IVP - Andy Unedited - The Apple of the Day

January 22, 2009

The Apple of the Day

Back in April 2008 I mused on Steve Jobs's leadership style (brilliant micromanager) and how Apple has benefited from that. Yet making the company so dependent on one (very talented) person has actually made the company more vulnerable.

With news that Jobs had to give up his day-to-day duties on doctor's orders, Wall Street seems to agree. Shares of Apple have dropped about 5 percent since the word got out about his health a week ago.

Why didn't Wall Street factor in Apple's inordinate dependence on Jobs during the last five years' run up in the value of Apple stock? Why do they just recognize this vulnerability now? Yes, ladies and gentlemen, the sad but shocking truth that I must now convey to you is this: Wall Street is shortsighted.

Posted by Andy Le Peau at January 22, 2009 8:47 AM Bookmark and Share

Comments

Hmmm. . . I suggest you might want to take a look at Google Finance's chart for AAPL and add in the S&P 500 for comparison. You'll find that AAPL has tracked the S&P 500 very closely since December 24 (I think it was around then that Jobs announced he wouldn't be at Macworld?). Indeed, since your post in April, AAPL is down 50%, but the S&P is down 40% (and arguably AAPL was a bit richly valued by any measure in early 2008). I'm not actually sure there is evidence that Wall Street is "recognizing this vulnerability" since the news came out about Jobs's health.

Of course, that's before today's post-earnings-reports trading, in which AAPL is, shall we say, diverging from the market as a whole.

Of course I completely totally agree that Wall Street is shortsighted! That's the one reason I still believe—although the great bulk of my investments are in index funds—that patient individuals can beat the market at times. Not that I have managed to do so myself, but I hear it can be done. :)

Comment by: Andy Crouch at January 22, 2009 9:39 AM

Andy

Long-term (i.e., the last year), you are right of course, that Apple has been affected far more by the overall forces of the market than by recent news on Jobs’s health. But over the past week there was an effect on stock price. Now we may see a “correction.” But I would argue even that may be a shortsighted correction.

Andy

Comment by: Andy Le Peau at January 22, 2009 10:10 AM

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