Sabtu, 25 April 2015

The interview that helped Steve Jobs return to Apple

Financial markets are largely, but not perfectly, efficient, or else all of us in the investment business would be wasting our time. Look, I’m a strong proponent of the Benjamin Graham school of value investing that Warren Buffett studied and perfected. In the long-run, I believe that investing in companies that are fundamentally undervalued relative to their peers will lead to the greatest and most predictable returns. Compounding interest is no doubt the eighth wonder of the world.

However, that doesn’t mean there aren’t situations, usually in the case of growth stocks, where a bit of qualitative analysis serves as a great complement to quantitative metrics.
The great Peter Lynch was a frequent guest on Wall Street Week with Louis Rukeyser. Lynch popularized the notion of “invest in what you know,” meaning if you take note of a product, service or industry in your daily life that you think could have significant potential for the future, invest in that company. Avoid investments you don’t understand. While I would not blindly recommend that mindset, there are many cases in history (with the help of hindsight) where Lynch’s strategy paid off handsomely.
Louis Rukeyser understood the need to look at the world analytically beyond just the walls of the Street, because analyzing things like technology can help unlock tremendous value for investors.
One of the most famous non-finance interviews Rukeyser conducted on Wall Street Week was with Apple co-founder Steve Jobs. At the time of the interview in late 1996, it had been more than 10 years since Jobs had been forced out of the Apple, a decade during which time he started another computer and software company, NeXT, and invested heavily in Pixar, the animation studio he bought from George Lucas.
Soon after the interview, NeXT was acquired by Apple for $425 million and 1.5 million shares, and Jobs was re-installed at the head of the then-floundering tech company. Knowing what Apple is today, it’s hard to fathom Rukeyser’s question to Jobs:

“You first came to public attention with Apple. In recent weeks it's been one of the failure stories of Wall Street and indeed the American economy. What went wrong?”
History tells us Jobs will go down as one of the greatest innovators and leaders of all-time, but at that moment NeXT was considered a lukewarm success, while Pixar euphoria (and stock price) had subsided considerably. NeXT’s focus on software proved most fruitful:
“[NeXT’s] sophisticated but expensive black box never caught on, and the project was abandoned. NeXT, still privately-held, moved on to developing the new software writing technique that some technology buffs believe will eventually turn the internet into an indispensable tool for doing online business.”
NeXT software laid the groundwork for what would become Apple’s operating system, and the buy-out also served a dual purpose: bringing the mercurial Jobs back into the company he put on the map. On Wall Street Week he laid out his view of Apple’s need to innovate so eloquently it would have been pure hubris for Apple executives not to restore the king of innovation to his rightful throne.
I wouldn’t be surprised if the interview with Rukeyser, whose program at its peak in the ‘80s and ‘90s was viewed in more than four million homes each week, played at least a small role in Jobs’ return to the company:
“I still think Apple has a future. There are some awfully good people there and there's a tremendous brand loyalty to the company. I think the way out is not to slash and burn, but to innovate—that's how Apple got to its glory and I think that's how Apple could return to it.”
We look forward on the new Wall Street Week to following Mr. Rukeyser’s lead in focusing on “anything that affects people and their money,” a category in which technology falls more than ever.
Watch the full Steve Jobs interview on Wall Street Week with Louis Rukeyser below:

All opinions expressed by the “Wall Street Week” participants are solely their opinions and do not reflect the opinions of SkyBridge Media, LLC or its affiliates or parent company. You should not treat any opinion expressed herein as a specific inducement to make a particular investment or follow a particular strategy. SkyBridge Media, LLC is separate from its investment adviser affiliate, SkyBridge Capital II, LLC. Opinions expressed herein may be consistent with, or opposed to, the views of SkyBridge Capital II, LLC or of securities or other financial positions taken directly or indirectly by SkyBridge Capital II, LLC.

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