What Is Steve Jobs Worth to Apple? About $20 Billion

32 Comments

Jeff Segal of BreakingViews tries to calculate the value of Steve Jobs to Apple (s AAPL).

  • Apple Mac Line at twice the industry average multiple (1.3 times revenue) is worth about $19 billion.
  • iPod business at five times EBITDA is worth about $14 billion.
  • iTunes music store at six times EBITDA is worth about $1 billion.
  • iPhone business could be worth about $17 billion.
  • Other businesses, about $11 billion, using Microsoft (s msft) multiple of 2.8 times revenue.

In total, these businesses can be valued at $60 billion. Given that Apple has a market capitalization of $80 billion, Segal concludes that Jobs is worth $20 billion to Apple’s shareholders. Jobs gets a premium because he is the Pied Piper who makes it all come together, and that is why Apple shareholders need a rock-solid succession plan. 

While Segal does have a point about the succession plan, I would be hard-pressed to buy into the $20 billion valuation. He also didn’t factor in the $24.5 mbillion in cash Apple has in its coffers. To me, Apple is Jobs and Jobs is Apple. What do you guys think?

32 Comments

Michael

Didn’t Apple fire him once already? He’s probably on final written notice or something.

Om Malik

@steve

Good points you makes about STEVE and Apple. I would say a designer type person is more appropriate for Apple. I think Mark Cuban would not be an appropriate fit. Reasons — just see him on Dallas sideline. :-)

Om Malik

@ Rohit, you are right about the error (see above) and also about finding a successor. Just like i have trusted apple to come up with good products, i think steve jobs is going to come up with good succession plan as well.

infosignz

Am I missing something? All these businesses are because of Steve Jobs (at least in part). So why do you want to factor him in separately? He is part of the business, not apart from the businesses. So it all adds up when you include the cash.

If SJ were to resign, wouldn’t the valuation of the business go down, at least temporarily?

Steve

Steve = Apple. And (even more frightening)
Apple = U.S. Consumer Electronics industry.

Moto, Palm, Dell are all flailing, and their leaders seem to have lost almost all capacity to recognize (let alone incubate) relevant innovation — meaning innovation that meets the desires of a market ready to emerge. Even when presented with terrific new ideas, they’re too gutless to get out front with those ideas, and too dumb or timid to try to create complete ecosystems around the resulting products.

No other top executive has demonstrated anything close to Steve’s combination of ability to recognize relevant innovation (like a great athlete’s “field vision”), strategic boldness (witness the iTunes and iPhone ecosystems), design aesthetics, perfectionism, maniacal “take the hill!” leadership capabilities (often stressful for the troops, but very effective), and, of course, showmanship.

The ultimate disaster for Apple would be to lose Steve and then replace him with some random marketing, sales, or engineering executive. (Remember John Scully? Gil Amelio?)

It will be tempting to replace him with one of Apple’s amazing product designers — a better choice than a random executive from another company, but it will be nearly impossible to fill Steve’s shoes.

I don’t know the solution. Maybe go for broke and try to recruit another larger-than-life billionaire — like Mark Cuban — to at least keep Apple’s go-for-broke spirit alive?

Rohit

Om,

When you say 24.5 million you mean 24.5 billion right? Jobs undeniably is the face of APPLE. But i think greatness comes from being able to find a successor , who if not that charismatic could at least lead the company with great vision.

Calvin

agree, jobs=apple and vice versa. Jobs departure would be a big blow to apple, sorry mac fanboys, windows is here to stay for another decade.

Scott Girard

Tim Cook, Phil Shiller, Jon Ives, Scott Forestall, and others. Apple has a great management team in place. Apple would miss Jobs dearly, but there is enough talent at Apple to keep it cruising. Steve is a Rock Star, but the company is beginning to realize Apple doesn’t *need* a front-man anymore. By the way, the cash number is 24 BILLION and Apple has no long term debt.

Ski Sullivan

To separate the man from the legend from the company requires a very sharp scalpel and the time to search for details that won’t matter when held up to the light. The fiercely loyal Mac base is the antipathy to the analytical view — that’s for the Microsoft crowd. Steve started it all, he got booted and figured out a way to wrest control of his baby from the business wonks, and brought it back to surpass past glories.

He’s created and fostered the legend to serve him in his efforts. Now it will likely cost the company dearly as he tries to unstick the glue that binds him to Apple’s performance (interesting how they worded the announcement to blunt speculation about his health) or perception of performance. Bill Gates had no such trouble outside of a much smaller loyalty core.

One aside, I suspect this matters a lot more to people past their 30’s who know some or most of the story. To younger users fueling the holy trinity of i- pod/phone/tunes, Steve is a cool guy but not germane to how sweet it is to own hot gear.

don

The cash is at 24 Billion (With a “B”) and is not featured in the numbers shown in this latest attempt at grabbing some free Apple death-watch traffic.

Which, by the math above, makes Jobs worth less than zero. Can we get past this now?

-Don

Screen Sleuth

Jobs is more of a media figure than an “grand emperor” really. I think the way Apple has themselves, pretty much anyone could run it and it would do well.

Doug Mohney

Two morbid thoughts come to mind…

1) Not likely anyone would create a life insurance policy for one guy at $20 billion. Don’t think Lloyd’s of London would take that action, not even back in the day when Lloyd’s and the markets were flush

2) Does this mean you short Apple stock if Jobs dies? That’s pretty morbid…

noname

“He also didn’t factor in the $24.5 million in cash Apple has in its coffers.”

is it million or billion?

Mark

So if you add in the cash Apple has, which I might add is the only real number here, Jobs is worth -$500M Which is nuts. I guess it is a slow day for Apple news.

charlie

It’s $25 billion in cash; which means that according to these number Steve Jobs is worth negative 5 billion. maybe the markets have factored the whole succession thing in already.

Throw in goodwill and the corporate logo, and Steve is worth even less.

sfmitch

I heard the same $20 billion value for Jobs when Apple’s stock price was double what it is now. That means Steve Jobs is now worth double what he was last year, relatively speaking. ???

Also, I think you need to change millions to billions when talking about the Apple cash pile.

PXLated

I think Jobs is more important to the media and those of us that have waited on baited breath for his every announcement over the years than to all the new Apple customers that know them just by the products, advertising, and the Apple stores. To those, as long as Apple produces new, nifty products, who cares who’s behind it all.

ronald

If Leaders set a goal and use data to reach it (Steve Jobs)
Managers use data to set goal and reach it (Steve Ballmer)

Then Steve Jobs is much harder to replace, or how does one identify a leader who knows what the goal should be. Managers on the other hand can be trained.
In other words Apple has a problem on it’s books, no matter how well Steve J is.

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