Needham analyst Laura Martin has expressed support for Apple's announcement that John Ternus will succeed Tim Cook as the next CEO, effective September 1. Martin endorsed the succession plan despite having previously encouraged Apple to diversify beyond its core philosophy by expanding into advertising and mergers and acquisitions. In a client note, Martin stated, "We support the transition, with Tim Cook moving to executive chairman and John Ternus taking over as CEO. We are optimistic about value creation, believing Ternus will instill urgency and a greater appetite for innovation into Apple's product lineup."
Martin maintains a "Hold" rating on Apple. She continues to advocate for significant expansion of Apple's advertising business, arguing that the company has "eroded shareholder value by underutilizing high-margin ad revenue." She estimates Apple will generate about $10 billion in ad revenue in 2025, representing less than 10% of its services revenue and under 3% of total revenue. Martin added, "We believe this revenue should approach 50% of services revenue, with approximately 80% margins, making it a key profit growth driver." Apple recently opened its Maps application to ads and expanded advertising placements within the App Store.
Martin also reiterated that Apple should acquire, or at least form a partnership with, media giant Disney, a deal she has repeatedly recommended. She explained, "We believe Apple should partner with or acquire Disney to extend user engagement and gain differentiated assets with pricing power, such as films and TV series. Apple should leverage M&A, partnerships, and industry leadership to accelerate value creation." The two companies have a long-standing relationship; Apple co-founder Steve Jobs became Disney's largest shareholder after selling Pixar to Disney in 2006.
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