The big news on Wednesday was the passing of Steve Jobs, the visionary who led Apple Inc. (NASDAQ/AAPL) to new heights. But with his death, the future of Apple will be the constant subject of debate. The concern obviously will be the ability of Apple to continue to drive innovation without Jobs. Apple is trading down about 1.75% in the pre-market.
Apple is the largest company in the world, with an astounding market cap in excess of $350 billion, which would rank it 29th on the International Monetary Fund GDP rankings for 2010. That’s impressive; but, at one point back in 1997, the stock was hemorrhaging at below $5.00, suffering a slow death and on the verge of collapse. Co-founder Steve Jobs came back to run Apple in 1997 to try to turn the ailing company around. Apple subsequently bounced higher, but fell back to the $7.00 range in 2002. Institutions and retail investors alike began to dump the stock, running for the exits.
Undeterred, Jobs introduced radical changes to Apple to re-invent the company via new and flashy desktops, laptops, and eventually leading to the “iPod,” “iPhone,” and “iPad.”
With this change in direction, Apple would ultimately become the darling of the investment community and techies worldwide. But what happened at Apple is not an aberration.
Companies do move up and down. The key is to look for companies such as Apple that are going through operational issues but where there is some hidden, core value. That was the case with Apple. Investors recognizing this great opportunity in 1997 have since made over 75 times their money. An investment of about $13,000 in Apple in 1997 would make you a millionaire today. A $100,000 investment is worth nearly $8.0 million!
Now, if someone would ask me, “What are the best stocks?” Apple would definitely be up there. The reality is that Apple is the “best of breed.” Just look at the iPad sales. Apple sold 9.2 million in the second quarter versus a mere 0.49 million for the equivalent “PlayBook” by Research In Motion Limited (NASDAQ/RIMM). For 2012, estimates call for the sale of 62.5 million iPads. Don’t be at all surprised to see Research In Motion (RIM) look at dumping its PlayBook, which is nice, but really not close to the iPad. RIM disappointed with third-quarter revenues and earnings per share falling short.
RIM did bounce over 14% on Wednesday on takeover speculation following a break below $20.00, its lowest level in nearly six years. Speculation is that Vodafone (London/VOD) may be looking at RIM.
While Apple is at the top, the company will need to continue to innovate going forward to brush off rivals without having Jobs around providing his extraordinary guidance and vision.
Clearly it will not be easy, but Jobs has entrenched his vision in Apple.
RIP Steve Jobs.
My Tribute to Steve Jobs— Visionary and Leader was last modified: March 1st, 2012 by George Leong, B.Comm.
George Leong is a senior editor at Lombardi Financial. He has been involved in analyzing the stock markets for two decades, employing both fundamental and technical analysis. His overall market timing and trading knowledge are extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi Financial’s popular financial newsletters, including Red-Hot Small-Caps, Lombardi’s Special Situations, Judgment Day Profit Letter, Pennies to Millions, and 100% Letter. He is also the editor-in-chief of a... Read Full Bio »
Forecasts Aug. 29, 2015
Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.
Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.
Estimates Aug. 29, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter)