Color on CEO Jobs' retirement announcement last night (376.18 ) -Update-
Oppenheimer notes, in a brief letter to Apple's board and Apple community, Steve Jobs announced his resignation as CEO. Mr. Jobs' impact on Apple can't be understated—he's its heart and soul. From that perspective his inability to meet the requirements of CEO is a negative for the stock. That said, the immediate announcement of Tim Cook, Apple's COO, as the new CEO shows a succession plan was in place. Mr. Cook and Apple's core leadership team have been in place for several years, and Mr. Jobs' absence doesn't take away from the quality of that team. Firm believes Apple's strategic course for the next several years is already in place; Jobs or not, OpCo sees Apple continuing its excellent execution.
Ticonderoga notes the tone of Steve Jobs' letter on January 17 that announced his third medical leave of absence was much more open ended around the potential length of his absence compared to previous letters, while his request surrounding privacy stood out to us. Essentially, the January letter indicated to firm that Steve Jobs would likely step down as Apple's CEO at some point in the not too distant future given his deteriorating health condition. As such, it's not surprised that this announcement came this year, albeit the precise date could never have been known. In fact, during firm's marketing meetings over the past eight months, investors have indicated that if Steve Jobs stepped down as CEO or worse, the stock could correct up to 10% the next day and they would be buyers on this potential selloff.
ISI Group notes while the new management team will have to prove its ability to continue the innovation process led by Steve, it believes there is significant upside even from the current product set that will drive upside to estimates. The co's current products lead their competitors by a significant margin and Tim Cook's leadership will help it execute on capitalizing its lead. Firm expects the next generation of iPhone by September end or early October followed by iPad 3 in early 2012. ISI remains positive on the stock and recommend buying on any weakness as it believes there could be 25-30% upside to next year's estimates with FY12 EPS ultimately ending up near $40 versus current consensus of just over $32.
AAPL is trading lower in pre market at $366.00