Thursday, December 18, 2008


A lot of column inches have been dedicated this week to analysing the announcement by Apple that this will be their last year giving the keynote at MacWorld. Furthermore, and despite its valedictory status, Steve Jobs won't be up there on stage delivering it ....

It's not hard to see the logic of the first point. Ever since the Internet put up its first corporate web-site, trade shows were well on their way to being a doomed species. Give it five years plus a nasty dose of recession and these high-tech bashes will be largely extinct. Apple doesn't need MacWorld anything like it did ten years ago now that they have their own retail outlets, their own highly-hyped press conferences and so much free media-buzz that it would drown out a city-sized swarm of bees.

It's therefore the second decision that's causing all the discussion: is this the beginning of the end for Jobs as the Big Cheese of Apple? Indeed, has his leadership role already slid into titular territory? Is he now too sick to do it? (Talk keeps going back to his dice with cancer, complete with obligatory mention of how gaunt he's been looking lately.) Apple says not, but it's clear that the change-over is no longer a matter of "if", but purely "when".

Silicon Valley has its own aristocracy within which Jobs has been ennobled to the highest possible level. But this begs the question, "what's that worth?" to Apple's stock price. Om Malik just posted an interesting assessment of how strong this "SJ premium" is when viewing Apple's current stock price, and the summary makes for interesting reading.

Today, Apple's market cap stands at around $80 billion. Using industry benchmarks to calculate the effective break-up value of the constituent parts of Apple's business, Jeff Segal, from the NY Times arrives at a total of approximately $60 billion from the Mac line, iTunes, gadget sales and all the rest. He therefore says that the Jobs premium is $20 billion, or roughly 25% of current enterprise value, which is really rather quite a lot when all is said and done.

Of course, this all assumes the market is a logical and methodological beast, something it proves not to be the case each and every day it lives, and hence no one really knows how wild the swings will be on the days following the switch to "After Jobs" for the Apple calendar. Regardless, it's interesting still to see the maths and ponder on what happens when he does inevitably step down. Ultimately, I suspect much will depend on the circumstances. An orderly transition to a board role will, if handled well, minimise the problem; a more sudden and more emphatic disengagement and just a 25% drop will be looking like a bargain.

Either way, the change will happen, so I actually hope for everyone's sake that this does indeed signal the beginning of the formal handover process. After all, with the stock price as beaten down as it is, when better to get this done?

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