Don't see magic fading following passing of company co-founder; 'creative spirit is still there'
The death of Apple Inc. co-founder Steve Jobs is not being viewed by the financial markets as a turning point for the company, according to financial advisers and market watchers.
“The death of Steve Jobs is a true tragedy when you consider the impact that he has had, but in terms of Apple stock it has not altered our investment strategy,” said Clinton Struthers, owner of Struthers Financial Services, a $100 million advisory firm.
“He was incredibly constructive, and you see so little of that type of entrepreneurial influence anymore,” he said. “But as a company, the creative spirit is still there and Apple will continue to be strong.”
Shares of Apple Ticker:(AAPL), which had gained more than 17% this year through yesterday, fell by 1% in premarket trading today on the news last night that Mr. Jobs had died at 56 following a long battle with cancer.
After hovering in positive territory for much of the morning, the stock price started falling into negative territory by around 1 p.m., when it was trading at around $377, down about $1 or less than 0.5% for the day.
The S&P 500, which was down 9% for the year through yesterday, was up nearly 1% at around 1 p.m. today.
“The real issue of the impact [of Mr. Jobs' death] will be the investor confidence in Apple's management,” said Harold Evensky, president and principal of Evensky & Katz LLC, a $700 million advisory firm.
“Apple is going to continue to be a great company, and I don't think one person did everything there,” he added. “But it does create questions.”
Mr. Jobs, who co-founded Apple in 1976, announced his resignation as chief executive of the company Aug. 24, but stayed on as chairman of the board.
He was replaced as CEO by chief operating officer Tim Cook, who has received strong support from the financial analyst community.
“We believe Tim Cook is well-qualified for his new role as CEO and has at his disposal a deep and talented executive team in the areas of supply chain management, hardware/software design and product marketing,” said Michael Walkley, a technology analyst at Canaccord Genuity Corp.
“We continue to anticipate strong earnings growth for Apple over the next several years with very strong demand and relatively low global market penetration for the iPhone, iPad and Mac products,” he added. “We reiterate our ‘buy' rating and $545 price target; Apple remains a top pick.”
Even while expressing sadness at the loss of Mr. Jobs, Sterne Agee analyst Shaw Wu showed support for the company by declaring, “We are buyers on potential weaknesses in Apple shares.”
In the near term, he added, “the stock may remain volatile as Tim Cook gains confidence from investors.”
Sterne Agee maintains its buy rating for the stock as well as its $500 price target.
“We will continue to believe that Apple is positioned to outperform in this tough macroeconomic environment with its defendable strategic and structural advantages, and its vertical integration,” Mr. Wu added.
