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Apple Soars While Jobs Takes Leave

1/24/2011 12:01:00 AM Eastern
CUPERTINO, CALIF. — Apple certainly knew how to kick the New Year off with a bang.

Apple managed to fully dominate the traditional industry news cycles for the first three weeks of the year with a series of announcements that included the iPhone finally coming to Verizon, the sad news that CEO and founder Steve Jobs is taking another medical leave of absence, and the company’s best ever financial report.

Jobs said Tim Cook, Apple’s COO, will again be responsible for the company’s dayto- day operations as Cook has in the CEO’s previous medical leaves.

However, Jobs’ personal announcement to focus on his health again kicked off speculation over whether the company will survive at its current high level without his firm hand on the helm and the intangibles Jobs brings to Apple.

Analysts tended to cover all their bases, saying the shortterm impact should be minimal as Jobs will continue to have some input in the operation, however the outlook was a bit darker if Jobs is not able to return to Apple full time.

“I have a lot of respect for the Apple management team, and I think the company will do fine in Steve’s absence. He is still engaged for the most important decisions, but even if he weren’t I think the company would execute fine for the forseeable future,” said Van Baker, VP and research director for Gartner’s retail and manufacturing industry advisory services. “That said, I am not minimizing Steve’s presence as I think the entire Apple culture is a product of Steve and his presence is pervasive in the Apple culture.”

Apple’s long-term outlook is less sanguine if Jobs remains on medical leave for an extended period or doesn’t come back at all to a full-time position.

Strategy Analytics senior analyst Alex Spektor said, “Mr. Jobs himself is one of Apple’s core differentiators. A significant part of Apple’s success should be attributed to Mr. Jobs’ strong, top-down management style and long-term vision.

“While Mr. Cook and the rest of the senior management team at Apple should be credited with helping to execute this vision, Apple’s ability to out-innovate the competition will be dependent on Mr. Jobs,” he said.

Ezra Gottheil, senior analyst at Technology Business Research, also sees the potential for Apple to lose some of its inventiveness if Jobs’ absence is long-term, but he does not see that prospect as a crucial blow. “Every few years, Apple does something very fresh, such as launching the iPod, iPhone and iPad,” Gottheil explained. Because “that kind of instinct is very rare,” an Apple without Jobs “might not have the percentage of successes” that it has had in making “major strategic leaps forward,” Gottheil continued.

Jobs’ medical leave comes at a time when Apple is at the top of its game, according to its fiscal first-quarter report for the period ending Dec. 25. Here are some of the notable numbers from the report, with comparisons to last year:

• Revenue was $26.7 billion, up from $15.7 billion, with 62 percent of sales coming from overseas.

• Net profit was $6 billion, up from $3.4 billion.

• Apple Stores had sales of $3.85 billion, up 95 percent from the $1.97 billion. Each of the 321 Apple Stores had average revenue of $12 million, up from last year’s $7.1 million average.

Peter Oppenheimer, Apple’s CFO, said about 75.7 million people visited Apple Stores during the quarter, up from the 50.9 million that came during the same period the year before. Oppenheimer noted the company’s four locations in China had the most revenue and store traffic in the entire chain.

The reason for all this is the overwhelming acceptance of Apple’s Macs, iPads, iPhones and iPods.

Oppenheimer said 851,000 Mac desktops and laptops were purchased in the stores during the quarter, with have of those sales going to people who had never before bought an Apple computer.

And here are the impressive unit sales totals:

• Apple sold 7.33 million iPads in its first holiday season.

• 4.13 million Macs were sold, a 23 percent increase over the prior year’s fiscal first quarter.

• 16.24 million iPhones were sold, a whopping 86 percent jump in unit growth.

19.45 million iPods were sold, a 7 percent unit sales increase.
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