For local analysts, Apple still shines

Thursday, August 25, 2011 | 8:01 p.m. CDT
On April 24, 1984, Steve Jobs, left, chairman of Apple Computers, John Sculley, then president and CEO and Steve Wozniak, co-founder of Apple, unveiled the new Apple IIc computer in San Francisco. Apple Inc. announced on Wednesday that Jobs is resigning as CEO of the company.

COLUMBIA — Financial analysts in Columbia said on Thursday advance knowledge that the health of Apple CEO Steve Jobs was failing tempered the stock market's reaction to his resignation.

“Everybody was expecting this announcement at some point in time," Patrick Madigan, a financial adviser in the investor services department of Boone County National Bank, said. “You’ve seen the stock price be a little depressed, waiting for that announcement, but most research companies believe the way he left the company, in taking kind of a back seat the last couple of years, that it will be in perfectly good hands.”

Apple shares fell by about 5 percent in after-hours trading before the market opened Thursday, but rebounded and ended the day with a 0.65 percent decline.

Madigan said the initial reaction of some shareholders was that without Jobs at the helm, "I’m not going to own Apple.

"But then I think the big money managers and the big mutual fund companies will step in and buy it because they realize Apple is so well run, it’s beyond one person. He set that company up where Apple is bigger than Steve Jobs. It used to be Steve Jobs was bigger than Apple, but not anymore,” Madigan said. 

By not downgrading the Apple shares, the markets showed a consensus that the company Jobs built is still on a strong position, even without its founder involved in an executive position, said Stephen Ferris, professor and director of the Financial Research Institute and J.H. Rogers chair of money, credit and banking in the Trulaske College of Business at MU.

It could also have been that people showed support for a company they knew a lot about and whose products they trusted, said Christopher Cottone, a registered investment adviser with LaBrunerie Financial.

“Steve Jobs was really a phenomenal American business titan. He started the company in a garage in California, and he eventually helped create and even change the industry,” Cottone said. “Him and his company represent what American business is really all about, in terms of creativity, vision, energy.”

Cottone advises Apple shares owners to hold their stock and add more if the value declines 10 percent to 15 percent. That's in line with Madigan's belief that Apple shares will gain value in the next 12 to 18 months. 

Former chief operating officer Tim Cook is replacing Jobs as Apple’s CEO. With 12 years at Apple, Cook has “fairly sound” credentials, Ferris said. “He was hand-picked by Steve to lead the company. He has a logistics background, and he was successful when he filled in for Jobs before, when Jobs took medical leaves. What we don’t know is if he has the same visionary aspect in terms of creating brand new products.”

As for Apple sales, Ferris doesn't think they'll be affected by the resignation because people are attracted to Apple products for their interface, quality and design – not because Steve Jobs is the CEO.

“It depends on to what extent Apple has been able to institutionalize excellence in product design, in product innovation, and how much is that centered around one person,” Ferris said. “Right now, I think the betting is that Apple will continue to be fast-breaking and innovative. But we never know for sure.”        

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