John Sculley – People are underestimating just how well Apple is run

Thu, Dec 6, 2012


Writing for the Motley Fool, Meena Krishamsetty relays a quote from former Apple CEO John Scully regarding Apple’s current business operations.

On the current situation Apple is in, Sculley had this to say: ‘I think they’re going through a very significant change now in terms of product cycles. Traditionally Apple introduces products once a year; now it’s really introducing products twice a year. The complexity of that from a supply chain is immense, and Apple seems to be doing it well. So, I think that people are underestimating just how well Apple is run, and just how successful the company can be when it gets to that twice-a-year product introduction cycle.’

And if you need an incentive to snatch up some Apple shares, it’s worth noting that Apple’s P/E is dreadfully low compared to the market at large.

Sculley’s comments here seem to agree with the unheralded notion that Tim Cook is a supply chain wizard; on the subject of Apple’s valuation, the former Cupertino CEO said that “the question is: does it still deserve a Steve Jobs premium?” to which he paraphrastically answers ‘yes,’ due to the fact that Cook has a clear product leader in Jony Ive.

When looking at the numbers ourselves, we can’t help but notice that the stock’s recent selloff may have shaved off most of that so-called ‘Steve Jobs premium,’ making now a great time to get in if you hold the same conviction as Sculley does. Between 2006 and 2010, AAPL shares traded at an average of 25.7 times trailing twelve month earnings, at a premium of 64% above the S&P. At its present price in the $586 range, however, the stock currently sports an earnings multiple of 13.3X, or a near-10% discount to the broader market averages.

Steve Jobs was certainly irreplaceable, but it’s important to remember that Apple is a company tens of thousands of employees and countless scores of talented engineers, executives, and designers. Apple’s executive team is top notch and Tim Cook and co. proved to be quite adept at maneuvering Apple through those periods when Steve Jobs was gone for months tending to medical issues. As such, there’s no reason to think that Tim Cook can continue to steer the ship into innovative and ever more profitable waters going forward.

via MF



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