WWJD: What Would Jobs Do?

TheStreet.com

NEW YORK (TheStreet) -- In this new post-Jobs era, Apple has struggled mightily. Well, sort of. While the stock did continue to make new all-time high after new all-time high, all of the glory -- and happy bulls -- were wiped away when Apple tumbled from $705 in September to $385 in April.

It was sort of like a struggling college football team that was once great. Allow me to explain. In our new era of NCAA football, history-rich, polished football universities expect their teams to win. If they don't, they fire the coach. Much like the corporate landscape of top companies, there's little patience and tolerance for average play.

If the new one -- we'll call him Coach Two -- cannot gain traction, they fire him too. He is given little chance to succeed. When Coach Three is brought in, he is able to generate some big wins and strong seasons in his first couple of years. Then all of sudden, he struggles mightily for a few years -- before potentially being fired.

Why does this happen? Well, all too often, Coach Two, who was brought in to turn things around, did not get enough time to recruit his players and implement his system. By the time Coach Three comes in, he can immediately do great things, with great players, ones that Coach Two brought in, but never got a chance to groom.

In other words, the second hire (Coach Three), in this case Cook, came in and carried the company empire that Jobs built. It worked for a while, as the company raked in record revenue and the stock made all-time highs, but eventually Cook was left on his own. The Steve Jobs coattails were gone.


He had Jobs' recruits (iPod, iPhone, iPad) and was able to have some successful runs. But now it's his turn. Now he needs his recruits (future products) to perform as good -- or better than -- Jobs' recruits did. Otherwise, he'll be fired just like the quick-success-turned-failure college football coach.

Can he do it? Well that all depends on the future pipeline. He aggravated shareholders to the point where David Einhorn, fund manager for Greenlight Capital, actually tried to take Cook & Co. to court The Link to unlock some of the $140 billion dollars Apple had on its balance sheet.

(In Apple's defense, most of this cash is held outside of the U.S., requiring them to pay billions in repatriation taxes).

Cook already put a floor in the stock by initiating an additional $50 billion stock buyback program (on top of the $10 billion plan in place), to be completed by December 2015. Meaning that this $425 billion market cap company is going to get a huge injection of cash in the open market over the next 32 months.

But is it really time to start the "off with his Cook's head" chant? No. I don't think so. Not yet. On the second quarter conference call, Cook hinted towards future product launches in the second half of 2013.

Specifically, he had this to say on the matter, "Our teams are hard at work on some amazing new hardware, software, and services that we can't wait to introduce this fall and throughout 2014. We continue to be very confident in our future product plans."

When later probed in the Q&A session about a more specific launch schedule, Cook deflected, "I don't want to be more specific, but I'm just saying we've got some really great stuff coming in the fall and across all of 2014."

To me, this is Cook's way of saying that patient, long-term oriented shareholders will be rewarded. I also think he kind of perversely liked the stock falling so much. Watching short-term traders and non-committal bandwagoners getting squashed like bugs.


I think his plan all along has been to ultimately reward those who weather the storm, those who stick it out. With a juicy dividend yield (now near 3%) and a $60 billion buyback program in place -- which is the highest buyback program from a company, ever -- I think we owe it to Cook and to Apple to see what they've got planned for fall.

Sure, margins are shrinking and growth is beginning to slow. But just because growth is slowing, doesn't mean the company still isn't growing. Even by the most pessimistic outlooks, Apple's stock will go higher on the heels of the buyback program, an ever increasing cash hoard and continued sales.


The June quarter will likely be weak and may prompt further selling. I still don't think Wall Street knows what to do with Apple. My thoughts, however, remain that we will see what the company has to offer later this year. It doesn't have to change the world, just improve it.

If the products are a flop, then sure, off with his head.

At the time of publication the author is long AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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