Apple shake-up cost investors $12+ billion

Markets finally opened this morning after a two-day period of suspended trading over Hurricane Sandy. Apple on its part has cunningly slipped in news late Monday that it fired iOS chief Scott Forstall and retail boss John Browett over a series of missteps that cost the Cupertino, California-headquartered company both reputation and market position.

Apple’s bet was that investors, fans and the general public would have some time to process the news before jumping to conclusions. Many watchers and analysts deemed the move a strategic re-aligning, one that gave Apple’s design guru Jony Ive more power, turning him into the steward of the user experience across Apple products. Still, some investors were spooked and sent shares of Apple down to their lowest level since late July…

Apple, which trades on Nasdaq under the AAPL ticker, closed at $603.70 last Friday for a market cap of $567 billion. Shares of Apple fell more than 2.5 percent, to $587.70, in early trading Thursday morning.

At post time on Wednesday morning, AAPL was down more than two percent, trading just shy of $591 a share and giving the company a valuation of approximately $555 billion. Now, conventional wisdom teaches us that in situations like this the $12 billion difference can be attributed mostly to Monday’s shake-up.

Image via Dominic Chu

If you follow Apple’s Wall Street performance, you will notice that shares dropped a bit below $600 following last week’s quarterly earnings report as some investors factored in smaller-than-expected iPad sales into their estimates.

Forbes has more on a number of missteps that combined are now impacting Apple’s stock price. Additionally, Piper Jaffray analyst Gene Munster summed up Monday’s shake-up with these words (via AllThingsD):

We believe that yesterday’s announcement all but confirmed that (Jonathan) Ive will be with the company for the foreseeable future, putting to rest a recurring investor concern of an Apple without Ive

This, combined with Tim Cook’s nine years remaining on his contract with Apple, suggests the two most critical management figures will be in place for the longer term. We think that despite the departure of Forstall who ran iOS development, iOS’s future is in good hands.

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As for the market impact following the news, big shot analysts and institutional investors are more often wrong than right when it comes to Apple. At any rate, the re-shuffling that took place at Apple is cause for some concern because it has introduced a factor of short-term uncertainty, now obviously factored in today’s stock price.

For better or worse, that’s just how these things work.

Disclaimer: the author does not own shares of Apple or any other company.