When an unusually gaunt Steve Jobs unveiled the 3g iPhone last month speculation about his heath started again. In response to a recent query Apple released a statement saying that Jobs’ health was a private matter. Some think otherwise and argue that since Apple’s performance is so tightly bound up with Jobs that he is public property as much as his company.
I disagree. Jobs is a private individual and the state of his health is a matter for him. It is common knowledge that he had pancreatic cancer which was successfully operated on in 2003. If Apple shareholders were sufficiently concerned about his health then they could have sold when that procedure became public knowledge and no doubt many did. Those who held on can have no complaints. They know Jobs’ history of illness and they know Apple is a secretive company. If they don’t like it they can sell their shares. Some complain this means selling at a loss but anyone buying shares in a company knows they can go down, if they do not they should not be trading stocks. If you want steady, risk free rises stick to Treasury Bills.
Jobs was responsible for a remarkable turnaround in Apple’s fortune and has made its shareholders very rich. When Jobs took over in 1997 Apple’s share price hovered under $5, at their recent peak in Jan 2008 Apple shares touched $200. Apple’s share price cannot keep climbing at this rate. The company hit a grand slam with the iPod and it will not repeat that success with the iPhone and Apple TV, the problem Apple shareholders have is that the assumption it will is already priced into Apple stock.
Right place, right time
The iPhone will be a success in its niche – high end mobile devices – but it won’t break out the same way the iPod did. The iPod rode the convergence of a number of factors; the emergence of filesharing, the expansion of broadband internet which facilitated the massive transfer of small files and mp3 compression which allowed music files to be shrunken to a tenth of their size. All that was required to complete the revolution was a small, cool, easy to use music player with equally beautiful software. These were Apple’s strengths, Jobs spotted the trend, bet the company and won. This will never happen again. At least not to Apple. The stock is already too high, swollen by the expectation that Apple will reign supreme.
All CEOs are human, Steve Jobs has his strengths and weaknesses and people who invest in Apple know what they are. If they are nervous about the future the answer is simple: sell.
Pic: Danny Novo
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Good post!