The following commentary is from an investment professional with Clear Harbor Asset Management who is a participant in TheStreet's expert contributor program.
Perhaps my most memorable moment from the decade I spent as a beat reporter covering corporate America for various media outlets came about seven months ago when I received a surprise phone call from Steve Jobs.
I was in a deli on West 47th street when my cell phone rang, and I have to admit that I initially thought it was a joke when the gravelly voice on the line claimed to be that of the famous
co-founder. Then it occurred to me that I had
in that day's
Wall Street Journal
about a previously unreported meeting in Silicon Valley between Jobs and the top executives of the cable TV industry -- which was my beat at the time -- and I should probably be taking the call more seriously.
Sure enough, it was him. Our conversation was off the record at his request, and I'll honor that agreement now, but I can say that Jobs was not calling to complain or dispute anything in my story, and he didn't try to plant any stories or additional information with me. In fact, as a reporter trying to decipher his motivations and get a new scoop out of the conversation, I struggled to figure out the purpose of his call.
According to Jobs, he just liked my story and wanted to chat about how the rise of digital technology was affecting the TV industry. That was an overriding theme to my coverage of the media industry during my two years at
, and it's well-known that after becoming a major player in music and publishing, Jobs viewed video entertainment--particularly TV--as the next media target in Apple's crosshairs. I like to think that he appreciated my work and was interested in feeling me out as a reporter that he could have some dealings with, but maybe that's wishful thinking.
Jobs died of cancer just five months after we spoke, and as a satisfied Apple customer myself, I've been thinking a lot about his call throughout all the ensuing media coverage of his death, life and legacy. Every other direct interaction that I had with top media moguls as a journalist came only through layers of public relations professionals. It's no coincidence to me that the one CEO who was able to come down from Mount Olympus and give me a call directly and unexpectedly to shoot the breeze about a story I had written happened to be the most successful and widely admired of them all.
Over the summer, I left full-time journalism and joined an investment firm, Clear Harbor Asset Management, to bring my years of experience covering financial markets to the benefit of our clients' investment portfolios. One of the first things I noticed when I landed in my new role was that Apple shares were nowhere near as expensive as I assumed they were, and my firm and I have been buying the stock despite concerns about whether the company can continue its winning streak without the man who got it started.
Shares of Apple are down by more than 11% from the highs for the year they set in the days following Jobs' death. The company's latest quarterly earnings report on Oct. 18 sparked a sell-off as iPhone sales fell short of high expectations, and investors appeared to get cold feet about its prospects without Jobs.
Such concerns are nonsense. The company is now valued at under 10 times Wall Street's earnings forecasts for next year--a bargain price for a business that has no resemblance to the company that tanked after the first time Jobs gave up the reins in 1983.
Apple is now the most valuable public company in the world, with no debt and over $9.8 billion in cash on its balance sheet, and it has one of the strongest corporate brands in existence. It has hundreds of stores all over the world, and its online iTunes is the largest music retailer on the planet. It's now the top-seller of smart phones in the U.S., it's the leader in the emerging tablet category, its line of Macs is the fastest-growing segment of the personal-computer market and there are other potential growth engines that appear to be emerging for the company in areas like financial services and the corporate market.
Jobs may be an irreplaceable leader of the company, but he has guided Apple to an enviable position and he left the company with an under-appreciated stable of talent in place, including longtime design chief Jonathan Ive and the company's new CEO Tim Cook, who seems more open to returning some of Apple's cash pile to shareholders through dividends and buybacks than his predecessor.
I don't recommend buying shares of Apple with a short-term time horizon, because the stock has been volatile and it's bound to continue fluctuating. It's possible that there's another recession in store, and next year's earnings expectations may prove too optimistic, but the odds of this stock turning into a star performer for the long-term shareholder at these prices look mighty good.
Personally, I hope Cook can follow through on Jobs' ambition of shaking up the old-media business model of the TV business. If he's having any trouble figuring it out, he should call up some of the media beat reporters that know the industry best. They can set him straight.
At the time of publication, Worden and/or his clients were long AAPL, although holdings can change at any time.