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Jobs' On Leave..How About Them Apple Stocks?
By Dian L. Chu, EconForecast
Everybody was probably expecting a slow market news day on Monday, Jan. 17. After all, it is the Martin Luther King, Jr. holiday, and the U.S. market is closed. But Apple Inc. managed to make it quite eventful by dropping a bombshell that CEO Steve Jobs has taken an indefinite medical leave battling a rare form of cancer, and the liver transplant he had almost two years ago.
Although the announcement said Jobs will continue as the CEO involved in “major strategic decisions for the company,” while COO Tim Cook will be responsible for the day-to-day operations, investors are clearly worried.
Apple & Jobs - One And the Same
Apple shares slid as much as 8% in Europe, and Nasdaq 100 futures, of which Apple comprises 21%, also fell 1.3% in the morning electronic trading. And you can’t really blame investors for over-reacting since Jobs is an integral part of Apple’s stock price. (See Chart)
Every time when you have a top executive taking an extended leave for whatever reason, the company’s stock typically will take a beating. However, very few corporations have its image and creativity so deeply linked to its CEO such as Apple and Jobs.
Jobs’ Leave Creates A Day Trader’s Dream
Furthermore, Apple’s stock has shot up over 300% since 2009, as the company has been able to continue coming up with cool products setting the industry and consumer trend. The flip side is that it also means heightened vulnerability, and Jobs medical leave is that very catalyst for some hard-hit pullback.
So, from a technical perspective, expect the stock to get clobbered by at least 8% testing the $320 level in the first trading day after the announcement (See Chart). And with the anxiety and anticipation of earnings release after the bell, the extreme volatility would make the session a day trader’s dream comes true.
$300 = Good Entry Point
In the next few days, depending on Apple's earnings numbers, it will most likely be a matter of time before the stock testing the $300 levels, with support at the $280 area, and major support at $240. The selloff at Apple will likely spread to other tech stocks as well since Apple is such a signature in the tech space.
For long term investors, $300 would be a good entry point (and you will not be alone as many are dying to get in on Apple at $300), but I’d also get a stop loss at $295. If it goes below $295, the I’d buy at $280 with a stop at $275, and so on.
Jobs May Not Come Back
Looking ahead, there’s a good probability that Jobs may not come back, judging from the “indefinite” nature of his leave, and the apparent secrecy surrounding it. However, since Jobs' health issue is nothing new, internal plans and infrastructure most likely are already in place in preparation for Jobs departure.
I also believe Apple's management team has a lot more depth than investors are giving them credit for, since Jobs is such a dominant influencing figure at Apple. But Tim Cook and his team have proven their leadership during Jobs’ five-month leave in 2009. As such, the company should go on without a hitch after Jobs' official departure.
A More Flexible Apple?
More importantly, I personally think without Steve Jobs, Apple could potentially become less rigid, and more nimble, collaborative, which could mean a more diversified growth potential.
One thing I would be worried about is that Apple could easily become a “broken” stock as new technologies and gadgets from competitors replace iPad, iPhone, and iPod, etc....if the company cannot continue to churn out new cool stuff as it used to.
The perception of a broken Apple without Jobs has already given rival Samsung stock a pop in the Asia market. Nevertheless, the pressure of new product development is something every player in the tech jungle faces, and frankly, Apple is in a far superior position than almost all of its rivals.
Related Reading:
Is Android The Next Gold Mine For Google?
Tech Sector: Is Mega Merger the Inevitable Solution?
Dian L. Chu, Jan. 17, 2011 | Vote Shorty Finance Award | Facebook Page | New Article Alert | Google Profile
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A day after Apple CEO Steve Jobs announced he would be taking a medical leave of absence, Apple posted stunning results for the first quarter of 2011. Apple's revenue and profits both set new records for the company.
http://www.prime-targeting.com/apple-of-our-eye/
Gap down and climb all day, guess the cattle saw a buying opportunity.
I think it is unlikely that Jobs will be coming back. Note how this leave of absence is open ended. The most likely medical issues are either a rejection of the transplanted liver, more tumors in the liver, or kidney failure. In the former cases, he'd need another liver transplant, problematic given his overall health. In the later case, he'd be a poor candidate for a kidney transplant due to his liver issues. I certainly wish him the best regardless.
That said, given his identity with the Apple brand, it's shameful that Apple doesn't provide some disclosure, or that the SEC hasn't looked into it. From the issues with the iPhone antenna it's clear that Jobs remains deeply involved not just in running the company but specific details of key products too.
News about Jobs was sooo yesterday, HFT cares not about fundamentals or CEOs..
Gun the market higher and BTFD
Kill the poor and the pensioners and BTFD on oil, gas, food, and all else that the sheeple need for existence. The sooner they are killed off the better because there will then be lots more food left at cheaper prices for the rich
more like burn and churn.
Meanwhile...."Shank and Crank"
1% decline... pre-earnings! Looks more likely to test $400 than $300. No ipad competition this year, tons in 2011. Tablets should be 1/2 of a laptop pricewise, not more! Only AAPL could pull off the brand mania. Other companies will find their tablet creations will fail miserably because of the brand.
And I HATE AAPL & am NOT long!
If you think for a second the HFTs and Hedgies are gonna let AAPL finish the day more than a couple bucks down, you're going tro be severely disappointed. Remember: In Europe they still a tiny semblance of an actual "equity market." Not here.
mission impossible... gun the stops, buy appl at discount, rally appl, sell to hwanger, gun the stops.... mission accomplished.
Some things are bigger than money. Good luck Steve J and best wishes to your family.
If history is any indication, AAPL - Jobs = Epic iPhail
Isn't Harry Wanker a big-time AAPL fan-boy? This is gonna leave a mark
Prediction: Harry says, BTFD..
Ahh yes. It always about money isn't it? Well not always...http://thecivillibertarian.blogspot.com/
"HONG KONG - The gloves are off in the fight for talent in the Asia investment banking industry, with newly arrived financial institutions establishing a foothold in the rapidly growing region. While competition for talent is always intense for the banking sector, Asia based executives, recruiters and analysts say the talent wars in the region have reached new heights."
http://www.wallstreetandtech.com/articles/229000798?cid=nl_wallstreettech_daily
Crazy how much the Jan 22 330 near-the-money calls are going for - $7.70! Somebody's thinking earnings will be a blowout, and we'll be over 350 by week's end. I bought the Jan 22 330/340 call spread for $5.35 - double or nothin' baby!
Crazy how much the Jan 22 330 near-the-money calls are going for - $7.70! Somebody's thinking earnings will be a blowout, and we'll be over 350 by week's end. I bought the Jan 22 330/340 call spread for $5.35 - double or nothin' baby!
WOW an imposter ..and I thought I wuz safe, Another three days on the front porch?
damn! i coulda bought apple two hours ago and cleared a cool 0.039877300613496932515337423312883 bagger! buy dip!
Apple with jobs?
BTFD, bitchez
Apple's loss of Jobs will be like Disney losing Walt, a complete loss of organizational direction, creativity and inspiration.
Wonder what Apple's version of EuroDisney will look like.
losing 'the man' is always a harbinger of collapse.
Last time Apple went Jobs-less...didn't go so well. Have the learned their lesson?
Free Gil Amelio !!!
not much for buying the latest unnecessary trinket, believe it or not i can live without social networking.
hard to get too bullish about something that a great % of people dont need, and a technology that china will simply replicate and reconstruct to the benefit of their own, domestic corporations.
so the marketing for Apple junk is limited to americans; the chinese will siphon market share with replicates soon enough.
so all hail the american consumer; the same one that will be paying 5 bucks a gallon and 50% more for food in about 6 months... kinda cripples the notion of expanding domestic market share.
how about diversions that dont require a subscription.