Munster claims Jobs worth $20 Billion in AAPL value....
By Connie Guglielmo
Jan. 17 (Bloomberg) -- Apple Inc. may find its most
valuable asset is something it can't protect through patents or
secrecy: Chief Executive Officer Steve Jobs.
If Jobs were to leave, shares of the Cupertino, Californiabased
company might drop 25 percent or more, analysts say. That
would erase about $20 billion in Apple's market value.
``It would be a disaster,'' said Gene Munster, an analyst
with Piper Jaffray & Cos. in Minneapolis, who's had an
``outperform'' rating on Apple's shares since June 2004. ``He
would be almost impossible to replace.''
The computer maker's dependence on its CEO was illustrated
the last week of December, when the stock dropped as much as 5.8
percent after The Recorder, a San Francisco-based legal
publication, reported Apple had faked documents to backdate
stock options.
On Dec. 29, the company said its own investigation, led by
Apple director and former U.S. Vice President Al Gore, cleared
Jobs of any wrongdoing. That eased concern Jobs may have to step
down and sent the shares up 4.9 percent.
The Gore report may not be enough to exonerate Jobs in the
eyes of U.S. regulators at the Securities and Exchange
Commission and Department of Justice, said James Post, a
professor of management at Boston University. Apple last month
took an $84 million charge to account for the backdated options.
``The desire to protect Jobs' iconic status comes at the
expense'' of shareholders, Post said. ``Someone is certainly
responsible for the harm done. If not Steve Jobs, then who?''
Options Probe
Apple has said it provided the results of its investigation
to the SEC and the U.S. Attorney in San Francisco. Federal
investigators are probing Apple's backdating of stock options, a
person familiar with the matter has said.
The probe may have been dealt a setback yesterday when
Kevin Ryan, the U.S. Attorney in San Francisco who helped spark
a nationwide investigation of stock options, announced he will
step down from his post with two years left in his term.
Jobs may be more closely linked to Apple's prospects than
any CEO in the Fortune 500, said Charlie Wolf, an analyst at
Needham & Co. Inc. in New York. Apple's valuation might fall as
much as a third if Jobs were to depart, he said.
``He has one of the keenest eyes in the world when it comes
to pinning down not only the design, but the features that will
attract the most people,'' said Wolf, one of 24 analysts tracked
by Bloomberg who rate Apple's shares ``buy.'' ``He's the
creative spark.''
Record Sales
Investor anxiety over the options probe comes with Apple
poised to report today that quarterly sales topped $6 billion
for the first time, reaching $6.44 billion, according to the
average estimate of 20 analysts surveyed by Bloomberg. The
average earnings estimate is 78 cents a share.
Apple in October forecast first-quarter revenue of $6
billion to $6.2 billion, up from $5.75 billion a year ago, and
profit of 70 cents to 73 cents a share.
Over the past five years, Jobs, 51, has cemented his image
as technology's leading fashionista with the iPod, a sleek,
easy-to-use digital music player that steamrolled over earlier
rivals to become the best-selling device in the U.S.
With celebrities such as U2 lead singer Bono, hip-hop
artist Kanye West and singer John Mayer joining him on stage,
Jobs, dressed in his trademark black turtleneck and jeans, has
transformed staid product introductions into high-profile media
events. He has unveiled smaller, high-capacity designs that have
driven sales from current and new iPod owners, said Munster.
``Apple's like a technology fashion house,'' said Jane
Snorek, a portfolio manager at FAF Advisors in Milwaukee, which
oversees $55 billion in assets including Apple shares. ``They
really have their finger on consumer design.''
Geek and Pitchman
Jobs has played this role since founding Apple at the age
of 21 with Steve Wozniak, acting as the pitchman to Wozniak's
geek. Together they helped popularize the personal computer with
the Apple II. In 1984, Jobs turned Apple into a household name
with the Macintosh, offering a PC with a simple-to-use, pointand-
click interface unlike anything consumers had seen before.
``He has a sense for how people perceive things, what
strikes people as having value and not,'' said Wozniak in a Jan.
12 interview. ``For Steve, it's all about not accepting the
adequate.'' Jobs knows how to build products that make people
say ``Wow!'' said Wozniak.
IPhone Debut
The announcement last week of the iPhone, which combines
the music and video features of the iPod with a cell phone, was
vintage Jobs. ``We have reinvented the phone,'' Jobs proclaimed
after receiving standing ovations from Apple admirers at the
annual Macworld Expo conference in San Francisco.
The company aims to sell 10 million iPhones in 2008,
capturing 1 percent of the global market, Jobs said. Investors
who had anticipated the device said they were surprised with its
ease of use and styling.
Apple's shares soared to a record $97.10 yesterday. The
stock, up 18 percent last year, declined 60 cents to $96.50 at
9:52 a.m. New York time in Nasdaq Stock Market composite trading.
Apple's stock has surged from less than $10 to almost $100
since Jobs returned to the company in 1997. He had been ousted
in 1985 by John Sculley, the Pepsi-Cola Co. CEO he had recruited
to help transform the start-up into to a mature organization.
In addition to moving Apple into consumer electronics, Jobs
has revived the PC business, with innovative designs such as the
iMac and faster machines built with chips from Intel Corp.
The question of who might succeed Jobs remains open though
he's surrounded by a cadre of jeans-attired executives who mimic
his use of the words ``cool,'' ``awesome'' and ``revolutionary''
to describe Apple's technology.
Talented People
``Steve has spoken about how great products come only if
one mind is in control of it, making decisions,'' said Wozniak.
``But I think even if Steve wasn't here, there are talented and
good people there who have gotten to know how Steve thinks and
what he's going to like and not like.''
They include Timothy Cook, 46, who led Apple while Jobs
battled pancreatic cancer in August 2004 and who was named chief
operating officer in 2005. Analysts, including Wolf, also single
out Ronald Johnson, 48, who has led Apple's retail store
expansion over the past five years.
``The biggest risk to Apple is not competition or markets
or products,'' Piper Jaffray's Munster said. ``It's probably the
reality that at some point Steve Jobs is going to leave. That's
just the wild card that investors have to deal with.'' |
