Wednesday, August 24, 2011

Steve Jobs, Value Stocks, & Being A Heartless Bastard.

It's official. Steve Jobs is no longer the CEO of Apple. This is no doubt a very sad day, as it is likely due to his deteriorating health... Honestly, my deepest of sympathies go out to Jobs, his family, and his friends.

With this said, the stock is down 5% in after hours trading. It does make me wonder what will happen to it in the coming days and weeks. While I don't like the situation that Jobs is in, I have no qualms with the idea of making money as the result of the markets reaction to such news. Likely, if the company drops much below 10x earnings, I will probably buy stock and/or LEAPS.

I do wonder what will happen to the company's huge cash hoard in the event that Jobs is no longer involved in the company... Furthermore, with Jobs as chairman, I wonder if he will push to deploy the cash in the near term.

It seems to me that we have a company that has products that people actually like (against, say RIMM) which might be getting into extreme value territory. Then again, Motorola used to have products that people loved, and we know what happened to them... They were broken up by Carl Icahn, with 1/2 the company being sold to Google. While this probably won't happen to Apple, there are a lot of variables at play here, some of which could greatly effect the company and others, that won't.

With all of this said, if I were forced to bet on things, I would say it would be strange to imagine a world in which Google won't dominate almost everything... In fact, I won't be a bit surprised if the company will eventually be split up (anti-trust style); it seems to me that it is quickly becoming the Standard Oil of our time. 100 years ago, oil was to be the basis of our growing economy, internet search is the basis of our future (as far as company products go, I use Google more than anything else; actually, I am probably one of the few people that they lose money on). After all, they control my phone, email, calender, blog, and internet browsing... which when combined, take up the bulk of my time; often, more so than I even sleep.

Then again, I used to say this about Wal-Mart... And now, my thoughts seem juvenile, at best.

Speaking of Wal-Mart, it will be interesting to see what Apple does, versus what Wal-Mart did, in the years after their founder stepped down.

Regardless, there are a lot of variables here and the screwd investor should make effort to monitor the situation. If nothing else, it will be an intellectually stimulating situation to watch unfold- no matter how unfortunate it is. In spite of the lengthy post about how AAPL stock might collapse, I won't be a bit surprised if it doesn't- I have no idea what other people will do with the new information. A few weeks ago, one would have thought that if Treasuries were down graded that they would have fallen in price, not gone up! Maybe a similar situation will hold true for Apple.

Disclosure: I have no positions in or against any of the securities mentioned. This is not advice of any kind. This is not a recommendation of any kind. I have received nothing to write/post these notes. Always do a ton of your own research in regard to anything that I say, do, write, or so much as even think about.

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