••Cook takes the reins; Jobs resigns; buy on any weakness
Steve Jobs announced his resignation as CEO after market, likely due to health. Tim Cook will take over as CEO while Jobs has been elected Chairman of the Board. Despite the near-term pressure this will likely create (stock was down 5% after market), we view this as a buying opportunity. While Jobs has been the key to Apple, he has built a capable bench of "Imagineers" and the transition comes at a time when valuation, product trends, gross margin upside, and likely positive Street EPS revisions, all provide upside potential for the stock. Maintain our Buy rating.
Tim Cook has been named the new CEO of Apple, as per Jobs’ recommendation. Cook is Apple’s former COO and has been with the company since the late 1990s. He served as interim CEO during Jobs’ prior medical leaves, in 2004, 2009 and again earlier this year, where he did an admirable job. We believe Cook is a suitable successor. Jobs has been elected Chairman of the Board.
No change to estimates; PO (Price Objective) remains $490
We leave our F2011 and F2012 EPS estimates at $28.33 and $34.29. F2011 and F2012 revenue remain $109.6bn and $136.7bn. Our PO stays at $490 on 12 times our C2012E NOPAT/share $34.50 plus $81 in net cash.