If you believe a company can't sustain the loss of a single individual, you shouldn't invest in it. Steve Jobs is a wonder, but he is not a one-man $300 billion corporation.
Image via Wikipedia
We had to know it was going to happen. As soon as word came out about Steve Jobs' latest health issue, a swath of commentators would jump on the "shareholders' right to know" issue and run with it. Steve Jobs, they would argue, is Apple personified. Without him, it's over.
Run with it they did. Not many got further than Brett Arends of MarketWatch, who, without any apparent nod to irony, decided to go big: "Jobs' employment at Apple is share-price sensitive information," he wrote. "He's probably the most important chief executive in the market, one of the most important people in the economy." Why, he demanded, were we not privy to more detailed information about Jobs' health? This, in other words, was a matter of national importance.
But is it? This latest Jobs health scare has brought into precise focus the inanity of the cult of the CEO, at least as far as the stock market is concerned. Steve Jobs is clearly a genius marketer. And he might just have a few more big ideas up his sleeve. But every journalist or shareholder who bemoans the lack of information about Jobs' leave is simultaneously insulting the other 47,000 employees who have made Apple (AAPL) such a success. And Jobs himself. He's the smartest man to ever walk the earth, but he hasn't taken care to build a deep bench? Especially given that he knows more than the rest of us about what's wrong with him? Would he do that to shareholders? Can we send him to jail for it?
Arends also floated the idea that with the paucity of information about Jobs coming from official sources, the opportunity is ripe for unscrupulous hedgies to float the "Steve Jobs is dead" rumor in order to make a quick buck. It's all about the integrity of the markets, you see. If other CEOs start to act like Jobs, demanding privacy about personal issues, what will become of us? We won't know anything about anything anymore, and the entire economy will come grinding to a halt. And hedge funds will win again, like they always do. Goldman Sachs (GS) will surely be involved, somehow.
( Apparently no one told Arends that the hedge fund world has people in high places at pretty much every technology firm in the Valley. They don't need to conjure up fake news to make money these days. They're getting the real stuff, via "expert networks." It's easier to make money from reality than myth.)
Charisma doesn't last forever
Apple stock slumped—momentarily—on the news of Jobs' leave, and then recovered on the total lack of follow-up news. This leaves one to conclude that this was…much less important news for shareholders than the likes of Arends would have us believe. "[There is] a fervent though erroneous belief that the quality of a CEO is the primary determinant of firm performance," wrote Harvard professor Rakesh Khurana in his 2002 book Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs. But what if we've already got a charismatic CEO? Is it irrational to hope that they live forever? Short answer: yes.
Before the rejoinders come back at me in full force, I'll admit that I have and will continue to contribute to CEO-as-hero canon. But we've got to draw the line somewhere. Will JPMorgan Chase (JPM) be a lesser place once Jamie Dimon leaves? Sure, if you're talking about being able to personalize a corporate narrative while tossing in a few choice words for good measure. Will the stock drop when he announces that he's decided to move on? It surely will. But if you can't take that kind of uncertainty, I'm not sure you should be buying stocks at all. Things change, people. And sometimes, that change is not for the better.
Jobs is a great marketer, and perhaps his greatest product is himself. (He will likely own the black turtleneck-and-jeans look for all of eternity.) But he is human, and one day he will leave the company he has helped reinvigorate so—for one reason or another. For now, the company is a finely tuned innovation machine. If you want my advice, I'd buy on the dip the next time Apple shares drop $20 on Jobs-related health news. But that's just me. Steve Jobs is a wonder, but he is not a one-man $300 billion corporation. No one is.
On the other hand, if you're talking about Warren Buffett and Berkshire Hathaway (BRKA), I would like to know if he's still drinking as many Cherry Cokes as he used to. It cannot be good for his health, especially at his age.
Also on Fortune.com:
Adult supervision over: Schmidt yields back to Google co-founder Page
Exits: Steve Jobs and Eric Schmidt
Apple's not alone in succession plan woes
Apple should follow Ferrari's model, look at them, since Enzo died they've produced their best cars ever!!
The most impressive thing Steve Jobs has ever created is not the iPod, iPhone, or iPad. It's the company called Apple, Inc. His "DNA" is deeply embedded in the way Apple functions as a corporation. Yes, he will be missed when he no longer leads the company, but his creation will continue to produce products that reflect his philosophy.
@Marshall Thompson
Dell, HP and the rest are in the same boat...
Imagine the labour problem Apple will face with the kind of iHaters in the labour unions, Apple will have to close down in no time.
If you REALLY think all the ideas and creativity comes from the top, you have all fallen into that "it's all about me and no one else" mindset. I even heard a talking head saying he doesn't even know what the other 47,000 employee's do at Apple. PLEASE. I work software engineering and ideas come from EVERYBODY! We all pitch ideas. The best CEO surrounds himself with creative people. Those who think it is all the CEO are deluded. And btw, Edison invented his first couple of patents. The others were done by others and registered as Edison's ideas. Just saying. And all these people running companies are from my generation, the navel gazing me generation. I am SO embarrased to be part of this generation. And before you turn Jobs into a god, remember these two words - NEXXT COMPUTERS!
Apple does not make a single product in the United States. Thanks for nothing, Steve.
Engineers delight in awkward complexity. Genius delights in simple, elegant solutions. Jobs and Wozniak are masters of the elegant.
Isn't this rich--FORTUNE, the mag that had more to do with glorifying all things CEO over last 15-20 years than just any other--now pontificating about cult they helped create. It's time that Apple shareholders insist Jobs leave for second time. Company can survive just fine without him and they need to get on with it.
While Steve Jobs may be a great CEO, it's quite reasonable to question whether he's really more creative & innovative that the geniuses he pays. The smartest guy in the company who fixes all the small tech problems is the CEO?
Such thinking betrays a lack of familiarity with how technology is produced in the real world. There's another Steve Jobs-like person born every minute, and probably several working at apple right now have their own garages full of projects.
The reason his story is so appealing to the geeks is that he's *just like the rest of us geeks*. People who forget this are reliably marked as clueless by those actually participating in the tech industry.
Here here! If any C level employee (and notice I use that word) of a company doesn't not provide for clear and competent succession then that person is a failure not matter what their track record. I am at that level, and it's about the company NOT about me. It should exist long after I'm gone...I'm only a steward, caring for it and passing it along.
But somewhere in the last 10 years, idiotic people have a cult-of-personality take on both companies and stocks. I have some sage advice for you: if the company even SMACKS of having a cult leader and not a CEO, the situation is NOT sustainable. If Apple cannot keep producing products at the level it has, it won't survive. And the only thing Jobs should have done in his tenure is to make sure that machine existed and is well oiled, ready for the next steward.
Personally, I think he got lucky at a time and place with the products. The future will hold a different time and place (I use an iPhone and, frankly, it's nice but didn't change my life any). Hopefully he's groomed someone to keep that going because if he hasn't, you should invest somewhere else as the company will under-perform.
Clearly a statement by a journalist not a businessman. Consumers, investors, staff, most pundits etc. all need to personalize brands like Apple to an individual until they reach a point of such ubiquity like Microsoft that the leadership becomes less relevant. Apple is a lifestyle choice as much as it is a practical product choice and it is without question that Steve Jobs has continually ensured that this is a sexy one. Even if he isn't, then the buying public assume he is, so to replace him requires a story that is compelling enough to show it as an improvement. Do you really thing Facebook would be hyped to a $50 billion valuation without the bad guy coming good 'coincidental' story from Hollywood concurrent with its IPO?
as an Apple investor who bought when it was 6 1/2 bucks, I'm NOT selling at this point either-
I vote that Tim Cook will also receive a $1 annual salary, and give him a slightly used private jet
bang, just saved at least 59 million every year!
I'm sure analysts would've reacted the same way had Bill Gates declared in 1996 that he was going on open-ended medical leave. And a comparison of Microsoft's performance during Gates's tenure and that of Steve Ballmer suggests that analysts would've been right in freaking out about a Gates-less Microsoft.
Job's has the creativity of Edison, the sales and marketing prowess of Sam Walton and the drive of Henry Ford. Those are some gigantic foot steps to walk into, doesn't matter who you are.
I agree with the author's general premise that Apple is not Steve Jobs and Steve Jobs is not Apple. I also believe that Steve Jobs is a person and deserves his privacy. He did nothing to request public notoriety. The Apple board is doing the right thing in not sharing his private health information.
That being said, I am both an Apple fan and an AAPL long position shareholder, and because of the company's past success (and hopes for the future), AAPL has grown to be a very significant piece of my stock portfolio. I am interested in keeping it that way (unless something else increases that much in value).
We have probably all see that when Steve Jobs has a health issue, the stock drops. That is probably unwarranted, but it happens all the same. The Apple board of directors has surely seen that, too. Those people have a direct financial obligation to shareholders - to protect their investment in the company. They need to start talking - not about Steve Jobs' health, but about a succession plan so that the stock *doesn't* go through these unwarranted dips and weaves. I think that *that* is a very reasonable expectation as a shareholder.
(Caveat: I know that Apple stock can perform well in Jobs' absence. That is not my point. My point is that the market reacts very strongly when it is clear that he will be absent.)
Finally, an article not about Steve's body parts. Apple is way beyond the "Steves" renegade operating system from Sunnyvale.
a CEO makes all the important decisions: acquisitions, new plants, new products,... Get the wrong guy (like Ken Lewis vs. Jamie Dimon) and everything goes down the drain. Get the right guy: Buffett, Gates, Ellison, Jobs,... and the stock soars.
Couldn't agree more. The stock market used to be about product, performance and financials. Now, it's about fear, misdirection and flash-bang short profits. It's difficult to go long on any stock any longer because professional investors knows that others are hedging on losses against you and will do whatever it takes to manufacture those losses. I've long suspected, too that brokers are shorting sell prices on highly traded stocks in order to generate more cash flow for themselves. Can't prove it but for a highly traded company like Apple, you cannot tell me that with a historical beta of 1.4 that Apple can only rise 1% while the S&P 500 grows more than 7% on a lack of any direction.
@Posted By duston minneapolis mn: January 21, 2011 11:46 am I can care less!!! I have nothing to do with anything apple!!!
That's an absolute lie! You actually take the time to read and respond to an article about Apple, which you apparently say does not interest you. lol
For all I know, Steve is still among us, alive and kicking (buts). Now, suppose he retires altogether ? SO WHAT ? Apple will still be here, kicking as many buts as it can, so they were tought to do. I only wish Steve the best, and recovery, to ... kick our buts for this much ado about nothing...
So, uh, where were you when Mr. Jobs was ousted and then Apple proceeded to drive steadily into the ground? What was the name of the guy that pulled them back from the brink? There's no speculation involved here. Are they in better shape now then they used to be? Yes. But then again so was Microsoft at one point, so was Dell, and so was Motorola with the Razor. Corporate thinking and focus groups can't tell you you want something that you haven't thought of. Steve Jobs can. Apple will need someone like him for their future beyond the products which are currently in their pipeline.
How can Jobs be a GOD? The man uses an iPhone and doesn't find it irritating that there is no button that Deletes all mail from the inbox.
The really funny thing about that is, that it would take a programmer 1 minute to write the code and test it. I guess they have other things on their minds, like releasing 10 new versions of the iPhone so that their stock can go higher.
Mr. Jobs is a very important PART of the whole Apple. Many parts make up the whole, great and small. There are dignified parts and there are uncomely or less dignified parts. Nevertheless, they are ALL parts which comprise the whole.
Read Full Article »