Needham analysts support Apple Inc.'s decision to change leadership, while also calling for more advertising sales and the acquisition of Walt Disney Company.

On Monday, Apple Inc. (AAPL.US) announced that John Ternus will succeed Tim Cook as the next CEO, a move that has been praised by many analysts and investors on Wall Street. Among them, Needham analyst Laura Martin also expressed support for this decision, even though she has urged Apple Inc. to actively expand its business and move away from its core ideas into the advertising and acquisition fields. In a report to clients, Martin wrote, "We support Apple Inc.'s succession plan announced yesterday, with Tim Cook stepping down as CEO on September 1 (to become Executive Chairman) and current Senior Vice President of Hardware Engineering John Ternus taking over as CEO. We are optimistic about the value creation that this transition will bring, as we believe Ternus will inject a sense of urgency (speed) and a spirit of adventure (innovation) into Apple Inc.'s product line." Martin rates Apple Inc. as "hold." She continues to advocate for Apple Inc. to further expand its advertising business. She even stated that she believes Apple Inc. has been "hurting shareholder value" by not fully capitalizing on high-margin advertising revenue. According to her estimates, Apple Inc. could generate about $10 billion in advertising revenue by 2025, less than 10% of its services revenue and less than 3% of total revenue. Martin added, "We believe this revenue should be closer to 50% of services revenue with a profit margin of around 80%, which will be a key driver of Apple Inc.'s profit growth." Last month, Apple Inc. opened up advertising placements in its Maps app and recently expanded advertising placements within the App Store. Martin also stated that Apple Inc. needs to acquire (or at least work with) media giant Walt Disney Company (DIS.US), a deal she has recommended several times but has not been successful. Martin explained, "We believe Apple Inc. should work with or acquire Walt Disney Company to extend user engagement and possess differentiation assets with pricing power and strong competitive advantages (such as movies and TV shows). We believe Apple Inc. should also leverage acquisitions, partnerships, and industry leadership to accelerate value creation." The two companies have a long-standing relationship. Apple Inc. co-founder Steve Jobs became Walt Disney Company's largest shareholder after selling Pixar to Walt Disney Company in 2006.