Analyst: Steve Jobs' "spirit" has been institutionalized
Steve Jobs in June
Traders may be punishing Apple (AAPL) for Steve Jobs' decision to skip his annual Macworld keynote — rekindling fears about his health in the wake of his 2004 surgery for pancreatic cancer — but analysts who follow the stock closely generally agree that those fears have been overblown.
Kaufman Bros. Shaw Wu is the latest to weigh in on the issue. In a note to clients Tuesday, he acknowledges that Jobs deserves a lot of credit for the "revival and success of Apple." In language that could have been written by Cupertino's PR department, he credits Apple's CEO with "helping revolutionize the world" with a long list of products and innovations, from the Apple II to the Apple Store.
But he argues that Apple doesn't need Steve Jobs to prosper, because his "spirit" has been "institutionalized":
"In our view, AAPL has an uncanny ability to attract and hire Apple 'fanatics' who are entrepreneurial, work hard, and are looking to change the world. The difference with AAPL today is that in addition to being innovative, the company has world-class operations and execution. We believe for a company of AAPL's size, … there are a lot of other people besides Steve Jobs driving success including members of its senior management team down to its 32,000 individual employees."
As proof, Wu ticks off a list of hit products that Apple introduced when Jobs was no longer there to drive innovation: the Macintosh Quadra, QuickTime, PowerMac and PowerBook, and Apple IIgs.
Okaaaay. But none of those products quite rises to the level of the iPod, iTunes, Mac OS X, the iPhone or the App Store.
In any event, Wu is sticking with his $12o price target. "With the pullback in the shares," he writes, "we find the risk-reward favorable for longer-term investors."
Apple closed at 86.38 Tuesday, up 0.75% for the day.
I was at Apple when Jobs was absent, and when he returned. Before he returned, there were excellent people at Apple, with the same fervor as they have today, including (for example) the same core industrial design team that is there now. The difference when Jobs returned was strong leadership and single-minded vision. Jobs is a unique virtuoso of new product development and marketing. I don't see how that can be "institutionalized".
The key point is that Jobs didn't come up from the corporate ranks. All that does is reward mediocrity and thinking "inside the box." If Apple is to remain at the cutting edge, Jobs needs to find a protege with his or her own vision and groom them to take over.
NuShrike, re-read my comment. I said that Disney and Jobs AREN'T the same – and the difference is precisely in the area of creativity.
Is Steve creative? Perhaps to some degree, but that's not his forte. Was Disney? You bet, and it WAS his forte!
Steve is an entrepreneur with good instincts for what sells and a drive that won't quit. THAT'S the thing Apple will need to replace in the far distant future when Steve Jobs isn't around any more….
That's an interesting perspective, let's put this "spirit" in Disney terms.
Yes, Walt is no longer around, but the business he left is a multi-billion industry.
But, what is this industry, and what did Walt do? He was at the fore-front of new technologies and ideas. I name: monorail, theme parks, animated color motion picture films, new stories, etc.
What has the Disney he left done with it? It came out with a couple handfuls of really extraordinarily animated films (Beauty and the Beast, Aladdin, etc), and then the Animation studio ended up almost shuttering due to the MBAs running it instead of true creative spirit. It still shows with the endless sequels that 'creatively' milks the classic stories for billions they are still worth. Pixar was then brought in to revive the Animation core, and bring in "new" stories when John Lassiter previously left due to how uninnovating, and empty Disney was becoming.
Monorails (dead): Disneyland (Anaheim) has switched entirely to natural gas-powered trams to shuttle theme-park goers around the myriad of parking lots. Neither Disneyland or City of Anaheim is interested in connecting a people-mover/monorail from Disneyland to the local Metrolink/Amtrak station. A very different experience compared to say Disneyland Tokyo where the train stops there all day, and Disney-themed music plays in the station.
Theme Parks (almost dead): I haven't experienced WDW to compare by, but the original Disneyland is the most poorly funded, and California Adventure is a farce. Compared to the non-Disney built Disneyland Tokyo and Disney Sea (which explores even the Jules Verne stories) — both puts Disneyland and CA to deep-shame by being more "Disney". Then, the huge shopping mall Ikspiari next to Disney Sea that can only be described as an outdoors South Coast Plaza, and so makes Downtown Disney look like a crumbling wasteland.
So, I think I named all the aspects where "spirit" doesn't cut it. IMHO, Disney is now a empty-soul that doesn't have the insight of why the current paths were chosen and so cannot choose new ones, but continues only because revenue streams are well-established.
Maybe John Lassiter can be the next dreamer, maybe this can all be blamed on Eisner, but the cockpit is still empty.
Is Apple also going to be empty again?
I don't think you can completely compare Steve Jobs to Walt Disney.
I see Steve as much more of a pure entrepreneur, i.e., someone who relies to a large degree on the creative input of others. Originally, I believe Steve Wosniak was the source of that creativity.
Walt, on the other hand was both a creator and an entrepreneur. And when he died, it took a while for Disney to recover, precisely because he was so much of what was Disney.
If Steve were no longer at the helm of Apple, what would be missing is that special ability to sense which way the wind blows, to decide on a course, and to keep a firm hand on the tiller.
Steve is a great captain. And that's what Apple would need without him.
But the ship, the creative spark that is Apple, would still be there, just as it was when he was gone before.
And a mighty ship it is indeed.
So many hateful people here today.
1. When John Scully was the CEO, Apple's US market share was close to 20% at one point, just before Windows 95. What they messed up badly was Copland.
2. QuickTime is the foundation of everything Apple does today. Powerbook was extremely popular and ahead of its time when it was introduced.
So, Apple had talented engineers to execute some good products while SJ wasn't there.
However, when Apple was stuck in Copland-noland, a lot of talented people left. We saw a lot of mediocre products from Apple during those years, before SJ returns.
So, while Apple has a lot of talented people today, they are working at Apple because of the leadership. If Apple takes a turn for the worse, nobody knows how long those people will stick around.
Wu is one of the most optimistic analyst on AAPL. This is just his point of view. Investors should make their own judgement.
How true. Walt Disney World has prospered for 43 years . Walt departed in 1966 , The first resort opened 5 years after his death and has been growing exponentially each year.
Bull, I lived the Apple IIGS years from 1986 to 1992 (and I still own it). Jobs was responsible if not instrumental in the entire destruction of the market-share dominating and lucrative Apple II line.
The IIGS could have been the ARM revamp that would've taken the business into the next generation a decade before the Newton and the iPhone, but the powerful Macintosh fraction dominated and shutdown all Apple II development. The only reason the IIGS even came out was because it was already coming out of the pipeline. It was also the only Apple II product that sold for so long with only one-to-two years of advertising.
As much as the IIGS did introduce the first use of ADB keyboard and mouse (a precursor to USB), color QuickDraw II (different color version was adopted by Mac), full synthesizer chip (which caused another Apple Music lawsuit and prevented any further use music tech in any other Apple computer), the signature Platinum grey color, it was the first and last Apple II to use it (ignoring the IIe re-release), and only 6 months before the Macintosh II's release with it.
The Apple II fans may have been more fervent than the Mac fans, but Apple's tendency to mass deprecate fervent customers by deprecating them on a mass-scale with whole architectural shifts of each new computer line (Mac II -> LC -> Quadra -> PowerMac) just drove a slow exodus. This is compared to the very backwards compatible approach the market-leading PCs always took.
It was also Jobs that instilled the anti-gaming reputation and policy of Macs (versus the earlier Apple IIs), because he decided that gaining market-share meant Macs are NOT toys, but a serious business machine. Ironically, Jobs entirely missed the concept of getting kids while they were young, and market that still dominates the movie industry.
In fact, Quadra, Quicktime, PowerMac, and PowerBook were all still factors driving Apple's slow death spiral of shrinking market-share and relativity until somebody or Jobs made the genius breakthrough to become Sony, or a consumer electronics giant, with the iPod.
By reaching mass audiences across all "party" lines no matter the computer architecture or OS, that was the real saving grace Jobs brought.
This Shaw Wu certainly does live the in-reality bubble that Jobs famously generates.
Analyst? this guy (Wu) is apple's cult member (this is the only cult in the world that is revered "remotely") and his job of analysing the cult business is a labour of love.
How characteristic to cults – when the spritual leader dies, the devotees begin to talk about the "spirit" of the founder that will "forever" stay with them.
So guys, stop pretending that this is about products and technology, this is a "spiritual" thing, a kind of a religion, backed by "underdog" and "I always told you so" ideology and rewards.
That said, I wish Steve Jobs good health, he is a human beng after all.
I like the concept but SJ is definitely the "main man of innovation" and it remains to be seen if his spirit can be institutionalized….Who knows, maybe someone will pick up the mantle and carry it higher…. Steve: What do you think?
What? Steve Jobs has been institutionalized? I'd better tell Jim Cramer and the analysts!
Just kidding. That's what it feels like sometimes as an Apple shareholder. Thanks for the insightful points.
(FYI I think that you have a typo in $120)
This Wu is just trying to save his ass. OK, let do this – how much would've AAPL cost if it carries ALL the *good stuff* like 'QuickTime', 'PowerMac' but iPod? If he still says $120, he is a genius, but on Mars.
Nice story – it's about time someone cut through the ridiculous reasons to bash Apple & Steve Jobs. Give credit where it is due.
Steve's a great guy to work for/with and man with an understanding of what people want. He's not the entire team, but he does know how to inspire you to reach inside and dig out that bit of greatness within that you're not sure you have. As far as macworld goes…IDG…too bad you pissed him off. But Macworld is about Macintosh Product, Macintosh Vendors, It's not all about Apple itself. It will go on.
Steve's a man that can be replaced. It's something he told us years ago.
Apple will find someone else to tend flock when the time comes.
Mike