Why investors are better off without Macworld

[Originally posted Dec. 18, 2008 on Fortune.com]

Apple (AAPL) may have dropped nearly 7% on the news that Steve Jobs is blowing off Macworld, but according to Bullish Cross' Andy Zaky, investors should be happy he did.

In an unpublished analysis of the company's last four major press events -- starting with Macworld 2008 and ending with October's Spotlight on Notebooks -- Zaky documents a pattern that's become increasingly self-destructive.

Behind Steve Jobs' Macworld exit

[Originally posted Dec. 17, 2008 on Fortune.com]

Truth is, nobody outside Steve Jobs' inner circle knows why Apple's CEO won't be giving his annual Macworld keynote this year.

The news broke Tuesday afternoon, and by dawn Wednesday just about every reporter who follows the company had filed a story. Techmeme's news aggregator listed 104. Google News had 779.

I haven't read them all, but I've read enough to know that nobody has talked to Jobs or been given the inside dope.

On its face, Apple's press release makes a plausible case for why Macworld 2009 will be its last. Apple (AAPL) has cheaper and more effective venues for reaching its audience -- on its own terms and its own schedule.

Video: Bart Simpson channels Steve Jobs

[Originally posted Dec. 1, 2008 on Fortune.com]

Get it while it's still available on YouTube: The Simpsons' clever send-up of "Mapple," "MyPods," "MyPhones" and "Steve Mobs," whose real slogan, Lisa Simpson learns, is not "think differently" but "no refunds."

Our favorite scene: When the black-shirted staff at the Mapple Store turns on Bart and prepares to flay him with their ear buds.

Below the fold: three clips from the Apple (AAPL) spoof.

The Papermaster chronicles: An Apple vs. IBM timeline

[Originally posted Nov. 8, 2008 on Fortune.com]

Steve Jobs' high-profile raid on IBM's managerial ranks hit a snag on Friday.

A judge in White Plains, N.Y., ordered Mark Papermaster -- IBM's (IBM) former top microprocessor executive and Apple's (AAPL) newest senior VP -- to immediately stop working for Jobs.

It's the latest chapter in a bi-coastal drama that pits one of the world's largest and most established technology companies against one of the brashest. Here's a timeline:

The day Tim Cook calmed the waters

[Originally posted Nov. 10, 2008 on Fortune.com]

Adam Lashinsky's fascinating profile of Tim Cook in the new issue of Fortune reminds me of the day last February when Apple's (AAPL) chief operating officer single-handedly reversed a slide in the company's share price that had been going for two months.

Here's what I wrote the next day:

Losing Tony Fadell: The man who made the iPod

[Originally posted Nov. 4, 2008 at Fortune.com]

Big news for Apple in Tuesday's Wall Street Journal: The company is losing one of its stars, Tony Fadell.

Tony who?

If Steve Jobs didn't loom so large in Apple's public persona -- drawing the spotlight at every appearance -- a lot fewer people would be asking that today.

Fadell was -- and until he leaves at an as-yet undisclosed time for "personal reasons," still is -- the top engineer in a company renown for its engineering prowess. At Business 2.0, the now-defunct Time Inc. monthly, we ranked him No. 27 on our 2007 list of "50 Who Matter Now" in the world of business.

And when Fortune tried earlier this year to handicap who might be best equipped to replace Steve Jobs as Apple's CEO, Fadell came in No. 2, after COO Tim Cook. Here's how we described him then:

Tony Fadell
Title: Senior vice president, iPod division

With his American swagger and his hair bleached white, Fadell stood out at button-down Philips Electronics, where he led an in-house pirate operation designing Windows CE-based devices. It was there that he came up with the idea of marrying a Napster-like music store with a hard drive-based MP3 player. He shopped the concept around the Valley before Apple's Jon Rubinstein snapped it up and put Fadell in charge of the engineering team that built the first iPod. Ambitious and charismatic (and no longer a bleached blond), he now runs the hardware division that makes two of Apple's three key product lines: the iPod and the iPhone. (link)

Fadell will reportedly be replaced by Mark Papermaster, the top IBM executive who managed the company's blade server business. IBM (IBM) sued Papermaster last week over a noncompete clause in his contract to try to prevent him from joining Apple (AAPL). See here.

In a press release issued Tuesday morning, Apple announced that Papermaster had been named senior vice president of devices hardware engineering, reporting directly to Steve Jobs.

According to the release, Fadell and his wife Danielle Lambert, a VP of human resources, "are reducing their roles within the company as they devote more time to their young family. Fadell will remain at Apple as an advisor to the CEO. Lambert will depart the company at the end of this year after a successor is in place."


[Follow Philip Elmer-DeWitt on Twitter @philiped]

The day Apple released its iPhone revenue bomb

[Originally posted Oct. 23, 2008 on Fortune.com.]

Some Apple watchers have complained almost since the launch of the iPhone that Wall Street doesn't understand the device's value to the company. Analysts consistently underestimate Apple's revenue, these investors insist, because they fail to fully account for iPhone sales.

The problem has been festering for so long — and the gap has grown so large between Apple's actual earnings and the Street's grasp of those earnings — that Apple finally let the cat out of the bag Tuesday during its quarterly earnings call.

Measured by so-called generally accepted accounting principles (GAAP), the company earned $1.26 a share in 2008 Q4 on revenue of $7.9 billion. This is the form in which Apple (AAPL) has always reported its income.

But on Tuesday, for the first time, the company went one step further. CFO Peter Oppenheimer told analysts that when measured by actual revenue — counting the full value of every iPhone and Apple TV sold in the quarter — the company earned a good deal more: $2.69 per share on sales of $11.68 billion (see transcript here).

The consensus among analysts before the earnings call was that Apple's revenue for the quarter would be about $8.05 billion. Some traders looked at $7.9 billion and thought Apple had fallen short of the Street's target by $150 million. The smart ones looked at $11.682 billion and realized they'd underestimated Apple's earnings by nearly $3.8 billion. They're probably the reason Apple's share price jumped 12% in after hours trading.

How could the analysts have been so wrong?

Why does Steve Jobs look so thin?

[Originally posted June 13, 2008 on Fortune.com]

Much of the speculation about Steve Jobs' rail-thin appearance at the unveiling of the new iPhone on June 9 has tended to be all or nothing.

Either his cancer has returned or he is recovering from a bout with a "common bug," as his spokeswoman told the Wall Street Journal on Tuesday. "That's all there is to it," she said. (The talk may have unnerved investors a bit: Apple (AAPL) shares fell 4.1% on Thursday and another 2.4% by midday Friday.)

But this is not the first time Jobs' appearance has raised concerns about his health, and the "common bug" doesn't explain the weight loss that's evident in a review of his keynote videos over the past few years.

There's another possibility, one that is consistent with both Jobs' medical history and the changes in his appearance. It stems directly from the type of cancer for which he was treated four years ago and the nature of that treatment.

After Steve Jobs: Handicapping Apple's back bench

[Originally posted June 4, 2008 on Fortune.com]

"You know, I think it wouldn't be a party," Steve Jobs told Fortune in February, describing the future of his company if, as he put it, Jobs got hit by a bus. "But there are really capable people at Apple. ... My job is to make the whole executive team good enough to be successors."

Life at Apple without Jobs may be more than just a hypothetical. The 53-year-old Silicon Valley pioneer had a malignant tumor removed from his pancreas four years ago. With fresh concerns about his health following his gaunt appearance at the World Wide Developers Conference two weeks ago, it's fair to ask: who's on that executive team -- and which ones have a shot at ruling Apple once Jobs leaves (even if he exits years from now and not for health reasons)?

There are 11 men in all -- not counting Jobs. A handful are familiar faces to the small community of professional Apple watchers. As far as the general public is concerned, they are invisible, hidden in the long shadow cast by Apple's (AAPL) high-profile CEO.

Some seem more qualified to step into Jobs' shoes than others, but judge for yourself. Here they are, as listed on the company's Executive Profiles web page, in rough order of their chances of succeeding Steve Jobs.

Apple takes delivery of 188 mysterious ocean containers

[Originally published May 28, 2008 on Fortune.com]

Here's an intriguing report from ImportGenius, a search engine that gathers "competitive intelligence" by monitoring U.S. Customs records of ocean containers entering American ports.

Searching for shipments to Apple, Inc. (AAPL), employees at the Scottsdale, Ariz., company reported on Friday that they've spotted a "major spike" since mid March in ocean containers marked with a mysterious new label: "electric computers."

“They have never before reported this product on their customs declarations,” says ImportGenius managing director Ryan Peterson, who notes that there has been no corresponding falloff during this period of shipments labeled "desktop computers" or any of the other labels Apple usually uses.

"The fact that they are importing millions of units, combined with dwindling stocks of the first generation of iPhones," persuades Peterson that these "electric computers" are, in fact, the 3G iPhones Apple is expected to release in a matter of weeks.

Al Gore gets 10,000 Apple options

[Originally posted March 26, 2008 on Fortune.com]

Former vice president Al Gore, who sits on Apple's compensation committee and supervised the company's internal investigation of its option backdating case, has been granted options to buy 10,000 shares of Apple (AAPL) at the strike price of $129.67, according to Jonny Evans at Macworld UK.

With Apple shares closing at $140.98 Tuesday night, the options would be worth $113,100 if exercised today. Should Apple reach its 2007 high of 202.96 before the options expire in 10 years, the grant would be worth more than $730,000, not counting taxes.

Gore, who describes himself as a "recovering politician," has won the Nobel Peace Prize and an Academy Award since leaving office. He took a seat on the Apple board in 2003 and co-founded the cable network Current TV in 2004. He also advises Google (GOOG) and venture capital firm Kleiner Perkins Caufield & Byers.

Bloomberg News reports that in January, Gore exercised options to buy 1,000 shares at $7.48, reaping a potential profit of more than $124,000.


[Follow Philip Elmer-DeWitt on Twitter @philiped]