re: Is Apple Looking For Tim Cook Replacement?
I agree that it's kind of dumb to blame Cook. Not sure I agree that Apple is overvalued, though.
First, on why it's dumb to blame Cook.
Yes, some legitimate concerns have led to the stock decline: consumer loyalty has dropped because the iPhone, while still excellent, is no longer leaps and bounds ahead of the competition, and has seemed stuck in a period of incremental upgrades; the botched Maps launch; Siri is still fun but not a reliable tool; Samsung in the on the war path and Android is projected to be the OS king for the rest of the decade; etc.
But this doesn't justify dumping the CEO. For one thing, Apple still makes money hand over foot. Yes, they missed analyst estimates during the last period-- but have you ever seen a company perform better while still missing estimates? The fact is, Apple not only sells a lot of devices but also enjoys excellent margins on most of them. One could justifiably be concerned that the alleged "cheap iPhone" will cut into these margins-- but that's probably a necessary risk, given that it should result in increased global market share and more customers in the App Store.
Speaking of the App Store, Cupertino is still the leader in overall app revenue and, according to most sources I've seen, the top priority for developers. Moreover, the iPhone is also still the top single device not only among consumers but also within the enterprise market. The iPad has actually lost some business ground to cheaper Android tablets, and I'm sure Windows 8 will eventually eat into both iOS and Android-- but for the moment, Apple still has a big lead in the tablet market. On top of all this, Apple, while not immune to the PC slowdown, has weathered the storm better than any company not named Lenovo. Among companies that sell premium machines, Apple certainly seems to have handily beaten the market.
In short, Apple has concrete success and only circumstantial (if still real) risks of failure. The company's performance simply doesn't justify dumping the leader-- especially since there isn't a Jobs-like visionary waiting to assume the reigns. There would be an argument for Johnny Ive, I guess, but if Cook were dumped for some outsider, I'd frankly be more concerned than I imagine long-term investors are right now.
Apple hasn't released a major product in six months-- that's true. But wearable technology and television are reportedly among the company's forthcoming exploits, and if they get the UI and app philosophy right, those are multi-billion dollar revenue streams that the company doesn't currently have, and which (unlike the iPad) don't obviously cannibalize existing products. Sure, other companies are investing in the same tech-- but since none of the new products are going to be cheap at launch, I think the company that executes best stands a good chance of winning. Will that be Apple? Maybe not. But there's not an objectively strong reason to assume Samsung, Google or Microsoft will get it right first.
But about Apple's stock being overvalued? That's a point I disagree with. Perhaps the value was inflated when shared reached $700+, fueled by the irrational expectation that there would be no lulls between major Apple advancements. But investors have been routinely stupid for years when it comes to Apple. I remember feeling astonished when the stock bottomed out during the recession at $60 or something similarly insane. At that point, the company had posted huge profits for several consecutive quarters, but Wall Street kept telling itself that Apple built luxury products that were too expensive to weather the financial pressure. Some of the same stupidity is driving the stock down now. Large investments aren't just made by retirement funds and other long-term investors; they're also made by hedge funds that are exclusively interested in short term gains. Downward movement based on this kind of pressure isn't necessarily an indication of where the company is headed ultimately but rather an indication of where jumpy investors think the company might be in three or six months. The company has more than twice as much money in the bank as Microsoft for crying out loud-- and Microsoft, which has also been the victim of some whimsical investor tantrums, isn't exactly chopped liver.
Michael Endler, IW Associate Editor