'Apple concept stocks' mixed on Jobs' death

Taipei, Oct. 6 (CNA) Local stocks in Apple Inc.'s supply chain, or the so-called "Apple concept stocks", were mixed on the Taiwan Stock Exchange in Thursday morning trade after the news of the death of Apple's co-founder Steve Jobs surfaced, dealers said. They said there have been fears that Apple will be losing its innovative capability without Jobs and take a detour by entering price competition to attract buying, a change in strategy which may create an impact on contract component makers' bottom lines. As of 11: 30 a.m., cell touch panel maker TPK lost 1.99 percentto NT$543.00 (US$17.7), battery producer Simplo Technology shed 2.49 percent to NT$176.00, and phone camera lens supplier Largan has fallen 3.23 percent to NT$631.00. However, Hon Hai Precision, the flagship company of the world's largest contract electronics maker Hon Hai Group, gained 2.96 percent to NT$69.60. The group churns out iPhones and iPads for Apple. Hon Hai's affiliate Foxconn Technology Co. rose 1.23 percent to NT$98.00. "The launch of iPhone 4S has prompted many investors to worry that innovation at Apple is fading as its new gadget has dashed market expectations of a radically redesigned iPhone 5," Horizon Securities analyst Benson Huang said. Rather than maintaining its innovative capability to win market share, Huang said, the market has been surprised by Apple's announcement that it will cut the prices of iPhone 4 and iPhone 3GS dramatically after the iPhone 4S debut. "Now, the death of Steve has further raised such a concern as many investors have feared that Apple will come up with further price cutting measures," Huang said.

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Businesses need a creative side

Recently there has been a lot written about Steve Jobs’ departure as the chief executive of Apple. As of this month, Apple is the largest publicly traded company in the world by market capitalisation and the largest technology company in the world by revenue and profit.

The fascination people have about Jobs is his ability to bounce back and have great breakthrough. He started Apple in 1976 with Steve Wozniak and Mike Markkula, which came with the first commercially successful lines of personal computer in the 1980s. After a tug of war with Mike Sculley, Jobs resigned from Apple.

During the years of his absence the creative output and the share price of Apple went down. In this period Jobs formed Pixar, an animation company, that he eventually sold to Disney. He returned to Apple in 1996 and the rest is history.

Jobs has become iconic as the best second act story in business history.

So my analysis will focus on the ever constant tussle between the creative view versus the accountant’s view of running business.

First, the creative view of running a business beats the accountant’s view of running a business. Without the creative side there is no business to even speak of.

The creative side requires imagination coupled with action to bring about the thing imagined into actual existence.

Accounting then comes into play to measure the impact of the actions taken, which is an after-the-fact phenomenon because the accounting process is focused on reporting factual historical information.

This is why it is easier to look at things based on hindsight about what actions should have been taken to yield the best results. Accounting reporting does not take the risk of predicting results arising from possible actions, which is the domain of the creative part of business.

Second, accounting reporting is a useful accountability tool to use to measure the impact of the creatives in the business in terms of rands and cents. It brings about controls that help to maximise value.

However, the value in a business is mostly attributable to the creative energy that is flowing within the key parts of the business. So this accountability function played by accountants makes them the hated part of the business because they ask the tough questions that affect the final output of the business and the efficient use of the company resources.

This also causes accountants to be risk averse within the organisation because they focus on the bottom line impact of every decision made within the company.

So why is this relevant?

In most companies where you have the creative types running it, great value is created if it is balanced by the proper accounting teams.

If you have one extreme it would be the tech bubble of the 2000s, which showed the impact of creatives being given unfettered freedom in running the business without the proper accounting checks and balances. This led companies to be overvalued even when they had no sustainable tangible revenue potential to speak of, but only showed the creative potential.

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Apple Tallies record income on Mac, IPad, and IPhone Sales

Compared to previous year's third quarter, Apple's proceeds rose 61 percent from $9.73 billion. Profits rose nearly 78 percent from $1.83 billion.

On a per-share basis, Apple earned $3.51 per share, up 75 percent from the $2.01 it earned over the same period in 2009. The company's results beat forecaster expectations of $3.10 a share and $14.74 billion in income.

Apple sold 3.47 million Macs during the three-month period ended June 26, 2010--another quarterly confirmation for the company. Mac sales increased 33 percent over the 2.6 million units Apple sold in the third quarter of 2009.

The third quarter also marked the first full quarter of sales for the iPad, Apple's new tablet. Apple said it sold 3.27 million iPads during the quarter.

Apple sold 8.4 million iPhones in the third quarter, a 61 percent jump over last year's figures. The iPhone 4 debuted in the waning days of the third quarter in what Apple has called the most victorious product launch in its history.

For the economic fourth quarter ending in September, Apple expects profits of $18 billion and earnings per share to come in around $3.44. Analysts were predicting sales of $17.03 billion and earnings of $3.82 per share in advance of Apple's declaration on Tuesday.