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Will Apple Lose Top Employees? The Great Brain Drain (AAPL, MSFT, GOOG)

Administrator — Wed, 07 Sep 2011 09:53:34 +0000

When great CEOs leave a company, an entire corporate culture is at risk to change, even when the new CEO is the favored replacement. Tim Cook is said to be more than able to fill the role of Apple’s (NASDAQ: AAPL) CEO permanently now that Steve Jobs has left. There is just one problem in thinking that all things will remain the same except for the “minus Steve Jobs” factor. It is not even that Steve Jobs is one of the most memorable, most hands on, and most influential CEOs out there. Of technology CEOs, he certainly shines. What Apple and its investors have to fear the most is the possible competitive threat of a brain drain.

Apple is not alone. Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG) have both already experienced this brain drain effect. The risks are not just top executives leaving. The risk is that other employees will follow executive defections in the months and years ahead. More importantly, even the underlings who do not follow former executives to the same destination are either more likely to accept calls from recruiters or are more likely to go pursue new challenges and opportunities. If those employees feel that the best days of growth have been seen or if they feel they have already been made millionaires on stock and options, then the incentive to stay may even be less.

Again, this has happened elsewhere. It is not a definite outcome at Apple, but if it does occur there it will not be the last such case in business history. Now the new destinations for talent are numerous, from gadget-makers, to social media, to internet and software, and to many aspects of hardware. Imagine how many executives at Facebook, Groupon, Zynga, Dell (NASDAQ: DELL), HP (NYSE: HPQ), Oracle (NASDAQ: ORCL), EMC (NYSE: EMC) and elsewhere would love to bring in some of the Apple culture. These companies could certainly lure employees with salaries and stock options.

Microsoft has seen a large amount of brain drain over the past decade, and much was credited to the departure of Bill Gates, when employees could seek new challenges and after they had accumulated wealth. The departures were in the Windows design team, Windows Live, MSN, Xbox and Zune, and on. One of the most noted departures we tracked was Ray Ozzie as chief software architect, which Microsoft-Watch said was on the heels of other key departures. Business Insider gave a list in early 2011 of the top ten departures over the last ten years. What is funny about Microsoft is that the departures are often not usually over pay, but over pressure, lifestyle, and a desire to seek new challenges elsewhere.

Google has suffered a brain drain in recent years as well. The once best place in the world has peaked as far as its ability to grow, compared to the past. Google originally had been able to attract people seeking new challenges, but Google is not really known for being the top salary destination, and its workforce has expanded massively. Back in 2008, Wired wrote about the brain drain that occurs after a four-year or five-year option vesting plan. In late 2010, the company even reportedly instituted pay raises of about 10% to be more competitive. And now we have Larry Page as CEO without the full-time adult supervision of Eric Schmidt.

So, the focus on Apple …

Filed under: Activist Investor, Consumer Electronics, Corporate Governance, Economy, Editor's Picks, Labor & Unions, Management Change, Technology Companies Tagged: AAPL, DELL, GOOG, HPQ, JCP, MSFT, NATI, NTAP, ORCL, OSTK, SFLY

Early-Bird Analyst Downgrades (AAP, ALNY, COMV, DISH, DPS, HAS, NATI, NVTL, STEL)

247wallst — Wed, 20 Aug 2008 06:32:50 +0000

These are some of the early analyst downgrades or negative calls we are seeing this Wednesday in early pre-market hours:

Advance Auto Parts (AAP) Cut to Neutral at JPMorgan.
Alnylam Pharma (ALNY) Started as Underperform at Leerink Swann.
Comverge (COMV) Cut to Neutral at Broadpoint Capital.
DISH Network (DISH) Cut to Market Perform at Bernstein.
Dr. Pepper Snapple (DPS) Cut to Neutral at UBS.
Hasbro (HAS) Cut to Underperform at BMO Capital.
National Instruments (NATI) Cut to Neutral at Credit Suisse.
Novatel Wireless (NVTL) Cut to Sell at Piper Jaffray.
StellarOne (STEL) Cut to Underperform at Baird.

JON C. OGG
August 20, 2008

52-Week Low Club (AMLN, CYMI, NTCH, KEYN, MMA, NATI, STE, WTW)

247wallst — Wed, 30 Jan 2008 16:53:09 +0000

There was a much larger list of companies which hit 52-week lows, but these were some of the larger percentage changes that we looked at:

Amylin Pharmaceuticals Inc. (AMLN) closed at $29.34 versus a prior 52-week low of $29.73 (high $53.25). Poor future outlook and inflated costs…. stock starting to look like the "Amylin-ville Horror."
Cymer Inc. (CYMI) down 20% to $27.00, prior 52-week range was $31.25 to $45.16. Cymer was downgraded after missing earnings yesterday.
Hutchinson Technology Inc. (NASDAQ: HTCH) fell 33% to $16.18; prior 52-week range was $17.69 to $27.85. Low sales projections and downgrades from Caris and Brean Murray.
Keynote Systems Inc. (KEYN) tanked 28% to $9.20 versus prior 52-week trading range of $10.35 to $17.35. A Bad note of losses and downgrades.
Municipal Mortgage & Equity LLC (NYSE: MMA) down 22% to $7.13, versus prior 52-week range of $9.05 to $32.20. Woes continue, stock heading to pink sheets/OTC.
National Instruments Corp. (NASDAQ: NATI) fell almost 10% to $26.23, but intraday lows were $24.88; 52-week trading range $25.80 to $36.06. Citi downgraded after Q1 earnings outlook looked short.
Steris Corp. (NYSE: STE) fell 14% to $23.48; prior 52-week range $24.65 to $31.71. It is involved in the development, manufacture, and marketing of infection prevention, contamination control, microbial reduction, and surgical and critical care support products and services. For a nearly-recession proof business, you wonder why its outlook wasn’t in-line.
Weight Watchers (NYSE: WTW) fell 2.2% today to $41.94, although its intraday low was $41.49; prior 52-week trading range was $41.52 to $58.24. No real news today, maybe losing weight equals losing share prices? We doubt it. This may be economically sensitive even if this is one of the few ongoing methods of weight loss that will actually work.

Jon C. Ogg
January 30, 2008

Pre-Market Analyst Calls (July 13, 2007)

247wallst — Fri, 13 Jul 2007 06:43:45 +0000

AOB started as Outperform at CIBC.
AUY started asOutperform at Credit Suisse.
BGFV cut to Sector Perform at CIBC.
BJ raised to Equal Weight at Lehman.
BLK started as Outperform at Wachovia.
CCL raised to Overweight at JPMorgan.
CHE cut to Hold at Deutsche Bank.
CIT cut to Sector PErform at CIBC.
CREE started as Hold at Deutsche Bank.
DWA started as Buy at Stifel Nicolaus.
EMC cut to Mkt Perform at Morgan Keegan.
FRO cut to Reduce at UBS.
HAL raised to Outperform at Credit Suisse.
HDB started as Buy at Jefferies.
IBN started as Buy at Jefferies.
NATI raised to Overweight at Thomas Weisel.
NDN raised to Buy at Deutsche Bank.
PPDI cut to Hold at Jefferies.
RCL raised to Overweight at JPMorgan.
RNOW started as Hold at Cantor Fitzgerald.
RSH cut to Sell at B of A.
SEB raised to Buy at Jefferies.
SWK started as Neutral at B of A.
SWY raised to Equal Weight at Lehman.
VRSN raised to Buy at Jefferies.
VSCN cut to Mkt Perform at FBR.
WON cut to Sell at Citigroup.
ZBRA raised to Overweight at Thomas Weisel.

Jon C. Ogg
July 13, 2007

Earlybird Analyst Calls (June 18, 2007)

247wallst — Mon, 18 Jun 2007 06:23:00 +0000

ADP started as Sector Perform at CIBC.
ANDW cut to Neutral at B of A.
ASN cut to Sector Perform at RBC.
CKFR raised to Outperform at CIBC.
CPS cut to Sector Perform at CIBC.
EFD cut to Sell at Citigroup.
ENCY cut to Underperform at Rodman & Renshaw.
FCS raised to Outperform at RWBaird.
FIS started as Outperform at CIBC.
FISV raised to Sector Perform at CIBC.
GME raised to Overweight at JPMorgan.
GPN started as Sector Perform at CIBC.
KDN raised to Buy at KeyBanc/McDonald.
KYPH cut to Market Perform at Wachovia.
NATI raised to Overweight at JPMorgan.
TEK raised to Overweight at JPMorgan.
WDC cut to Neutral at JPMorgan.

Jon C. Ogg
June 18, 2007