Wall Street Eases Into the Cook Era

Ever since Apple Chairman and former CEO Steve Jobs' serious health problems became public knowledge years ago, shares of AAPL have been particularly volatile. Factors ranging from the announcement of another leave of absence to a false rumor regarding a heart attack have been known to trigger sell-offs, though they haven't prevented the stock's value from climbing significantly over the last couple of years.

And despite Steve Jobs' resignation as CEO of Apple last week, the market generally held its expectations for a strong second half of the year for the company.

Jobs' decision to end his tenure as Apple chief perhaps didn't come as much of a surprise to Apple followers. Jobs had been on medical leave since January. His announcement was met with an outpouring of respect, praise and thanks from tech leaders, Apple fans and social media users, along with some trepidation about the future of the company and its market value.

Shares did fall an initial 2 percent Thursday, the day following his resignation, to US$369.47, but they rallied quickly as analysts and Apple-watchers began to weigh in with their almost entirely positive outlooks for the company, which will now be lead by former Apple COO Tim Cook. By Tuesday's close, the stock was up to nearly $390, still shy of the $404 it was briefly trading at a few weeks ago when Apple surpassed oil giant Exxon in market value, but on pace with consumer confidence in the tech sphere Jobs created.

"I do think the machine has momentum. Apple has built a pretty good culture and ecosystem that can be sustained for years to come," Mark McKechnie, telecom equipment analyst at ThinkEquity, told MacNewsWorld after Jobs' departure.

Apple did not respond to a request for comment by press time.

Solid Successor

Much of the short-term confidence from investors and analysts comes partly thanks to the announcement that Tim Cook, Jobs' right-hand man who ran the company during his former boss' medical leaves, would be taking over.

"It's a good thing Tim Cook is stepping in. It's good to have an insider as opposed to having to bring an outsider in there and have any dislocation from that front," said McKechnie.

The pressure of taking over for the man sometimes mentioned in the same breath as Edison and Rockefeller probably isn't lost on Cook, but the strong market performance and positive buzz surrounding his taking over are an indication that the company and its followers have faith in him.

"Tim Cook is extremely capable. He's proven to have done a good job so far, and Apple has built an incredible brand franchise, so at least in the short term they're strong," Jim Ragan, senior equity analyst at Crowell Weedon & Co., told MacNewsWorld.

Shortly after Jobs' departure, Cook wrote a memo to employees, which was later posted publicly by Ars Technica. In it, he assured employees the company will continue to produce the kind of products that put it on top of the tech field and became a part of the company's culture. He stressed that the company will not change under his leadership and gave Jobs credit as a valuable teacher and mentor and the reason Apple is where it is today.

Investors, even while wondering about Cook's long-term ability and how he will use Apple's deep pockets, seemed to agree with the new CEO's assurance that the company is still headed in a successful direction. Analysts like Hendi Susanto at Gabelli strongly encouraged investors to buy AAPL after Jobs' resignation.

On Deck for Apple

The resignation comes just before Apple is expected to announce the release of the next generation of the iPhone, most likely in October. It's also rumored to have an iPad 3 close to production for release early next year.

Jobs was usually the one to personally introduce new products and upgrades at Apple's press conferences, even as his health began to fail and he was going through the aftermath of cancer treatment and a liver transplant. Since Jobs made very few public appearances and was almost mute about his health issues, the rare product introduction moments were usually surrounded with speculation about his physical appearance -- whether he seemed more thin, gaunt or sickly than usual, for instance. The talk sometimes distracted from the launch of the actual product.

"I think the timing of the announcement is interesting because most of us believe that there is a major product announcement coming, and that's always been a big deal when he announces those, so maybe this will be more focus on the products and less on him," said Ragan.

Besides the iPhone 5, Apple has multiple products and upgrades on deck that Jobs set in motion.

"I believe he's set a vision for the company for the next few years. They are facing a very strong product cycle. Mac computers have been gaining market share, the iPad 2 is completely dominating the tablet space, especially because supply issues with the Japanese earthquake appear to be settled. The iPhone sold much better than expected, and there's the expectation of the next generation, so they're in a position where the second half of the calendar year is going to have a group of very strong products," said Ragan.

The coming of the iCloud service remains in every discussion concerning Apple, with guesses as to when it's coming and just how big of an impact the data synchronization technology could have. Rumors suggest it'll possibly be partnered with a new Apple TV service, which could lead to Apple putting a bigger dent in the entertainment industry.

"We know the iCloud is coming out. If that leads into more movie entertainment type of business, that will give another avenue of growth over the next several years," said Ragan.

Rachelle Dragani is a freelance reporter based in Brooklyn, NY. She enjoys staying on top of e-commerce deals, reporting on what new gadget is coming your way, and keeping tabs on anyone trying to hack into your info. Feel free to e-mail her at rachelle.dragani@newsroom.ectnews.com.