Steve Jobs has resigned.
It's hard to say this is much of a surprise to anyone since he's on his third medical leave and all. Hopefully, Jobs' resignation will give him the time to focus on what really matters: his health. He's certainly done plenty for shareholders over the past decade. It's time to concentrate on Numero Uno.
Jobs is leaving Apple (Nasdaq: AAPL ) in the very capable hands of longtime unofficial heir apparent Tim Cook, who has served as chief operating officer since 2007. This isn't Cook's first rodeo; Cook has manned the ship in both of Jobs' previous medical leaves in 2004 and in 2009 in addition to already being in the driver's seat since January this year. Sorry, fellow Fool Rick Munarriz, you were off by four months.
What's Tim Cook's story?
Party like it's 1998
Along with the death of Frank Sinatra and the founding of Google (Nasdaq: GOOG ) , 1998 also marked the year that Tim Cook was recruited by Jobs to join then-beleaguered Apple Computer. At the time, Cook worked for Compaq Computer procuring and managing product inventory and had already spent 16 years in the computer industry, including 12 at IBM (NYSE: IBM ) .
Cook, who holds an MBA from Duke, was tasked to cut out the inefficiencies of Apple's supply chain, manufacturing operations, and distribution network at the time. Apple was notoriously disorganized with manufacturing back then, purchasing parts in Asia for computers assembled in Ireland to be shipped back to Asia to be sold. Inventory management was also in shambles as swollen inventories were written down on the then-unpopular computers.
He shuttered factories and warehouses globally and forged relationships with contract manufacturers, reducing the amount of inventory -- which Cook despises -- that the company needed to carry on its balance sheet. This has opened doors for Chinese manufacturers like Foxconn and Pegatron to ride Apple's coattails, while generating cost savings for Apple.
If you've ever bought a Mac, and chances are many of you have as Mac unit sales rose 14% last quarter, you may have noticed that they frequently ship directly from the Chinese manufacturer to your doorstep.
Cook has been pivotal to Apple's cost-cutting and margin expansion over the years as he slimmed down logistics and eliminated inefficiencies. It's obvious how Cook had risen to the No. 2 spot at Apple, reporting directly to Jobs until now.
What, no turtleneck and jeans?
Although Cook has normally shied away from the public spotlight, he took center stage earlier this year to unveil the Verizon (NYSE: VZ ) iPhone, donning a casual suit instead of Jobs' familiar black turtleneck and jeans combo. He's recently been getting a lot more attention as investors have been focusing on him since succession planning has justifiably been on shareholders' minds as of late.
He's been known to have a quiet manner and polite demeanor in contrast to Jobs' outspoken showmanship. He'd better get used to the limelight as he takes over the largest gadget maker in the world.
The A-(pple) Team
Even without Jobs, Apple's top brass have made names for themselves and will continue to contribute to the company's performance.
Jonathan Ive has been credited with devising many of the company's lustworthy devices. Scott Forstall has been instrumental with molding iOS as it evolves against Android. Phil Schiller helped carve a unique brand identity amid an increasingly commoditized PC world through clever marketing. However, the company did recently lose its retail mastermind, Ron Johnson, who left to become CEO of J.C. Penney (NYSE: JCP ) .
As much credit as Jobs deserves, his visions would have failed to become reality without this top-notch team, and Cook will continue to tap the individual talents of this crew for years to come.
I'm not selling my shares
Jobs will remain chairman and continue to be heavily involved in the major strategic direction of Apple, just like when he was on medical leave. Cook has plenty of experience running the show day-to-day. The only unknown is whether Jobs has more serious medical conditions that he's not disclosing and he's in worse shape than he's letting on.
Bottom line: Apple will be fine. This day has been a long time coming, and Cook's transition will likely be seamless. The initial knee-jerk reaction to the news is obviously to sell, but I think those who sell on this news are shortsighted and will probably want their shares back sooner rather than later. In fact, I think the initial fear may create a buying opportunity.
Cooks has an impressive and accomplished track record at Apple, including his time spent steering the boat. This time should be no different. It just makes it official. Jobs has built Apple into a well-oiled machine, and Cook will be a proficient CEO, but Apple will probably have to pay him more than $1 per year.
- Add Apple to My Watchlist.