Apple's Steve Jobs Is Company's $20 Billion Asset (Up

[David Farber <dave () farber net>]

Begin forwarded message:

From: "CONNIE GUGLIELMO, BLOOMBERG/ NEWSROOM:"  
<cguglielmo1 () bloomberg net>
Date: January 17, 2007 1:15:10 PM EST
To: dave () farber net
Subject: (BN ) Apple's Steve Jobs Is Company's $20 Billion Asset (Up


Apple's Steve Jobs Is Company's $20 Billion Asset (Update2)
2007-01-17 12:44 (New York)


     (Updates shares in 21st paragraph.)

By Connie Guglielmo
     Jan. 17 (Bloomberg) -- Apple Inc. may find its most valuable
asset is something it can't protect through patents or secrecy:
Chief Executive Officer Steve Jobs.
     If Jobs were to leave, shares of the Cupertino, California-
based company might drop 25 percent or more, analysts say. That
would erase about $20 billion in Apple's market value.
     ``It would be a disaster,'' said Gene Munster, an analyst
with Piper Jaffray & Cos. in Minneapolis, who's had an
``outperform'' rating on Apple's shares since June 2004. ``He
would be almost impossible to replace.''
     The computer maker's dependence on its CEO was illustrated
the last week of December, when the stock dropped as much as
5.8 percent after the Recorder, a San Francisco-based legal
publication, reported Apple had faked documents to backdate stock
options.
     On Dec. 29, the company said its own investigation, led by
Apple director and former U.S. Vice President Al Gore, cleared
Jobs of any wrongdoing. That eased concern Jobs may have to step
down and sent the shares up 4.9 percent.
     The Gore report may not be enough to exonerate Jobs in the
eyes of U.S. regulators at the Securities and Exchange Commission
and Department of Justice, said James Post, a professor of
management at Boston University. Apple last month took an
$84 million charge to account for the backdated options.
     ``The desire to protect Jobs' iconic status comes at the
expense'' of shareholders, Post said. ``Someone is certainly
responsible for the harm done. If not Steve Jobs, then who?''

                          Options Probe

     Apple has said it provided the results of its investigation
to the SEC and the U.S. Attorney in San Francisco.
     While federal investigators in San Francisco said they are
scrutinizing Apple's stock-options irregularities, the probe may
have been dealt a setback yesterday when Kevin Ryan, the U.S.
Attorney in San Francisco who helped spark a nationwide
investigation of stock options, announced he will step down from
his post with two years left in his term.
     Jobs may be more closely linked to Apple's prospects than
any CEO in the Fortune 500, said Charlie Wolf, an analyst at
Needham & Co. Inc. in New York. Apple's valuation might fall as
much as a third if Jobs were to depart, he said.
     ``He has one of the keenest eyes in the world when it comes
to pinning down not only the design, but the features that will
attract the most people,'' said Wolf, one of 24 analysts tracked
by Bloomberg who rate Apple's shares ``buy.'' ``He's the creative
spark.''

                           Record Sales

     Investor anxiety over the options probe comes with Apple
poised to report today that quarterly sales topped $6 billion for
the first time, reaching $6.44 billion, according to the average
estimate of 20 analysts surveyed by Bloomberg. The average
earnings estimate is 78 cents a share.
     Apple in October forecast first-quarter revenue of
$6 billion to $6.2 billion, up from $5.75 billion a year earlier,
and profit of 70 cents to 73 cents a share.
     Over the past five years, Jobs, 51, has cemented his image
as technology's leading fashionista with the iPod, a sleek, easy-
to-use digital music player that steamrolled over earlier rivals
to become the best-selling device in the U.S.
     With celebrities such as U2 lead singer Bono, hip-hop artist
Kanye West and singer John Mayer joining him on stage, Jobs,
dressed in his trademark black turtleneck and jeans, has
transformed staid product introductions into high-profile media
events. He has unveiled smaller, high-capacity designs that have
driven sales from current and new iPod owners, said Munster.
     ``Apple's like a technology fashion house,'' said Jane
Snorek, a portfolio manager at First American Funds in
Minneapolis, which oversees $55 billion in assets including Apple
shares. ``They really have their finger on consumer design.''

                         Geek and Pitchman

     Jobs has played this role since founding Apple at the age of
21 with Steve Wozniak, acting as the pitchman to Wozniak's geek.
Together they helped popularize the personal computer with the
Apple II. In 1984, Jobs turned Apple into a household name with
the Macintosh, offering a PC with a simple-to-use, point-and-
click interface unlike anything consumers had seen before.
     ``He has a sense for how people perceive things, what
strikes people as having value and not,'' said Wozniak in a Jan.
12 interview. ``For Steve, it's all about not accepting the
adequate.'' Jobs knows how to build products that make people say
``Wow!'' said Wozniak.

                           IPhone Debut

     The announcement last week of the iPhone, which combines the
music and video features of the iPod with a cell phone, was
vintage Jobs. ``We have reinvented the phone,'' Jobs proclaimed
after receiving standing ovations from Apple admirers at the
annual Macworld Expo conference in San Francisco.
     The company aims to sell 10 million iPhones in 2008,
capturing 1 percent of the global market, Jobs said. Investors
who had anticipated the device said they were surprised with its
ease of use and styling.
     Apple's shares soared to a record $97.10 yesterday. The
stock, up 18 percent last year, declined 92 cents to $96.18 at
12:42 p.m. New York time in Nasdaq Stock Market composite
trading.
     Apple's stock has surged from less than $10 to almost $100
since Jobs returned to the company in 1997. He had been ousted in
1985 by John Sculley, the Pepsi-Cola Co. CEO he had recruited to
help transform the start-up into to a mature organization.
     In addition to moving Apple into consumer electronics, Jobs
has revived the PC business, with innovative designs such as the
iMac and faster machines built with chips from Intel Corp.
     The question of who might succeed Jobs remains open though
he's surrounded by a cadre of jeans-attired executives who mimic
his use of the words ``cool,'' ``awesome'' and ``revolutionary''
to describe Apple's technology.

                          Talented People

     ``Steve has spoken about how great products come only if one
mind is in control of it, making decisions,'' said Wozniak. ``But
I think even if Steve wasn't here, there are talented and good
people there who have gotten to know how Steve thinks and what
he's going to like and not like.''
      They include Timothy Cook, 46, who led Apple while Jobs
battled pancreatic cancer in August 2004 and who was named chief
operating officer in 2005. Analysts, including Wolf, also single
out Ronald Johnson, 48, who has led Apple's retail store
expansion over the past five years.
     ``The biggest risk to Apple is not competition or markets or
products,'' Piper Jaffray's Munster said. ``It's probably the
reality that at some point Steve Jobs is going to leave. That's
just the wild card that investors have to deal with.''

--With reporting by Rochelle Garner in San Francisco. Editor:
Guyon (jmw/kjo/jls/lwo)

Story illustration: To graph Apple's stock performance, click on
{AAPL US <Equity> GP <GO>}. For a breakout of sales by product,
see {AAPL US <Equity> DES 6 <GO>}.

To contact the reporter on this story:
Connie Guglielmo in San Francisco at +1-415-743-3582 or
cguglielmo1 () bloomberg net.

To contact the editor responsible for this story:
Emma Moody at +1-212-617-3504 or
emoody () bloomberg net.

[TAGINFO]
AAPL US <EQUITY> CN

NI COS
NI TEC
NI CPR
NI ERN
NI MUSIC
NI CONS
NI CA
NI RET
NI SOF
NI ELE
NI WNEWS
NI OPTIONS
NI OPPROBE
NI LEGAL
NI FEA

#<268372.2379675.1.0.32.28506.25>#
#<460457.732785.1.0.32.28506.25>#
#<583848.2449640.1.0.32.28506.96>#



#<865958.166543.1.0.32.28506.25>#
-0- Jan/17/2007 17:44 GMT


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