Jobs' medical leave creates uncertainty for Apple, investors
For the second time in two years, Steve Jobs is going on medical leave. Only this time, he's not saying when he'll be back.
In January 2009, after furious speculation and opaque statements about the state of Jobs' health, the Apple CEO, who also had surgery for pancreatic cancer in 2004, issued a letter to employees saying he would take a leave of absence until the end of June 2009. Chief Operating Officer Tim Cook, widely acknowledged to be an operations whiz, stepped in to run the show on an interim basis. Though the market did not take well to the initial news, the company obviously recovered, and went on to soar to new heights.
To find out how U.S. investors will react this time around, however, we'll have to wait until Tuesday. Apple released the news on a holiday, when the U.S. market is closed, possibly to allow shareholders time to absorb the news. In Frankfurt, the Wall Street Journal reported, Apple shares were off 7.4 percent at one point in afternoon trading. The company announces fiscal first quarter earnings late tomorrow afternoon.
One can only hope that more information will be forthcoming during that earnings call. Jobs makes a plea for privacy in his letter, saying, "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." But he does not share any details about the extent or severity of his health issues, nor does he give any kind of time line for when he'll be back.
Investors, of course, abhor uncertainty, and are likely to punish the company for revealing so little unless more comes out tomorrow. To be fair, this time around Jobs is not relinquishing the reins, saying he will remain CEO and "be involved in major strategic decisions for the company." Still, if he's not running things on a day-to-day basis, his leave is likely to be met with some concern. Without more information about his health situation or when he'll be back to running the company full time, investors are sure to fret over the state of his health, the length of his leave and the possibility that someone so tied to the fortunes of the company could be gravely ill.
The last time this happened, Jobs and Apple directors were criticized for not sharing more. Debates raged over whether Jobs, as an individual, had medical privacy rights that superseded his and the board's responsibility to disclose more information to shareholders. As it turned out, Jobs had a liver transplant during his leave, a serious medical procedure.
Also worth considering: Apple investors may be more skeptical this time around. Just days before the company's January 14, 2009 announcement, in which Jobs said his health issues were "more complex than I initially thought," he sent a letter to the Apple community, saying he had a "hormone imbalance" confirmed by "sophisticated blood tests" and that "the remedy for this nutritional problem is relatively simple and straightforward." Investors may again be wondering this time if another shoe is yet to drop.
Of course, I wish Jobs a speedy recovery, and do believe in a certain amount of respect for privacy as a family goes through an illness. But I also believe leaders have a responsibility to share as much information as possible, even if that means giving up some of their own privacy. That's especially true at a company where one person is so central--whether in reality or in perception--to the company's future.
January 17, 2011; 10:11 AM ET |
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