Apple founder Steve Jobs announced yesterday that he was stepping down as CEO.
This announcement follows just weeks after Apple became the largest publicly-traded company in the U.S. Additionally, it was revealed that the tech behemoth has more cash on hand than the U.S. government.
In his resignation letter, Jobs wrote, “I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that time has come.” Jobs has struggled with pancreatic cancer since 2004.
Jobs recommended that Apple’s COO Tim Cook replace him as CEO. Jobs will serve as chairman of Apple’s board, which Cook will join as well.
What Does This Mean for Apple Shares?
CEO resignations often affect the value of a company’s shares. A 2010 study from the Stockholm School of Economics shows that CEO turnover often negatively affects stock performance in the short term. In 2008, Apple shares fell more than 50% when it was rumored that Jobs’ cancer had returned and he would have to step down.
Google's stock also took a temporary dip in January when CEO Eric Schmidt announced he was stepping down as CEO, to be replaced by Google co-founder Larry Page, who would again assume the title.
Apple’s shares have fallen in value since Jobs’ announcement yesterday, sliding 5.13% to $355.70 in after-hours trading last night, and an additional 2.1% this morning.
While the stock is certainly under pressure, analysts are confident that Apple shares will bounce back. Cook has served as interim CEO during Jobs’ previous medical leaves of absence and is highly-regarded within the company.
The confidence in Apple shares also reflects the expectation that Jobs’ resignation was a long time coming, and that the company is prepared to move forward, even in his absence. Mike Binger, a hedge fund manager, told the Wall Street Journal that, “This was a ‘when’ not ‘if’ moment.”
That said, Steve Jobs’ place in history is already secure. Says Schmidt, “Steve Jobs is the most successful CEO in the U.S. of the last 25 years,” while former Apple CEO John Sculley called Jobs “the world’s magic man."
In that sense, Jobs' departure may be perceived as an opportunity for Apple's competitors: Recently, the CEOs of LG, Acer and Nokia—all in the race to develop products competing with the iPad—stepped down after failing to adequately compete with Apple products. The company's dominance in the industry has been attributed largely to Jobs' management skills, and competitors will surely take every opportunity to exploit any perceived weakness.
Yet Another Significant Resignation
Last Monday, Standard & Poor’s president Deven Sharma announced that he too would step down from his position. While the company said that Sharma had been planning to leave the credit-rating firm since the beginning of the year, the announcement follows closely on the heels of S&P’s controversial decision to downgrade the U.S.’s credit rating.
(Read more about the credit downgrade, and what it means for you.)
These two major resignations heighten the unsettled feeling that has characterized Wall Street for the past couple of weeks, with investors in wait-and-see mode before Ben Bernanke's much-anticipated speech tomorrow. The Federal Reserve Chairman is expected to announce new steps that will be taken to strength and stabilize the economy.
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