Apple's next big thing: A new CEO?
If sentiment doesn't improve alongside the launch of something new and successful soon, Tim Cook's job could be on the line.
Did Apple's (AAPL) board of directors make too quick of a decision when they appointed Tim Cook as CEO?
Sounds crazy now, I know, but so did my riff on TheStreet -- along with Tim Cook-Steve Jobs comparisons -- back on Aug. 24, 2012, when AAPL traded around $663, headed for its all-time high of $705.07:
Emotion has a fascinating way of working itself into stock investing. You're long AAPL . . . For perfectly understandable reasons, you're passionate about the position. The best mistake you can make is to detach yourself from the hysteria and take some profits.
Because, if my long-term bearish outlook pans out and the stock follows, more than a few longs will dig their respective heels in. They will check their cost bases and claim they'll sell if AAPL falls (insert arbitrary percentage here).
However, as it falls those profits you thought you were about to bank erode. You hold out for a rebound to recover a few bucks. The stock drops more. Before you know it, your profit pales in comparison to what it once was, you're sitting at break-even or, worse, you're holding an on-paper loss.
And here we are, with AAPL waffling in the low-to-mid $400s eight months later.
If the next six months or a year go by and things do not improve, we'll look back on this -- and it will not seem funny. What do I mean by "improve?"
First, sentiment must improve. That's what drives AAPL. Tim Cook presides over uncertainty that -- fair or not, wrong or right -- looms because he is not Steve Jobs. That's why the stock is down.
Investors would be more than willing to look the other way on slowed growth, an earnings miss or two and even a different way of doing things at Apple if they had confidence in management. But they don't. They give Jeff Bezos at Amazon.com (AMZN) massive benefit of the doubt, but not Cook.
It's one thing to run a supply chain (or operate retail like Ron Johnson did in the shadow of Steve Jobs). It's entirely another to be in the same class as Jobs and Bezos as a high-profile CEO.
Bezos has the same flavor of skins on the wall as Steve Jobs does. Visionary skins. Trust-me-I-know-what-I'm-doing skins.
Second, Apple must produce a product that's actually new. It's all good if the iPhone isn't revolutionary (see TheStreet). Evolutionary is fine on the existing product line -- if it ain't broke, don't fix it. But, man, you have got to come up with something new. And soon.
Forget these look-backs at how much time Apple has always had between-product launches. That means nothing now. We knew something great was coming under Steve Jobs so timing never mattered as much. We had confidence. But now -- fair or not, right or wrong -- we don't.
And, at some point, Apple's board will lose the confidence they had. How could any board not given the circumstances? How can they look at Tim Cook and not second-guess their decision to make the symbolic move to grant the guy one of the biggest stock awards in the history of executive compensation? I'm sure he has a pretty sweet separation package as well.
That aside . . . whether the world wants to acknowledge it or not, the clock ticks on Tim Cook's tenure as Apple CEO. If he doesn't duplicate Steve Jobs' magic in the next six to 18 months, the board will have to backtrack.
Sure, Jobs wanted Cook to get the gig. But he didn't make the decision to prematurely anoint Cook the guy for the next decade. Symbolic or not, that was a bad move. And don't be surprised if you start hearing talk about Apple reversing course much sooner than expected.
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