Question

Summary: Key Points in the Article

Apple Computer CEO Steve Jobs announced he was taking a leave of absence for health reasons. Jobs has been fighting cancer and also recently underwent a liver transplant. Even though the computer giant is in good hands with Chief Operating Officer Tom Cook taking over the stock price fell by​ US$6.40, or nearly two​ percent, on the news.

Jobs is widely known as a visionary and a micromanager. Under his leadership Apple has transformed the computing industry. While​ Jobs' health outlook is unknown many investors are betting on his recovery and return. Those who bought Apple stock when Jobs stepped down in 2004 for health reasons made a nice profit when he returned to the helm.  

Question                                                                                                                               2 Marks

“When a financial manager makes good or bad financial decisions the impact of these decisions will be reflected in the​ company's Stock price”.

Do you agree with the decision taken in the above case? What decisions you will take to improve the stock price of Apple Computers in this situation?

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Answer 1

When a financial manager makes good or bad financial decisions the impact of these decisions will be reflected in the​ company's stock price as those decisions have future financial implications over the company and are also crucial for the creation of shareholder's wealth in the future.

The decisions taken above are under an emergency situation although Steve had stepped down earlier in similar ground i.e. health issues. So in absence of Steve, the responsibility has to be assigned to his subordinate who is caliber enough and has the potential of filling his shoes.

In absence of a CEO many decisions can't be taken and also might lead to internal conflicts or hostile takeovers. So an immediate appointment of new CEO was need of the hour but before that, a shareholder meeting could have been done to maintain the confidence level of them on the company and the announcement of the new CEO would have been done there with highlighting the key achievements of Tim.

To improve the stock price, the future plans of the company i.e. the upcoming new product list might be released in public to reverse the sentiments and the targets of sales for the current fiscal year should be set. This will help the analyst to project the financials and growth rate of the company and will lead to a buy call.