Apple's Ailing CEO Takes Leave
Tech Icon's Absence Called a Blow to Firm

By Peter Whoriskey and Mike Musgrove
Washington Post Staff Writers
Thursday, January 15, 2009

Apple co-founder Steve Jobs announced yesterday that the illness he has downplayed for months even as it rendered him strikingly gaunt has turned out to be "more complex" and that he was taking a leave of absence from the company.

The decision was the latest turn in the tech icon's semi-private battle with an ailment, still undisclosed, that is testing not just his health but also his renowned capacity for controlling every detail.

It also comes as the prosperous economic era in which he launched the iPod and the iPhone -- two products that seemed to embody the epoch's infatuation with technology -- comes to a crashing close.

Jobs's long-standing reluctance to discuss details of his ailment and prognosis has infuriated some investors, and, as expected, Apple's share price plunged yesterday. In the announcement, Jobs, 53, said he would be taking medical leave until the end of June. But, he said, "as CEO, I plan to remain involved in major strategic decisions while I am out."

Even so, investors and analysts view even the partial loss of Jobs, considered a seminal figure in the industry, as a critical blow that will be felt beyond the company.

Known for his tenacious attention to product design and aspirations to countercultural chic, Jobs has driven his engineers, sometimes relentlessly, to develop simple products that have won both aesthetic and technological plaudits.

With the exception of Microsoft founder Bill Gates, few corporate leaders are as fundamental to their company's identity as is Jobs.

In 1976, he co-founded the company, which had its first startling success with the Apple II, one of the first popular personal computers. After he was forced out in a boardroom coup in 1985, when he was 30, Apple languished.

Since his return to Apple in the 1990s, he has created products that have redefined consumer technology.

With the iPod and iTunes, Apple enabled people to carry their entire catalog of music anywhere with unprecedented ease. With the iPhone, his company elegantly brought to fruition the idea of a handheld device that could be used as a phone, a computer and an Internet connection.

The design of each, as expected, was sleek and attracted most of the attention. But their creation required not just engineering excellence but also dealmaking savvy.

To create the iTunes Store, Jobs had to cut a deal with wary record companies to sell their music at 99 cents a song. Likewise, the iPhone required him to negotiate a deal with the service provider AT&T.

"There's no company that gets scrutinized more than Apple and no executive under the microscope more than Steve Jobs," said Michael Gartenberg, a tech industry analyst. "Nobody asks if Steve Ballmer is gaining weight or if Michael Dell has the sniffles or if Eric Schmidt has a headache. . . . Obviously, this is a blow."

In his absence, Jobs said, Tim Cook, an executive who has been with the company since 1998, will handle day-to-day operations.

"During the past week I have learned that my health-related issues are more complex than I originally thought," the announcement said. "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."

"There's such a cult of personality around Jobs that it looks to outsiders like he's incredibly important in the day-to-day operations of the company," said Adam Engst, publisher of a Mac news site called TidBits. "It's hard to tell whether or not that's really true or if there are plenty of other people to step in to take over chunks of his job. I hope and believe Apple is a sufficiently grown-up company that a key executive can step out from day-to-day operations without impacting it in a big way."

Many investors seem to doubt that Jobs can easily be replaced, and the stock has ghoulishly run up and down depending on the medical reports.

In 2004, Jobs received a diagnosis of pancreatic cancer and had surgery, which apparently was successful. He did not disclose the illness until a speech at Stanford University in 2005.

"No one wants to die," he said in the speech. "Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be because death is very likely the single best invention of life. It is life's change agent."

Then, last June, Jobs appeared strikingly thin, and the uncertainty over his health provoked new worries, particularly for investors. Stock prices suffered as a result.

The company deflected repeated questions about his health, citing his privacy.

But concern about Jobs's health arose again Dec. 16, when the company announced that he would not attend Macworld, a conference he has addressed in his trademark black turtleneck for several years. Instead, the company sent marketing chief Philip W. Schiller to make a presentation.

Apple's stock fell 2.7 percent yesterday, to $85.33. In after-hours trading last night, it was down an additional 7 percent.

Last week, seeking to quell the most dire rumors regarding his illness, Jobs disclosed that he was suffering from a "hormone imbalance."

"Unfortunately, my decision to have Phil deliver the Macworld keynote set off another flurry of rumors about my health, with some even publishing stories of me on my deathbed," he wrote. "I've decided to share something very personal with the Apple community so that we can all relax and enjoy the show tomorrow."

The announcement indicated that blood tests had identified the trouble and that a "straightforward" nutritional remedy was being undertaken. The comforting suggestion that his ailment was not a recurrence of cancer sent the stock price up.

"As many of you know, I have been losing weight throughout 2008," he said last week. "Fortunately, 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. . . . The remedy for this nutritional problem is relatively simple and straightforward, and I've already begun treatment."

He added: "So now I've said more than I wanted to say, and all that I am going to say, about this."

And it was all he said -- until yesterday, when his piecemeal, vague health disclosures led some Apple watchers to wonder whether they might reflect a corporate decision to withhold bad news, using privacy as a shield. Or the inconsistencies of a man wrestling with his mortality.

Still, his admirers cling to the belief that Jobs hasn't been bluffing himself or the public.

"Steve's not delusional," said Travis Good, a member of a local Apple user group known as Washington Apple Pi. "All I can say is from life's experience, a change in message such as this is usually due to a harsh revelation. He wouldn't have played his cards this way if he'd known. There must have been new medical insight, which forced him to change his plans."

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