MacWorld Step Is Yet Another Positive for Apple

Along with the usual economic fears and estimate reductions, the news that Apple (AAPL) was stepping back from MacWorld and that Steve Jobs is not presenting this year has analysts and "investors" dropping AAPL hard again. We try not to write about Apple since the name is clearly over-covered but like many, we can’t resist.

Apple has already been visibly absent from most technology conferences as both a sponsor and a participant. You will find Sun (JAVA), Microsoft (MSFT), IBM and HP (HPQ) all the time but just about never Apple. Google (GOOG) and Facebook are appearing more and more and sending speakers along with sponsorship fees as well. This has been true of Apple for some time. Despite they company's success it just doesn’t play that game and I for one am glad it doesn’t. (That’s a whole other post however…)

Under the "be careful what you wish for" angle, this is a step away from the very thing most people complain about which is the huge value afforded to Steve Jobs and how risky it is to have it tied to one man. The facts are that most Apple customers are buying the products because of the design and features offered rather than some cult-like following of Steve Jobs. Of course most of the people that are into technology and blog are very into the whole cult-of-Apple thing, so it gets over-covered. Getting Steve Jobs off the stage is a good idea in terms of beginning to share the limelight and build a broad, capable team of managers.

For example we saw Marissa Mayer is "just a VP" at Google and she impressed a tough crowd at Le Web last week with her obvious intelligence, drive, talent and ability. That’s probably more important for investors to know than how Larry, Sergey and Eric are dressing and saying the same general things again.

Should Apple clarify how it runs the company and demonstrate that it has a deep bench and the ability to be successful if it loses some key members of its team? Yes. But the fact is that pulling back from MacWorld is consistent with everything it is doing and makes total sense to us. It also ties right into what critics of the "Jobs risk" have been wanting. So what’s all the fuss?

Amazingly Oppenheimer downgraded Apple shares yesterday and is quoted as saying that "[until Apple elaborates on the Jobs health thing] it can no longer continue to recommend Apple as a long-term investment."

As always, we continue to be very happy about the consistently idiotic and noisy world of what now passes for "the Street." It reminds us of the good decision to leave it to focus on more practical, real, profitable research work.

[Disclosure: We do have a small long position in Apple at the time of this writing. We have no idea where the stock is going in the next several months but we believe its franchise will eventually be worth quite a bit more and are in no rush to see it reflected in the share price.]

Comments

[michiganjake:]

Amen!

2008 Dec 18 07:18 AM

[BJMC:]

Sir

You are in a minority of commentators

Hopefully though, you are consistent with a majority of investors.

Thank you for an objective and sensible viewpoint.

2008 Dec 18 07:19 AM

[Timeline St...:]

Absolutely! This will add a huge amount of value to shareholders in the end as millions of people in 80 countries are now able to watch Apple product launches. I think, also, that the reason Steve will not be at MacWorld is that they are preparing a product launch that will happen in Feb/Mar, and he will give that one from the Apple campus. It will be the launch of the launches!

2008 Dec 18 07:43 AM

[inthedark:]

Does better as 'beleaguered' Apple.

2008 Dec 18 08:04 AM

[wallton:]

I had been waiting for an article with such a perspective. Nice job. It is totally consistent with Apple's marketing behavior, even within the Macworld-world (Macworld East?). One thing is for sure, Apple is going to drive it's own ship, and it can only help to show that more than one guy has an idea about how to steer.

2008 Dec 18 08:50 AM

[Jon T:]

SO right. Apple is putting itself into the driving seat more and more. Which can only be good for the balance sheet and investors.

And as for those analysts, what are they doing. They seem to be removing themsleves from reality more and more...

Your summary was perfect: "the consistently idiotic and noisy world of what now passes for "the Street."

2008 Dec 18 08:52 AM

[mollytjm:]

thank you for this article! i've been saying for a long time that Apple should untether itself from these specific big dates for coming out with new product lines. the dates impacted the sales because people always feared what would be announced that would make the purchase of the day before, obsolete. obsolete is the tech word of the day anyway, why make it worse?
Apple has so many wonderful, brilliant people in it's huge organization. It's time people understand that Apple is not one man, savvy as he is, and that the company is extremely sound and well placed in the global economy. Steve Jobs secured the future for Apple as Disney did for his company. These are Icons in innovation. Long may they rule:)
long appl

2008 Dec 18 09:43 AM

[waf76:]

I can no longer take any Apple analysts seriously with the exception of Andy Zaky. They are looking out for the best interests of their clients. When they downgrade apple which is traded at 3x cash and has been absolutely remarkable in this downtrodden economy I suspect their investors are building positions gradually in Apple. When they start upgrading the stock at targets that seem unreachable at this moment that is when their investors are selling into rallys. At the end of the day all hedge funds are gonna want to be in on Apple as it is one of the only companies in which the current downturn has not significant impacted their business. Small investors should continue to stay long Apple. Patience is a virtue.

2008 Dec 18 10:11 AM

[fakeAppl:]

You forget that Steve Jobs doesn't just represent the cult-factor. Many investors and journalists see him as the only sole reason Apple products have great design or are easy and intuitive to use. He has a special talent of knowing what product works and doesn't, most of the time. That talent is crucial and is the largest risk factor to Apple.

2008 Dec 18 10:50 AM

[KenC:]

Yeah, you wan't Apple to respond, keep making empty threats!

2008 Dec 18 01:52 PM

[Kris Tuttle:]

I agree that Steve Jobs is more than a cult-factor and has had a very visible and material role in getting the company executing again. Seems like more people are expecting Apple to at least start discussing the formulation of a transition plan if and when Steve Jobs decides to do something else for whatever reason.

This is likely to bring anxiety in the Apple investor base since they may be forced to recalibrate their long-term visions of who is running Apple and how are the doing it.

However I'm not sure that it can't be done well. Hurd has done well over HP and he's basically an execution/numbers guy, not a genius in design or technology. Similar things could be said of Gerstner when he came into IBM.

In fact it could be that as Apple transitions into more of a mainstream computer company a different leader could be even better. This isn't too say that there are not reasons to worry. Until we know what the plan looks like and get some visibility of what the new team would be like it's hard for investors to decide how important an issue this is.

Big Shoes to Fill, no doubt.


On Dec 18 10:50 AM fakeAppl wrote:

> You forget that Steve Jobs doesn't just represent the cult-factor.
> Many investors and journalists see him as the only sole reason Apple
> products have great design or are easy and intuitive to use. He has
> a special talent of knowing what product works and doesn't, most
> of the time. That talent is crucial and is the largest risk factor
> to Apple.

Jan 02 03:37 AM