Apple’s Steve Jobs Takes Medical Leave; Shares Plunge (Update3)
By Connie Guglielmo
Jan. 14 (Bloomberg) -- Apple Inc. Chief Executive Officer Steve Jobs, who said this month that he is being treated for a nutritional ailment, will take a medical leave of absence through the end of June. The shares fell 6.4 percent.
Chief Operating Officer Tim Cook, who filled in during Jobs’s 2004 medical leave, has taken over Apple’s day-to-day operations, the Cupertino, California-based company said today in a statement. Jobs said he will remain involved in major strategic decisions.
“During the past week I have learned that my health- related issues are more complex than I originally thought,” Jobs said in the statement. “In order to take myself out of the limelight and focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence.”
Jobs’s disclosure adds to concern that he may not be able to continue running the company he co-founded in 1976. After being ousted in the 1980s, he retuned as CEO in 1997 and overhauled Apple, leading the company into the consumer- electronics market with the iPod and iPhone. Analysts and investors have raised questions about Jobs’s health since his surgery for a rare form of pancreatic cancer in 2004.
“The part I find most troublesome is the health issues being more complex than they thought at first,” said Romeo Dator, a portfolio manager for U.S. Global Investors Inc. in San Antonio. “With the markets already nervous, a visionary founder and leader of a company taking a leave of absence is not good news.”
Shares Plunge
Apple fell $5.48 to $79.85 in extended trading after closing at $85.33 on the Nasdaq Stock Market. They slumped 57 percent in 2008.
“You almost have to start thinking that there’s a higher likelihood that he’s not coming back in June,” said Chuck Jones, an analyst with Atlantic Trust Private Wealth Management in San Francisco, which owns Apple’s shares. “It’s potentially an extremely unfortunate personal situation.”
Apple spokesman Steve Dowling declined to comment and said Cook and Apple’s board members aren’t available for interviews.
If Jobs were to leave Apple, the shares would likely lose 10 percent of their value, Gene Munster, an analyst at Piper Jaffray & Co. in Minneapolis, said this month.
‘Distraction’
“Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well,” said Jobs, who turns 54 next month.
Jobs said earlier this month that he is suffering from a nutritional ailment and that he planned to remain Apple’s CEO during his treatment. He said he’d been losing weight throughout 2008 and that the reason was a mystery to him and his doctors.
“After further testing, my doctors think they have found the cause -- a hormone imbalance that has been ‘robbing’ me of the proteins my body needs to be healthy,” Jobs wrote in the Jan. 5 letter, addressed to the Apple Community.
Although he has started treatment, Jobs said last week that his doctors advised him it may take until at least late spring to regain weight. He said he was getting “simple and straightforward” treatment for a hormone imbalance that his doctors had discovered in recent weeks.
Macworld Appearance
Last month, Apple said Jobs wouldn’t deliver the keynote address at the Macworld Expo conference in San Francisco -- ending an 11-year run and renewing speculation about his health. Jobs, wearing his trademark black turtleneck and blue jeans, has used the Macworld show to unveil new products, including the iPhone in 2007. Jobs didn’t appear at the show.
Speculation among analysts and investors about Jobs’s health resurfaced last June after he appeared thinner at Apple’s conference for developers. The company said at the time that he was suffering from a “common bug” and declined to discuss his health throughout 2008, saying it was a private matter. Rumors persisted as he continued to appear frail at company events later in the year.
Jobs told members of Apple’s board in July he is cancer- free and was dealing with nutritional problems after his surgery, the New York Times reported at the time, citing people close to Jobs.
In 2004, Jobs said that he underwent surgery to remove a neuroendocrine islet cell tumor that was growing in his pancreas. Neuroendocrine islet cell tumors are found in about 2,000 to 3,000 people in the U.S. annually, according to pancreatica.org, a pancreatic cancer information Web site maintained by the Lorenzen Cancer Foundation in Monterey, California.
‘Irreplaceable’
“He’s irreplaceable,” said Piper Jaffray’s Munster. He recommends investors buy Apple’s shares and doesn’t own any. “Once you’ve accepted that, then the best thing for the company to do is highlight other talent.”
Cook, 48, first came up as a possible heir to Jobs in August 2004 when he led Apple during Jobs’s monthlong leave to recuperate from cancer surgery. His position as Jobs’s second- in-command was cemented in November 2005, when he was promoted to operating chief.
Apple has said it has a confidential succession plan.
In March, Jobs said that Apple’s board, which includes former U.S. Vice President Al Gore and Google CEO Eric Schmidt, could look at Apple’s current management team for his replacement.
“Our board of directors fully supports this plan,” Jobs said today. “I look forward to seeing all of you this summer.”
To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net
Last Updated: January 14, 2009 18:35 EST |
