When Steve Jobs resigned as Apple Inc. (NASDAQ:AAPL) CEO on Aug. 24, 2011, shares fell 5.22% in after-hours trading. The sky, presumably, was falling. But the initial shock proved short-lived. By the following day's close, the iPhone company's shares were down just 0.7%, as investors reassessed the company's ability to operate without its iconic co-founder.
Tim Cook, who had served as Apple's chief operating officer and previously taken charge during Jobs' medical leaves, was named CEO immediately. Apple's subsequent financial performance offered early evidence that its growth engine remained intact — a historical precedent for investors to revisit on the heels of Jensen Huang's departure from Nvidia Corp (NASDAQ:NVDA).
Apple's fiscal fourth-quarter results, reported in October 2011, showed revenue of $28.27 billion and diluted EPS of $7.05. That compared with management's July forecast of approximately $25 billion in revenue and $5.50 in EPS — beats of roughly 13% and 28%, respectively.
However, Apple had fallen short of Wall Street's higher expectations, particularly on iPhone sales. Shares dropped nearly 8% in after-hours trading following the report, showing that beating management guidance alone wasn't enough to satisfy investors.
Cook's Second Quarter Showed Underlying Momentum
For its fiscal first quarter of 2012, Apple had projected approximately $37 billion in revenue and $9.30 in diluted EPS. Instead, it reported $46.33 billion in revenue and EPS of $13.87 in January 2012, exceeding its own forecasts by approximately 25% and 49%, respectively.
Shares surged nearly 9% in after-hours trading following the results, as Apple also reported selling 37.04 million iPhones during the quarter.
The distinction matters: Apple's first post-Jobs quarter was largely completed before Cook took over, while the January results reflected his first full quarter as CEO.
Together, the results showed that Apple's operating momentum survived the transition.
What Nvidia Investors Should Watch
Nvidia's next financial test comes Nov. 17, when it releases its next earnings report. It'll be an early indication of whether its financial momentum can remain intact with CFO Colette Kress as interim CEO.
The company previously guided for fiscal third-quarter revenue of $108 billion, plus or minus 2%, and a gross margin of approximately 74%.
For investors, Apple's experience offers a useful framework: distinguish between the market's initial reaction to a leadership shock, the company's ability to meet its own forecasts, and Wall Street's expectations for what comes next.
