Oracle’s co-founder and CEO Larry Ellison says Apple will always be in trouble without Steve Jobs.
Oracle’s co-founder and CEO Larry Ellison says Apple will always be in trouble without Steve Jobs. His proof? Apple was in trouble when Steve Jobs wasn’t around in the 1990s.
In an interview airing this morning with Charlie Rose, Ellison (the inspiration for the villain in the movie “Charlie’s Angels”) first praised Jobs:
“He was brilliant. I mean, he was our Edison. He was our Picasso. He was an incredible inventor.”
But, when Rose asked Ellison what happens to Apple without Jobs, Ellison says:
“Well, we already know. We conducted the experiment. I mean, it’s been done.
We saw Apple with Steve Jobs [Ellison motions his index finger upwards as if drawing an upwards-sloping curve].
We saw Apple without Apple without Steve jobs [Ellison motions his finger straight down].
We saw Apple with Steve Jobs [Ellison again motions his finger upwards in a curve].
Now, we’re going to see Apple without Steve jobs [Ellison lowers his whole hand].”
When Rose asked Ellison if he were shorting Apple, Ellison responded:
“I’m not shorting Apple. I like Tim Cook. I think there are a lot of talented people over there.”
Rose then pressed Ellison:
“You just said Apple is going down without Steve Jobs. That’s exactly what you said.”
“Okay, okay. I’ll say it publicly: he’s irreplaceable…. They won’t be nearly as successful because he’s gone.”
The experiment Ellison is referring to, of course, was when Jobs was removed as CEO of Apple in 1985. Jobs started Apple and, by the time he was removed, the company had nearly $2 billion in sales.
Based on just the numbers, Apple without Steve Jobs wasn’t as terrible a company as Ellison portrays. Under John Sculley, revenue growth at Apple was impressive; sales quadrupled to nearly $8 billion by 1993 and shares were up about 550% by the time Sculley left the helm. However, Sculley was forced out when profits took a hit.
Michael Spindler ran Apple for a couple of years after Sculley and revenues were as high as $11 billion. That tenure ended when he failed to get the company acquired. Gil Amelio replaced Spindler but revenue fell by a third of what it was in a matter of a couple of years. Plus, the company was operating at a $1 billion loss before Steve Jobs returned.
When all was said and done, Apple’s share price was up 75% for the twelve years it was Jobs-less in the late 1980s and 1990s. Meanwhile, the Dow was up 516% during this same time.
While Apple wasn’t down as Ellison implies, it was nowhere near what happened after Jobs came back: From 1997 until Jobs’ passing in 2011, shares rocketed nearly 9,638%, trumping the Dow’s 38% return over that period. Apple’s revenues meanwhile went to $108 billion per year.
In the first year after the death of Steve Jobs, the company continued ahead with many of the products and innovations Jobs implemented. Sales were up $48 billion to $156.5 billion in 2012. Apple’s shares continued to rise as well; they were above $700 nearly a year after Jobs was gone.
Yet, in the last twelve months, shares are down over 25%. But they’re still 23% above where they were when Jobs died.
So, while the numbers may not back up Ellison’s claim, what Ellison appears to have meant was Apple as a company – its vision and its ambitions – were down without Steve Jobs. A frequent criticism leveled at the post-Jobs Apple is that the company no longer creates the sort of cutting-edge products it was once known for.
How does that translate for shareholders?
We ask that of Talking Numbers contributors Enis Taner, Global Macro Editor at RiskReversal.com, and Richard Ross, Global Technical Strategist at Auerbach Grayson. They look at Apple’s fundamentals and technicals respectively to determine if there’s something to what Ellison said.
Is Ellison right? Watch Taner and Ross analyze Apple in the video above and decide.
Coming up Wednesday: Ron Paul on Talking Numbers!