Tim Cook’s Huge Run at Apple

Tim Cook will never be Steve Jobs, but to investors that should not matter, given how shares in Apple (NASDAQ: AAPL) have done since Cook became CEO. Apple’s stock is up more than 45% since he took over on August 24, 2011. The shares reached as much as 65% higher since then. In the final 10 months of Jobs’s tenure, the stock was not up anywhere close to that much, on a percentage basis.

Part of the reason for the lackluster stock performance before Jobs’s retirement may have been worries about his health, which were reasonable. But Apple had breakout quarters after Jobs’s death, and they were unlike anything the consumer electronics company had posted before. Critics of Cook argue that the products that drove these earnings where Jobs’s inventions. But Cook would have been blamed for poor results if the numbers had gone the other way. If Cook would have gotten the blame, then he should get a great deal of the credit. Apple did not break down after Jobs died. If anything, its prospects got better, at least if revenue and margins are used as measures.

Cook will not get out from under Jobs’s shadow entirely until investors are convinced there are no more future product introductions with which Jobs had involvement. That means Cook will not get credit for the iPhone 5, which Jobs supposedly had under development before he died. Maybe the iPhone 6 and iPad 4 will not considered products that Jobs “invented.” The question of invention trumps whether Apple is well run in almost every other way. This includes, particularly, marketing and manufacturing. Apple’s products sell themselves, maybe. But it only takes one slip in the supply chain, on the assembly line or in the early marketing of a new product to throw the Apple machine off center.

Cook already has proven that Apple has a strong steward, no matter how long it takes the market to catch up to that realization.

Douglas A. McIntyre