January 15, 2009
Jobs’ Health Issues Hurts Shares As New Executive Steps In
After the announcement of Apple CEO Steve Jobs' medical leave, all eyes are on his supposed successor, Tim Cook, while Apple shares start to drop.
Cook's performance during Jobs' absence will ultimately provide some insight into whether Jobs has secured a quality executive to handle the company's affairs once he steps down.
Mike Janes, who worked with Cook for five years at Apple, believes he is an extraordinary executive. "I don't think there will be any disruption at all while Steve is away."
For the next five months, Cook will step in while Jobs takes a leave to deal with some "complex" health issues. Cook ran Apple for two months in 2004 while Jobs recovered from surgery for pancreatic cancer.
Jobs has attempted to assure investors and employees that he had discovered his weight loss was caused by a treatable hormone deficiency. He released a statement saying he had begun a "relatively simple and straightforward" treatment and insisted he would remain at Apple's helm.
The announcement sent Apple shares to one-year lows in extended trading Wednesday, but by Thursday morning they had recovered slightly, and were down $3.49, 4.1 percent, at $81.84.
Apple promoted him from executive vice president to chief operating officer in 2005, based on his performance during Jobs' sick leave. Cook has since become Apple's top-paid executive, with a salary of $800,000 for the current fiscal year.
Cook has been in charge of Apple's day-to-day operations for several years while the charismatic Jobs commanded the spotlight.
Analysts have credited Cook for doing a masterful job figuring out the proper balance between supply and demand for such rapid selling Apple products like the iPod and iPhone. His inventory management has played a pivotal role in Apple's ability to accumulate $24.5 billion in cash and short-term.
"As soon as he got there, Apple stopped making operational errors," said industry analyst Roger Kay of Endpoint Technology Associates. "They used to be like the Keystone Cops - they'd generate demand, but have no product."
Apple investors still worry that the company could suffer without Jobs' orchestrating the brainstorming that leads to the company's market-changing products.
Apple Inc. shares fell 4 percent Thursday as investors struggled to make sense of the latest disclosure from CEO Steve Jobs regarding his health and his need to go on leave until the end of June.
Marshall Goldsmith, an executive coach who teaches at Dartmouth University, echoed the seeming concern over Jobs' relevance to the company's success.
"You can't have someone held up in every magazine as the best leader in the world and on the other hand say if he leaves it doesn't matter," he said. "If there was an announcement tomorrow that Jobs is being replaced by God, the stock price would still go down."
But Cook is certainly no push-over, much like Jobs, he can be demanding and expects his subordinates to have the answers about both big and small business issues.
Originally from Alabama, Cook graduated from Auburn University in 1982 with degree in engineering. Before joining Apple in 1998, Cook worked at IBM Corp. for 12 years and spent a short time at Compaq Computer.
Last week, Jobs said his disclosure of his hormone problem was "more than I wanted to say, and all that I am going to say" about his health.
In December, Apple said Jobs would not take the stage at Macworld, the biggest Apple trade show of the year, at which Jobs traditionally delivered the keynote address, sparking rumors and forcing Jobs' to pen the Jan. 5 letter, which he hoped would easy investor anxieties.
Apple spokesman Steve Dowling would not elaborate on Jobs' condition or what he discovered in the past week.
"The company has been soft-signaling to the Street for a while now that Steve Jobs is not going to be CEO forever," said Apple's top marketing executive, Philip Schiller. "This will be sort of a trial period for Cook to be chief executive."
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