However, he offered a murkier look at the potential impact on Appleis executives, stating: “We believe there are not yet enough facts to form a conclusion on whether key
executives might have been involved in creating options irregularities at Apple or
Pixar, and our default assumption is that Jobs is not likely to have been involved;
however, our review of Pixar disclosures does not allow us to rule out the
possibility, given Jobs was a member of the board that made options decisions,
and our analysis suggests these may contain irregularities.”
Looking at a worst-case scenario in which Apple CEO Steve Jobs leaves the company, Mr. Farmer concluded: “Our positive view of Appleis fundamentals does not depend on any single
executive. We think Appleis brand, technology, and network effects are largely
independent of management and consumers will buy Macs and iPods regardless
of who is CEO.”
The analyst added: “That said, we acknowledge the stock would likely gap down, at
least temporarily, if a key executive such as Jobs were to leave. For instance,
when Mark Hurd left NCR in early 2005 the stock dropped 20% (justifiably in that
case, in our view) though it eventually traded above and below that departure-
related range. All else equal in our fundamental view, we would consider Apple
executive related stock weakness to be a continued buying opportunity.”
Mr. Farmer retained his “Buy” rating on Appleis stock, with a US$72 price target. At 3:06 PM EST on Wednesday, the companyis shares were selling for $67.70, up 1.88% for the day. The stock has been on an upward trend this week, buoyed by analyst reports similar to Mr. Farmeris assessment.
Thanks to MacNN for the heads-up.
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