Apple's Jobs takes another medical leave, raising questions about firm's future
Steve Jobs, the iconic chief executive of Apple who has battled serious health problems for years, said Monday that he is taking another medical leave of absence, raising questions about whether the country's most highly valued technology company can prosper without its leader.
The announcement that the creator of the iPod, iPhone and iPad would step aside - without revealing the extent of his medical problems or how long he'll be on leave - prompted criticism from some analysts that Apple was betraying its obligations to tell its shareholders important information.
Jobs, a survivor of pancreatic cancer and recipient of a liver transplant, two conditions known to cause a variety of complications, sent a message to Apple employees Monday saying that the company's board "granted me a medical leave of absence so I can focus on my health." He added that he would continue to be involved in major decisions but would give up day-to-day control.
Apple's stock dropped sharpTuesday morning, rebounding some by late morning. At around 11 a.m., it was down $13.04, or nearly 4 percent, trading at $335.
Since founding Apple in 1976, Jobs has been known for a nearly fanatical attention to detail - caring as much about the appearance of his products as how they function - that makes him unique among many technology executives.
He has fostered a culture at Apple that has allowed the company, which was months from bankruptcy in 1997 when he returned to the helm after a long hiatus, to edge out bigger rivals and dominate the market for smartphones and music players.
Critics say Jobs's decision to go on leave without providing more details gives the company's shareholders little insight into what the future holds for Apple as its rivals, such as Google and Microsoft, fight hard to capture some of the success of the iPhone and iPad.
"For better or worse, Steve Jobs represents Apple," said Charles Elson, a corporate governance professor at the University of Delaware. "I wish we would have more disclosure here. I wish the board let the investors know what they know at this point."
An Apple spokesman declined to comment on the question of disclosure.
Jobs, 55, has suffered in the past decade from two serious medical conditions. In 2004, he disclosed he had surgery to remove a rare form of pancreatic tumor. In 2009, he had a liver transplant.
John Fung, chairman of the Digestive Disease Institute at the Cleveland Clinic, said possible complications from the surgeries are numerous, including rejection of the transplant, infections and the development of diseases such as diabetes.
Fung, who hasn't treated Jobs and cautioned that every case is unique, estimated that the five-year survival rate for a patient such as Jobs would be about 50 percent.
Rajesh Ghai, an analyst with investment bank ThinkEquity, said that Apple is widely perceived as inseparable from Jobs but that during more than 10 years, many of his lieutenants have learned Jobs's style.
"There is a perception among investors that's pretty strong that Steve Jobs is the most important asset that Apple has," Ghai said. "But there is definitely an organization around him that understands the design philosophy and process he has embraced."
Jobs has closely guarded details of his health problems over the years, despite his iconic status at the company. Federal securities law requires that a public company tell investors any information that would probably make a significant difference to its financial performance or its share price. But regulators have not said that companies must disclose a top executive's impaired health.
Debate over what Apple must disclose roared over the past few years after the company sent conflicting signals about Jobs's health.
While presenting the second generation of the iPhone in June 2008, Jobs appeared on stage looking very thin, fueling speculation that he was facing a new health threat.
Apple dismissed the concerns, saying its chief executive had a "common bug." The company insisted that his health was a private matter.
"The reports of my death are greatly exaggerated," flashed a screen above Jobs at a conference in September 2008.
Then in January 2009, Jobs, looking even more frail, said a hormone imbalance had caused him to lose weight, writing that "the remedy for this nutritional problem is relatively simple and straightforward."
But just a few days later, Jobs ceded control of the company, saying he would take five months off to treat an undisclosed health problem. Only in June did he reveal that he had a liver transplant.
He returned in June 2009 as the company was working fast and furiously on the development of the iPad tablet.
"Investors in Apple have already had a dry run of Jobs seeking medical leave, and they know that investing in Apple means much less disclosure than at other companies and therefore higher risk," said Stephen Davis, senior fellow at the Millstein Center for Corporate Governance and Performance at the Yale School of Management. "But they also know that Apple has been able to pull it off."
The problem with this approach, said Alexa Perryman, an assistant professor at Texas Christian University, is that Apple doesn't have a public succession plan. The company has been fighting efforts by some shareholders to force it to reveal its succession plan.
"If you're investing in Apple, you're not sure who's leading the company in the long run," Perryman said.
As he had with his previous absence, Jobs said Monday that he asked Chief Operating Officer Tim Cook to temporarily oversee the company.
"I have great confidence that Tim and the rest of the executive management team will do a terrific job executing the exciting plans we have in place for 2011," Jobs wrote in his message to employees.
Jobs added: "I love Apple so much and hope to be back as soon as I can. In the meantime, my family and I would deeply appreciate respect for our privacy."
Apple recently granted Cook nearly $60 million in compensation, largely as a result of bonuses he received for his stewardship of the company in Jobs's absence. The company's shares rose 66 percent during that time.
Apple released the information while the U.S. stock market was closed to observe Martin Luther King Jr. Day. The company will announce its quarterly financial results Tuesday.
The stock is up 69 percent in the past year, closing at $348.48 on Friday. Shares of Apple listed on the Frankfurt, Germany, exchange slipped by more than 6 percent Monday.
Staff writer Cecilia Kang contributed to this report.