Former Google and Apple Execs: Yahoo, JC Penney and AOL
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Something that occurred to me this morning is that there are an awful lot of former executives of search engine Google (NASDAQ: GOOG) and tech giant Apple (NASDAQ: AAPL) running around running other people's businesses these days. I can't be the only one to notice this. It seems to me that some of the esteem the market and business community assigns to these firms is transferring to the people who work there.
That seems to make sense at first blush, but does it? There have certainly been some high profile hires in the last few years as boards try to find a way to replicate some mojo. Speaking as a man who has done a certain amount of hiring, however, I know that what works at one place isn't necessarily transferable to another. Sometimes it's the culture of the place, along with the community of people, that makes great things happen and innovations take place.
With that in mind, I thought I'd take a look at some Google and Apple alum and how the magic has transferred over. Maybe we can figure some things out.
I figured I'd start with the source. Google is one of the most wildly successful firms in the world right now. It's the tech start-up that made good. Not only did Google become popular as an online firm, but it did something few others have done: It made money while doing it. I know that sounds like crazy-talk but it's true.
Since the depths of the great recession (early 2009, say) shares of Google have climbed 212.7%. That's not a bad comeback. Hell, that's more than a comeback, that's runaway growth! It's done all that with a P/E that doesn't show overpurchasing like other online firms do, and an EPS of $32.47 and an operating margin of 25% show that it's doing it right.
Right, everyone should know about Apple by now. If not, shut down the computer and go home. Maybe invest in buggy whips or something. Apple, in spite of recent losses in stock price – which I think are more media than data-driven – is still one of the best investments around.
At $422 the firm is, to my mind, undervalued. I think there's plenty of room for a bounce-back based on the company's products, history and EPS of $44. The smart watch coming out this year likely won't hurt that, either. Investors just have to get used to the fact that Apple was more than Steve Jobs and stop panicking. They're just losing themselves money.
OK, that's our baseline. How do the others stack up?
Yahoo (NASDAQ: YHOO)
This is one of the most famous 'Former Google' hires right now. Marissa Mayer, hired to be the CEO at Yahoo, is certainly making a lot of news. With a new web design and no more telecommuting Mayer is certainly becoming the most 'newsmaking' member of the former Google exec cohort. She appears to be smart, motivated and aiming at a target for her new company.
Mayer has been in place at Yahoo for about 7-8 months now. That's hardly enough time to make a full set of changes in anything as big as Yahoo. Still, since the day she took over, the company's stock has climbed 45%. In that time the S&P 500 has climbed 13.2%. Toss in a Q4 operating margin of 14% and we have a tentative win for Mayer. Still, these are early days for her.
J. C. Penney (NYSE: JCP)
This has been an unmitigated disaster. CEO Ron Johnson – a former Apple SVP for Retail Operations – went to the mid-level retailer with a plan to change up the flagging stores and bring it into a new, more profitable age. That's great. Too bad it's gone terribly. Johnson has struggled to really understand the space in which JCP sits, or its customers.
It's been about 14 months since Johnson took over at J. C. Penney's, and ugh. After an initial pop that saw the firm's stock climb from $29.75 to more than $40 it's now down to $16.73. That's a drop of 43.7% since he took over. The world knows it, too, as rumors and innuendo are swirling around Johnson at this point. Hell, last year the firm lost 10% in a growing economy. I declare this former Apple exec hire a FAIL.
AOL (NYSE: AOL)
Tim Armstrong is our second former Google exec on the list. He left Google back in 2009, so we've got some time to review his actions. There have been reports that turning around that particular firm has been a headache for Armstrong, and there's a history there of cashiering execs quickly; that instability is becoming the main thing there. Still, it's AOL. Once the biggest online service ever, it's now a thing of the (apparent) past.
The firm's shares stayed either flat or drifted downward through mid-2011. Since then, though, they've climbed 212%. That's in about the last 18 months. Last year the firm reported an operating margin of 54%+ and a it pays a 5.15% dividend. This could really mean that AOL is starting to find its way out of the wilderness. Might be worth picking up a share or two if you have some risky money lying about.
So, of the three we examined, that's one win, one monstrous loss, and one tentatively good but too early to really tell. So I'd have to say that it's unclear whether having the special 'tech pixie dust' of working at Google or Apple gives an exec anything special other than some sexiness to boards looking to replace a CEO on the way out the door. But media hype can do all sorts of things in that circumstance. Don't believe it unless you have other reason to do so.
Follow Nate on Twitter: @natewooley
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