updated 07:50 pm EST, Sun January 25, 2009
Apple stock buyback
Apple should announce a management succession plan and use some of its cash reserve to retire 20 percent of the company's outstanding shares, according to Chad Brand, founder and president of Peridot Capital Management. Brand claims that the company has plenty of competent managers and its operations would continue to be successful even without jobs. He believes, however, that the board should nonetheless announce a potential executive hierarchy in the event that Jobs leaves his position as CEO.
"The board knows this is a crucial issue (the stock plummets each time the health issue appears troubling), but simply ignores it for some reason," Brand said. "The idea that he is the entire brains behind the company and its products, and not the other 35,000 employees is pretty silly. Jobs is certainly a very good CEO, but the idea that Apple lacks the talent to innovate without him seems far fetched to me."
Brand also suggests that the Cupertino-based company should use part of its cash hoard to initiate a stock buyback program, which could still leave $12 billion in the bank while retiring 20 percent of the outstanding shares. "A large buyback would be significantly accretive to earnings per share and could get the stock rolling again after the latest Jobs-related hiccups," he said.
Despite the frustrations voiced by shareholders and analysts, Apple is one of the few companies that was able to weather the recent-quarter economic turmoil without announcing dismal financial results. The company achieved a record revenue of $10.17 billion, along with a net profit of $1.61 billion, while still maintaining a gross margin of 34.7 percent.
Other tech industry giants did not finish 2008 unscathed, including AMD, Intel and Samsung each reporting a net loss for the quarter, while Sony, Microsoft and Nokia also fell below expectations. Intel and Microsoft each plan to displace at least 5,000 employees and AMD will cut salaries across the entire workforce, in addition to 1,000 layoffs.