CUPERTINO BUSINESS REPORT
Jobs Is Back, Apple's Still Standing, Life Goes On

After all the excitement about Steve Jobs' health, the market reaction to news that the Apple (Nasdaq: AAPL) CEO had returned to work appeared muted. Apple shares closed at US$142.43 at close of trading Tuesday, 46 cents up from the previous day's close. They were actually down from Monday's open of just under $144.

Shares did climb a bit last month on news that Jobs had received a liver transplant. However, it may also be telling to look back to January, the time at which Jobs announced his planned absence. Since then, the value of Apple shares has nearly doubled.

This could be due to general belief among investors that Apple has a good management team in place which has kept the company running on an even keel despite the CEO's absence.

Meanwhile, some users are finding that their brand-new iPhone 3GS smartphones are getting too hot for comfort, a potential publicity problem for Apple.

In its computer sector, Apple is doing well -- the state of Maine has followed through on a nearly $69 million contract announced in March.

All in all, the company looks strong.

So Steve Is Back

The reaction to Jobs' return was muted, even at Apple. The company did not post a press release on the matter to its Web site, though several months ago it did publicly state that Jobs would return in late June.

However, analysts expect he'll provide the vision that the company needs.

"Steve's the guy who says, 'See that mountain way off in the distance? That's where we're going.' He identifies the mountain and gets you there," Carl Howe, a Yankee Group research director, told MacNewsWorld.

"Jobs' return to Apple is always welcome," Gartner (NYSE: IT) analyst Ken Dulaney told MacNewsWorld. "He's an icon, like Michael Jackson or Pavarotti. I think he'll continue to do what he does best, which is to push the Apple development environment to do better."

iPhones Turn Up The Heat

Jobs is also known for his fanatical adherence to quality, and that characteristic may be very much needed by Apple soon. Some bad news has surfaced about the iPhone 3GS, which sold 1 million units the weekend of its launch last month.

The iPhone 3GS reportedly tends to heat up, in some rare cases enough to mar the finish on the back of the device.

"You never want to hear about a problem like this," Laura DiDio, principal at ITIC, told MacNewsWorld. "Even more so when you have competition -- the BlackBerry is still No. 1 in sales , and you have the unexpected resurgence of the Pre, and then there's the Android phones that are coming along."

The problem may lie with the phone's battery, or it could be a problem with the phone's way of managing power, but Ramon Llamas, a senior research analyst at IDC, contends that consumers don't care what the cause is, they just want the problem to be resolved.

"The fact is, it's a problem, and it's happened to more than a couple of people," he told MacNewsWorld. "If this does persist, how extensive will it be?"

Indeed, if Apple has to put out a recall, it could lose some of the good will it gained from strong demand for the iPhone 3GS, and that might impact its share prices.

Apple did not respond to requests for comment by press time.

Moving Into Maine

While the iPhone is a profit powerhouse for Apple, the company isn't doing too badly in the laptops field, either. The state of Maine, which piloted a project to provide every seventh- and eighth-grade student and teacher in its public middle schools with Apple iBook laptops in 2002, has extended the program yet again.

On Tuesday, it confirmed a four-year deal signed in March to cover all its public and private high schools.

That contract was for up to 100,000 laptops, but because not all the schools have chosen to participate, the total has been pared down to 71,000 laptops, Maine Department of Education spokesperson David Connerty-Marin said.

The laptops will be leased at $242 each a year for four years, and the deal will be worth almost $69 million, he told MacNewsWorld. They will be fully loaded with various application software packages.

"Some people ask us why we're paying $968 for a Mac for four years when we can buy a Dell (Nasdaq: DELL) for $700 at Staples," Connerty-Marin said. "Dell doesn't come with repair, replacement, replacement batteries, software and 24-by-7 technical support; this is a whole educational package."

Other states are reported to be planning similar programs, all of which will be good for Apple's bottom line.

Ruling the App World

Apple will also continue to get a boost from its market-leading App Store.

ITIC's latest survey found that the number of apps produced for smartphones, including the iPhone, BlackBerry and Palm (Nasdaq: PALM), will double year-over-year between 2009 and 2014.

"You're not talking about a device that's just a phone; you're talking about a highly portable computer," ITIC's DiDio said.

Apps are a key marketing tool; the Palm Pre's lack of apps, for instance, is believed to be slowing down its sales.

If Apple continues to retain the lead with its App Store, which it acknowledges has helped boost iPhone sales, it should remain hard to beat.