The Fate of AAPL – Bleak or Bright?

Steve Jobs - The Fate of AAPL

Steve Jobs and his legacy won't be quickly forgotten

The Apple (AAPL) company is left on thin ice after the irrevocable loss of its father. On October 5, 2011, Steve Jobs, the visionary behind the Apple company, lost the battle to cancer. The future of AAPL, the Apple stock, hangs on a thread as concerns surround it, raising awareness that the company will never be the same. However, the true fate of the company is yet to be revealed with the passing of time. Analysts from Wall Street look over the situation with optimism, suggesting that AAPL is strong enough to stand upon its own pillars.

Investors gained concern as questions floated around regarding the fate of AAPL, the stock they invested in. However, day-to-day operations at the Apple company were usually in the hands of Tim Cook rather than of Steve Jobs. Cook said, “Apple has lost a visionary and creative genius, and the world has lost an amazing human being.” However, the loss of a company’s visionary is not a reason for the company to lose its vision too.

Already by Thursday, AAPL shares dipped about 0.7 percent before rising up again during the day, due in part to the announcement of the iPhone 4S. By Thursday evening, AAPL shares were down by 0.23 percent, with 1.4 percent gains. The stock went through ups and downs this year, but overall increased by 90 percent. When Steve Jobs resigned in August due to health issues, shares immediately dropped 0.7 percent. Cook stayed on top of things, ensuring that Apple didn’t meet with failure.

Wall Street watches most companies fluctuate, contrary to their predicted forecasts, but not Apple, which steadies itself at a forecast beyond expectations. “We believe Apple’s innovation and product momentum can continue,” says Ben Reitzes, an analyst at Barclays. Europe is nearing a recession and the U.S. is making close contact with one, but AAPL earnings might increase by 23% next year. What cannot be predicted are the future ideas of Apple, which unfortunately will lack original innovation from the company’s founding father. As President Barack Obama stated, Jobs

exemplified the spirit of American ingenuity… Steve was among the greatest of American innovators – brave enough to think differently, bold enough to believe he could change the world and talented enough to do it.

Without the leader of innovation, the Apple company can take one of two turns: it can slow down with lesser quality and less innovative ideas, or it could climb even higher as new ideas are put forth on the table. Apple stocks have dropped after the passing of Steve Jobs and after the announcement of the new iPhone. Does the future of the company therefore look bleak or bright? Time will tell. This year, “Apple had become the second-largest company of any kind in the United States by market value,” according to Forbes. Economists agree that the legend of the Apple company will live on, and analysts haven’t downgraded Apple stocks or cut down their estimates.

Innovators don’t hold power forever, but it is their ability to transfer this power and inspiration to others that help a company stay alive. History has shown that the death of leaders such as Walt Disney of Disney (DIS) or Ray Croc of McDonald’s (MCD) have not halted their company’s successes. This past quarter, Apple reached record revenues and is on its way to reach them again, with a projection of over $134 billion in revenues by 2012. This shows that Apple can survive on its own, without Steve Jobs.

The question is – how long will Apple survive in this state? The innovative ideas will eventually run out, and the man behind them won’t be there to rev them up. Back in the 80’s and 90’s, Apple faced a downfall for years after Jobs was fired. Stocks fell from $17.50 to $3.19 between 1992 and 1997, and shareholders lost 21.5 percent, giving way to a loss of 77 percent of shareholder capital.

Apple got back on its feet under the direction of Steve Jobs yet again in the late 90’s, although it took some time and several reinvented products for that to happen. What saved Apple back then was marketing for the appropriate audience, like college students, and the creation of new products in response to competition from other companies, mainly Microsoft. Since 2001, Apple shares have continuously climbed high. Since its low of $3.19 per stock price in 1997, prices have risen up to $378.25 by October 5, 2011, the day of Jobs’ death. Analysts predict prices could grow by $45 per share sometime soon.

The Apple dynasty lost a total of 10 percent recently, about $30 billion in market value, but this downfall is the result of the record high that the company hit back in September – at a time when the majority of stocks were seeing lows. “Analyst support for the stock and belief in its earnings ability have not waned one bit,” according to Yahoo! Finance. The company could grow by 35 percent next year, reaching a value of $350 billion.

It is highly unlikely that the popularity of the Macs, iPods, iPhones, and iPads will die down, but if new ideas are not introduced soon, eventually consumers will become bored, hence a lesser interest in AAPL. The company is lucky enough to have a faithful global customer base and products that continue to sell high. What the company needs now is a handful of innovative ideas – and they ought to be introduced soon while the dynasty of the white headphones is still hot.

NOTICE: This article was based on research of stock market information and other sources of information, found both online and in print media. Neither StockTips.com nor any of its owners, contributors, officers, directors, consultants, or employees take responsibility for the accuracy of the information contained in this article or the accuracy of the information on which this article was based. StockTips.com was not compensated by any of the companies mentioned in this article for the preparation of this material, nor were the materials approved by the companies which were mentioned.

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