We cannot know if Steve Jobs was as influenced by Warren Buffet as Bill Gates, but I doubt he would have mistaken Apple for a conglomerate. It’s a company, a very good company, but not a conglomerate. The mistake of pricing its shares like a conglomerate is to exclude retail investors. This isn’t a problem when the street and institutional investors love you. We loved Steve, not Apple. Now we are left with the dark side of bad labor practices in China.
Apple is still a value buy on the basis of forward earnings but it’s time to look at what is happening to the brand. Every day there is a new lawsuit or some form of bad press. This is simply because of human nature. The very people who praised Apple as an underdog are now relishing the chance to pull it down.
What could Apple do? Split the stock 10 for 1. Fall back; it’s time to keep your head down and be a less obvious target. Microsoft makes gobs of money and is not obvious. Steve was a master of managing expectations. He would have seen that the stock price is bad PR.
What can we do? Sell. I know the fundamentals are there but sell, at least half your position. Send Cook a message. Retail investors will not buy a stock at $600. Tell him to make it $60. Also, if the company cannot find other companies that it should acquire with its cash horde or distribute some of it as dividends to shareholders it has lost its way.
What would Steve have done? Probably what Cook has done. He would not have cared much about his wealth or shareholder value and only thought about what was right for the company. He would have been able to make that work because he was magic and investors could not wait for his next performance. Tim Cook is not magic. He needs to split the stock, take charge of the Apple image and reward shareholders soon.
Apple is a mature company. It needs to act like one.