Apple (AAPL) Tim Cook Replacement Rumor Has Wall Street Buzzing
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Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.5%
EPS Growth %: -0.7%
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Is Tim Cook in hot water at Apple (NASDAQ: AAPL)?
That is the scuttlebutt on Wall Street Monday following a Forbes article over the weekend. Forbes' contributor Gene Marcial said Wall Street sources close to Apple executives claim the company is secretly searching for a new CEO to replace Cook.
With shares of Apple down 44 percent from their all-time September 2012 high, it is not surprising that the Tim Cook-replacement talk is kicking into higher gear. However, while clearly not a great stat for any CEO to reign over, today's rumors about Mr. Cook should be taken with a grain of salt.
The fact is that while the recent slide in shares of Apple has been frightening for shareholders, the stock is still up about 7 percent from the $370.71 closing price on August 24, 2011 when Steve Jobs stepped down and Tim Cook stepped into the top spot. Not to mention Tim Cook was hand-picked by Mr. Jobs who "strongly" recommended him for the CEO job.
While today's rumors are likely supported by little or no truth, they do underscore the uneasiness being felt by Apple shareholders who worry about intense competition from Samsung, the company losing its cool factor and the company's lack of production innovation.
For anyone to expect Cook to keep up the frantic pace of growth Apple witnessed over the last decade would have been naive. Apple is a different company now. No longer is it about growing revenue 80 percent per year. Now it is about managing earnings, giving back to shareholders and managing expectations. IBM (NYSE: IBM) has successfully done this for years and should be a model for Mr. Cook to look at. Despite its recent setback, IBM trades at a multiple of 11x next year's earnings while Apple trades at 9x. Placing an IBM multiple on Apple yield a price of $480 per share, or 22 percent higher than the current market price. No, this is not one of the 100 percent return year's seen in the past but it is a damn good return. The jury is still out on Cook. In order to be successful he needs to move away from the Steve Jobs-model and move to the Tim Cook-model. Over the next-twelve months Cook can really earn his stripes as CEO or bury himself.
Apple is expected to report second quarter 2013 results after Tuesday. Analysts mostly expect the company to miss this quarter and provide a weak outlook for the upcoming quarter. Given that today's CEO rumors are nothing more than idle chatter it is unlikely that the company or the analyst community will address the speculation on the earnings call.
Shares of Apple are trading up 1 percent early Monday to $394.61.
That is the scuttlebutt on Wall Street Monday following a Forbes article over the weekend. Forbes' contributor Gene Marcial said Wall Street sources close to Apple executives claim the company is secretly searching for a new CEO to replace Cook.
With shares of Apple down 44 percent from their all-time September 2012 high, it is not surprising that the Tim Cook-replacement talk is kicking into higher gear. However, while clearly not a great stat for any CEO to reign over, today's rumors about Mr. Cook should be taken with a grain of salt.
The fact is that while the recent slide in shares of Apple has been frightening for shareholders, the stock is still up about 7 percent from the $370.71 closing price on August 24, 2011 when Steve Jobs stepped down and Tim Cook stepped into the top spot. Not to mention Tim Cook was hand-picked by Mr. Jobs who "strongly" recommended him for the CEO job.
While today's rumors are likely supported by little or no truth, they do underscore the uneasiness being felt by Apple shareholders who worry about intense competition from Samsung, the company losing its cool factor and the company's lack of production innovation.
For anyone to expect Cook to keep up the frantic pace of growth Apple witnessed over the last decade would have been naive. Apple is a different company now. No longer is it about growing revenue 80 percent per year. Now it is about managing earnings, giving back to shareholders and managing expectations. IBM (NYSE: IBM) has successfully done this for years and should be a model for Mr. Cook to look at. Despite its recent setback, IBM trades at a multiple of 11x next year's earnings while Apple trades at 9x. Placing an IBM multiple on Apple yield a price of $480 per share, or 22 percent higher than the current market price. No, this is not one of the 100 percent return year's seen in the past but it is a damn good return. The jury is still out on Cook. In order to be successful he needs to move away from the Steve Jobs-model and move to the Tim Cook-model. Over the next-twelve months Cook can really earn his stripes as CEO or bury himself.
Apple is expected to report second quarter 2013 results after Tuesday. Analysts mostly expect the company to miss this quarter and provide a weak outlook for the upcoming quarter. Given that today's CEO rumors are nothing more than idle chatter it is unlikely that the company or the analyst community will address the speculation on the earnings call.
Shares of Apple are trading up 1 percent early Monday to $394.61.
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