The departure of Steve Jobs from Apple (AAPL +1.00%) was not a happy event. The innovative founder, who himself had returned to the company after being ousted by the board, had a terminal illness. Tim Cook was taking over in a very difficult situation and didn’t have much help during his transition. That’s not what is happening this time around, as Cook hands the CEO job over to John Ternus. That’s positive news for worried investors.
What did Cook do for investors?
When Tim Cook took over Apple in 2011, it had a market cap of around $350 billion. That’s a very big company, but its market cap is $4.7 trillion today. Very clearly, investors benefited greatly under Cook’s tenure. It seems reasonable for investors to wonder if John Ternus can keep Apple’s successful run going.
Image source: Apple
The honest truth is that there’s no way to know how he will handle the CEO role at this industry-leading technology giant. But this CEO transition is very different from the last one, which should reduce the risk of failure. Most notably, Cook will stick around as executive chairman. That means he will be available to Ternus if the new CEO needs some guidance. This should make for a smooth transition.
Also important is that Ternus is a 25-year Apple veteran whose most recent role was overseeing the company’s hardware engineering business. He joined the company’s product design team in 2001. Essentially, he’s steeped in what is likely the most important aspect of Apple, making products that customers love. It is probably reasonable to give him the benefit of the doubt that he can, indeed, keep Apple focused on what sets it apart from the competition.
Today’s Change
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Current Price
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Key Data Points
Market Cap
Day’s Range
$324.11 – $330.81
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54.6M
Gross Margin
48.65%
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0.33%
A difficult time to take over the top job at Apple
That said, there are many moving parts in the technology sector right now. For example, artificial intelligence (AI) is a new technology that is expected to materially change the world, let alone the tech sector. Apple has yet to stake out a material position in the AI space, focusing mostly on integrating the tech into its product offerings rather than investing heavily in AI infrastructure. Ternus will have to deal with the impact of this disruptive technology.
That, notably, includes the impact of AI spending on the tech sector’s cost structure. Apple has already hiked prices, and Ternus will likely be responsible for initiating further price increases at a time when consumers are stretched. Given the business’s consumer focus, the new CEO clearly faces headwinds. However, given Cook’s continued availability and Ternus’ long tenure at Apple in key roles, investors probably shouldn’t count him out just yet.
