Tim Cook, chief executive officer of Apple Inc. (NASDAQ:AAPL) recently announced the organizational changes in the company, as well as the departure of two of its senior executives.
John Browett, senior vice president of retail, and Scott Forstall, senior vice president of iOS Software, were asked to relinquish their positions after committing missteps that brought negative impact to the company.
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Apple Inc. (NASDAQ:AAPL) dismissed Forstall due to his refusal to sign his name in the company’s letter of apology to consumers in connection with the deficiencies of the iOS 6 Maps application. On the other hand, Browett was pushed out of the company, due to his mistake in implementing a new staffing formula that cuts the hours of employees in retail stores, wherein no adequate number of staff is left to attend to consumers for several weeks.
According to the analyst from Barclays equity research, the management shakeup might raise concerns regarding the leadership stability of Apple Inc. (NASDAQ:AAPL), but they believe that Tim Cook will ensure the proper operation of the company’s retail business as interim head, while the company is searching for a new executive to replace Browett. The analyst also believes that the changes “may actually be rather well received” by the employees of the tech giant.
The analysts think that Phil Schiller, senior vice president of Marketing, will serve as a key to Apple’s future and inner circle. They noted Schiller’s prominent role during the launching of the iPad Mini and new Mac products. According to them, his position in the company is safe.
With regards to the additional responsibility of the four executives of Apple Inc. (NASDAQ:AAPL), including Jony Ive, Eddy Cue, Craig Federighi, and Bob Mansfield, the analyst believes the move “will put in place Tim Cook’s team.” According to them, “We are particularly pleased to see increased responsibilities for Jony Ive, arguably the best designer in the world. We continue to believe Apple Inc. (NASDAQ:AAPL) has a deep bench of talent that can continue to execute in a manner consistent with investor expectations.”
The analyst maintained the $800 per share price target for Apple stock. According to them, the valuation was based on a market multiple of around 13.0x to their estimate for FY14 of $60.66. According to them, their valuation is conservative, but somewhat realistic, considering Apple’s growth potential.
On the other hand, Gene Munster, analyst at Piper Jaffray believe that Ive’s additional role in the company should put to rest the “recurring investor concern of an Apple without Ive.”
In addition, Munster said, “This, combined with Tim Cook’s nine years remaining on his contract with Apple Inc. (NASDAQ:AAPL), suggests the two most critical management figures will be in place for the longer term.”