Thursday, August 25, 2011

Steve Jobs and Scottie Pippen

I am sad to see Steve Jobs leave the CEO position at Apple (AAPL), although this was not unexpected. Jobs has been on medical leave since January, and has been battling cancer for some time now. I wish him all the best, and hope he will continue to contribute as Chairman.

As to the questions of whether Tim Cook can step into the shoes of Steve Jobs, I think that is an impossibility. There are few executives on earth like Steve Jobs. He has been both a brilliant visionary, a tech artist, and a superb engineer. His success has been so superb that anything will pale in comparison. Jeffrey Immelt was a fantastic executive at GE, but after taking over for Jack Welch it was nearly impossible to live up to expectations.

Sure Tim Cook has been well groomed for years. Jobs knew this day would come, so he had a responsibility to both groom Cook and prepare the company for this day. But Tim Cook is more like Scottie Pippen when he played with Michael Jordan. Pippen was a fabulous player with the Bulls, and shared many championships. He was capable of executing fantastically in that offense, but that was alongside Jordan. Take Jordan out of the picture, and Pippen couldn't carry a team and elevate them to the same level.

So I think it is unfair to keep asking if Cook can replicate Jobs' success. Apple's product road map is pretty well laid out for the next couple of years. I think Cook will do a fine job executing on these plans and continuing to grow the company nicely. It's the longer-term picture that I'm worried about. It's the vision that Jobs possessed. It's the maniacal attention to detail; the perfectionist attitude; and the willingness to navigate unchartered waters.

I trimmed a few shares of AAPL today, but it remains one of our largest holdings. I still think the stock is undervalued relative to its earnings power and growth rate. So I think it is too cheap to discard. I plan on keeping it as a core holding, and trading around it from time to time. But to act like nothing has changed at the company is being a bit naive.

long AAPL


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