Apple, the technology innovator and standard-setter for stylish cellphones, personal computers and transformative gadgets from iPods to iPads, is losing its iconic leader once again. It's unclear when — or even whether —Apple CEO Steve Jobswill return.
"I love Apple so much and hope to be back as soon as I can," Jobs, 55, told employees in an e-mail Monday, announcing he was taking his third medical leave since 2004. Jobs — who previously had a cancerous tumor removed from his pancreas and later had a liver transplant — did not elaborate on his medical condition.
His latest health-related departure is a bombshell at a critical time for Apple and is renewing investor fears of an Apple without its chief symbol of all things cool. Apple (AAPL) shares, which have soared more than 80% from their 52-week low and closed Friday at $348.48, are widely expected to slump this morning when Wall Street trading resumes after the Martin Luther King Jr. holiday. Overseas investors reacted quickly Monday, sending Apple shares plummeting 7% in some markets.
Few corporate CEOs are as visible or as tied to a company's philosophy and style as Jobs. In his standard black mock turtleneck shirts, faded Levi's and running shoes, Jobs is a rock star in a world of button-down, desk-bound chieftains. His appearances at trade shows and corporate events, where he unleashes the latest Apple gadget or product update with the aplomb of a Broadway showstopper, are as much about entertaining the masses as they are corporate events — highly anticipated not just by Wall Street analysts and clients, but also by technophiles and consumers.
"He's the world's greatest salesman," says Gene Munster, an industry analyst at Piper Jaffray. "You could have someone up there making the same presentation, but it wouldn't be the same. Steve is the one who envisioned the personal computer, and brought it to the phone, to fit into the pocket. He's arguably had a bigger impact on the lives of Americans than any president."
Apple's chief operating officer, Tim Cook, will fill in as interim CEO on day-to-day operations. But, "There's only one Steve Jobs," notes Leander Kahney, editor of CultofMac.com and author of Inside Steve's Brain, a book on Jobs' influence on Apple. "Apple will chug along for years, with or without Jobs, but it may not burn so bright. It would be like U2 without Bono ."
"Apple without Jobs will be like Disney without Walt," industry analyst Rob Enderle says. "Both men are clearly iconic to their companies."
'I hope to be back ... soon'
Jobs, who co-founded Apple with pal Steve Wozniak in 1976, launched the first successful line of personal computers. Ousted in a management shake-up in 1985, he returned in 1996 when the company was struggling and repositioned Apple from a niche player in the desktop market to a leading purveyor of tech-cool PCs and portable entertainment devices such as the iPod, iPhone and iPad, a tablet computer.
Near bankruptcy when he returned, Apple now has a market value near $320 billion, second only to energy giantExxonMobil. Yet Jobs' value to the company isn't measured in dollars alone.
"His main gift is zooming in and out at speeds beyond physics," says longtime Apple watcher Richard Doherty, an analyst at Envisioneering Group. "He created the app economy with the iPhone and, in turn, the GoogleAndroid app economy, because without the iPhone, there wouldn't have been an Android. He can see product, services and business models to serve new products that others don't see."
In his e-mail, Jobs said he plans to stay involved in Apple's major decisions. After his bout with pancreatic cancer in 2003 and liver transplant in 2009 (which Apple did not disclose immediately), some Apple watchers are alarmed about a medical setback that comes almost two years after Jobs announced he was stepping away because of the medical issues that led to the transplant.
"The words in (Monday's) release were cryptic," says longtime Apple stock analyst Charles Wolf of Needham & Co. "The words I found important were, 'I hope to be back as soon as I can,' not, 'I will be back soon.' That opens a Pandora's box."
One of Jobs' last appearances was at the launch of the latest MacBook Air laptop in October in San Francisco.
Jobs had been back to his usual work routine after his latest return to the company in June 2009. "We heard from a lot of Apple folks that they would see him daily in the cafeteria, he was actively involved in all the meetings and very excited about the iPad," says Tim Bajarin, an analyst at Creative Strategies.
A Jobs-less Apple should survive — even thrive — because its executive bench is "the best in the world" with Cook, global product marketing chief Phil Schiller, industrial design chief Jonathan Ive and retail operations chief Ron Johnson, Munster says. "They're going to do just fine the next two years, through 2012. It remains to be seen if they can conceive the next big thing after that."
Cook joined Apple in 1998, after several years at Compaq and IBM. He filled in as interim CEO when Jobs battled pancreatic cancer in 2004 and when Jobs was out again for six months in 2009. Under Cook's last run as interim CEO, Apple continued to launch well-received products, including updated laptops with lower, entry-level prices and a faster, feature-laden iPhone.
Apple rewarded Cook handsomely for filling in for Jobs in 2009. According to the company's latest proxy statement, in 2010 Cook was awarded a special bonus of restricted shares worth $52.3 million and a $5 million cash bonus for his "outstanding performance" during Jobs' leave.
"Cook seemed to keep the ship afloat during the last absence," says Lou Mazzucchelli, a tech analyst in New York.
Cook has been more visible at Apple events recently, appearing with Jobs to answer questions from reporters and analysts. Last week, Cook was the face of Apple in New York when the company announced a version of the iPhone for Verizon 's wireless network — scheduled for a Feb. 10 launch. Jobs did not attend.
The company is scheduled to report its results for the first quarter of fiscal 2011 today. Analysts estimate the company posted sales of more than $24 billion. Full-year results look promising, with the Verizon iPhone launch, an updated iPad and a Mac computer with a revamped Lion operating system coming soon.
Cancer and a transplant
Jobs was diagnosed with a rare form of pancreatic cancer, called a neuroendocrine tumor, in 2003, but his illness was not disclosed until the following year, after he'd tried a special diet treatment and had surgery.
In June 2008, he appeared at a trade event looking thin and frail. Apple said he was suffering from a "bug," but reports later surfaced that he had surgery and lost weight as a result. In January 2009, Jobs said a hormone imbalance had caused his weight loss. Two weeks later he gave up daily oversight of Apple for six months, saying his health problems were more serious. That June, a Memphis hospital confirmed that Jobs had had a liver transplant.
His latest announcement could be a sign that his pancreatic cancer has returned, says Richard Goldberg, a professor at the University of North Carolina-Chapel Hill's Lineberger Comprehensive Cancer Center.
Goldberg has no knowledge of Jobs' case but says the most likely reason for a setback is that the tumor has spread into the transplanted liver. It's also possible Jobs' body is rejecting the transplant, although that is more likely soon after a transplant, he says.
All pancreatic cancers are serious, but Jobs' type of tumor was much less lethal than most pancreatic cancers, from which patients often succumb in months. Some people who have what Jobs had survive for many years, Goldberg says.
Jobs has not said why he had a liver transplant, but neuroendocrine tumors often spread to the liver. It's possible that his original liver was damaged by treatment for the tumor, Goldberg says.
Jobs' earlier health problems and the effect of the news on Apple's stock price led some investors to push the board of directors to disclose a management succession plan. In a Jan. 7 filing with the Securities and Exchange Commission, the Central Laborers' Pension Fund, which owns about 11,500 shares, asked for a shareholder vote to force Apple to disclose a succession policy.
Apple's board is urging shareholders to reject the proposal, contending that publicizing such a succession plan would tip investors to corporate strategy. Apple's annual shareholders meeting is scheduled for Feb. 23.
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