Like so many other in the industry i have spent a few hours today catching up on all the latest following Steve Jobs resignation as CEO of Apple, handing the reigns to Tim Cook for good this time. One of the questions that leaves us with is how this might impact on the future direction of the company, a question i’m sure many investors are asking themselves as well as the immediate reaction in the market is one of caution.
While Steve Jobs is stepping down as CEO, likely due to ongoing health issues, he will retain a role as Chairman of the Board and still be a director in the company, so they are not loosing him completely. But one can’t get around the fact that over the recent decades Apple and Steve Jobs have largely been interlinked, and he has been the key person driving the success of the company, leaving some very big shoes for Tim Cook to fill. It is therefore natural that the market might take a step back and consider the possible impact this might have on the future valuation of the company.
To highlight some of the relationship between Steve Jobs health and the Apple share price i thought i would put together this simple infographic that looks at Steve Jobs and the Apple share price over the last decade or so (click for larger version).
There is no doubt that certain events over time in relation to Steve Jobs health has caused the market to react negatively, usually for a short period of time before adjusting itself again based on the underlying strength of the company. Based on what we have seen historically it is likely that we could see the same happening now (we already are to some degree), but fact remains that there is still a potential strong upside to the Apple share.
A recent Business Insider article highlights the potential upside of the Apple share as it looks at iPhone penetration in emerging markets, China especially, the launch of the iCloud, and the rumored iPad 3 coming early 2012. The possible impact of a more price diverse iPhone range was also highlighted in an earlier post i wrote about the potential impact of the iPhone 5 on 2012 sales.
A share price of course consists of more elements than just the performance of the company at the time, as trust in management and future strategy plays a significant role, an area that only time can give us answers to in the post Steve Jobs era. According to Reuters the Apple share has been marked lower by investors today, with trading in Frankfurt down 4% following after-hours trading in the US down 7%.
Here is the actual wording from Steve Jobs resignation letter to Apple:
To the Apple Board of Directors and the Apple Community:
I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.
I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee.
As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.
I believe Apple’s brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role.
I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you.