Apple’s Stock: Looks Like Jobs’s Departure Was Priced InApple shares are down about 5% in after-hours trading following the news that Steve Jobs was stepping down as CEO.
This is to be expected: 5% is not actually a large drop, considering the importance of Jobs to the company he founded. Your Digits blogger doesn’t go in much for stock pricing, but it seems to her that this rather small selloff is simply an emotional reaction.
That’s not to say that the loss of Steve Jobs as CEO should be taken lightly, although he will remain as chairman.
What your Digits blogger means by that is this: Anyone who did not price Jobs’s coming departure into their purchase of Apple shares has not been paying attention.
Now, maybe there will be questions about how much Apple should have disclosed to shareholders. But the fact of the matter is that Jobs has been on medical leave since January. He was diagnosed with pancreatic cancer in 2004 and underwent a liver transplant two years ago, as Yukari Kane mentions in her story about the resignation.
Apple presents an air of magic, and everyone involved with Apple wants Steve Jobs to be healthy. But this is a serious situation, and investors by this point should have accepted it as such.
Apple’s share price is astronomical, it’s true. But that isn’t just because of Steve Jobs. It’s because Apple has been producing – increasing its share in the PC market, continuing it performance in smartphones and MP3 players, and just trouncing everyone when it comes to tablets. If Jobs weren’t ill, one could imagine that the stock price would be a good deal higher.
Of course, some could point to Apple’s previous stint apart from Steve Jobs – when the company nearly failed before bringing him back as chief executive. In that case, however, Apple was having trouble even before Jobs’s departure. It certainly was not coming off a string of hit after hit after hit.
A logical pricing of Apple’s stock might take into account the importance of Jobs, but it should also account for the fact that Apple appears to have a pretty good thing going.
Plus, Jobs has known for a while that he is facing a serious illness. There hasn’t been anything stopping him from making sure a long-term strategy is in place. He is going to remain as chairman, and the new CEO, Tim Cook, has been running day-to-day operations for some time.
So given the fact that Jobs is so identified with Apple, a 5% drop seems unsurprising and not terribly big. Jobs’s departure, while sad, appears to have been mostly priced in.