Decoding Share Prices: Amazon, Apple, and Facebook

Jean-Louis Gassée analyzes the stock prices of Apple and Amazon (and Facebook):

Why do they think Apple has so much less room to grow than Amazon?

First, a big difference: Apple’s founder is no longer with us while Bezos is very much in command. This is no criticism of Tim Cook, Apple’s new CEO. A long-time Jobs lieutenant, the architect of Apple’s supremely effective Supply Chain, a soberly determined man, well liked, respected and healthily feared inside the company, Tim Cook is eminently credible. But traders are cautious; they want to see if the Cook regime will be as innovative, as uncompromisingly focused on style and substance as before.

I agree that investors are taking a wait-and-see approach to Tim Cook as CEO, but, I think overall, the Jobs-to-Cook succession has been a good thing for Apple’s share price. Investors dislike uncertainty and Steve Jobs’s health had been a source of uncertainty for years. Steve Jobs’s value had been drained from Apple’s share price years ago. Apple has reported great numbers so far under Cook, but they’re not that different than the numbers Apple has been reporting quarter-after-quarter for years now. I think one of the biggest reasons Apple’s share price has gone up under Cook is that there were so many investors who truly worried that Apple would fall apart without Steve Jobs.

Tuesday, 29 May 2012

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