEO role in 1997, the company was on the verge of collapse.  He has left Apple in the best possible position to continue its march forward,” he said. “Apple has surpassed Microsoft and Google in market capitalisation, the Macintosh continues to outpace PC sales, and iOS devices are still the hottest game in town.  Did I mention that they have $75 billion in net cash on the balance sheet?  Sadly, Apple’s condition is a lot healthier than that of their co-founder.”

“Apple has already named Tim Cook as the successor to Steve Jobs.  Mr. Cook has worked alongside Jobs over the last 13 years and is regarded as one of the best operators in the business.  His inventory management is unparalleled in the tech industry.  While no one can ever be Steve Jobs, we can learn from his examples.  Steve Jobs has left his imprint on Apple.  Planned Obsolescence, Incremental Innovation, and Proprietary Intertwining of Products are key principles that will not disappear from Apple’s philosophy.  As Tim Cook put it in his letter today, ‘I want you to be confident that Apple is not going to change. I cherish and celebrate Apple’s unique principles and values. Steve built a company and culture that is unlike any other in the world and we are going to stay true to that—it is in our DNA’.”

Jesse Divnich of EEDAR agrees that Apple is still in fine shape, and investors should have faith in the management team Jobs surrounded himself with. “While Jobs is a creative genius, his best quality is his leadership and part of being a great leader means hiring and training the correct people. One man doesn’t make a company, especially one of Apple size, which currently sits at a $340 billion market cap,’ he said. “If everyone is so concerned about the future direction of the company, what they are really saying is that they don’t have much faith in the rest of Apple’s management, which was built, trained, and fine-tuned under the helm of Steve Jobs. If in the future, Apple fails to execute, it would really speak a lot to the leadership skills Jobs brought to the company. Personally, I have a lot of faith in Apple’s team and their ability to continue to execute at the same level when Jobs was at the helm.”

Khan added that Apple should be able to maintain its value for some time to come. “I have faith in the team Steve Jobs has assembled. Virtue LLC has been long shares of Apple since 1997 and we have no intention to sell the stock until we have determined that it has become overvalued.  Apple is a great American success story and its brands have and will transcend time.  Chinese consumers are buying Apple products hand over fist even though there are knockoffs everywhere because they want that Apple logo,” he said. “After all the work Jobs and Woz put into the company back in the garage in Northern California, Apple stands above all other great American brands.  There is great value in this company, and there will be for some time to come.  I wish Mr. Jobs the best, and I am honored that I got to thank him in person for all of his hard work at the 2010 Apple shareholder meeting.  After all he has done for the industry and the world while battling with cancer, I think he deserves some rest.”

If there is any negative affect at all on the mobile gaming side, it’s that some developers might take a closer look at competing platforms besides iOS, RW Baird analyst Colin Sebastian. “Regarding mobile games, there won’t be any changes in the near term.  Over time, one scenario is that some publishers will hedge a bit and think harder about development on other platforms such as Android,” he said.