Try the new FT.com

January 17, 2011 11:22 pm

Concern over direction bites into Apple shares

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

Investors reacted with concern that Steve Jobs’ departure on medical leave from Apple could delay key new product introductions and add long-term uncertainty about the direction of the company he founded.

Apple’s decision to put out the statement on a US public holiday with markets closed left investors to register their fears in Frankfurt, where Apple has a secondary listing, sending the US group’s shares down 8 per cent.

Mr Jobs gave no time­table for his return from his second medical leave of absence in two years. He is keeping the chief executive title, but is again handing off responsibility for the day-to-day running of the business to Tim Cook, chief operating officer.

While Mr Cook drew wide praise for running Apple as interim chief executive in the first half of 2009, during Mr Jobs’ last medical absence, it was only after the founder’s return that Apple introduced the much-heralded iPad.

“Unfortunately, even Steve Jobs isn’t superhuman. There may come a point where health problems necessitate a change in leadership,” says Noah Elkin, an eMarketer analyst. “Everyone knows at some point it will happen.”

Apple declined to say what was wrong with Mr Jobs, fuelling speculation that his cancer had returned. An earlier recurrence of a rare type of pancreatic cancer was the presumed reason for his liver transplant in 2009.

Liver transplants fail to completely remove similar tumours as much as 30 per cent of the time, according to cancer specialists.

Apple’s failure to specify a return date for Mr Jobs this time round has served to heighten speculation that he may not return. During his 2009 leave, Apple said Mr Jobs would be absent for six months; in fact he returned more than a week early.

“I love Apple so much and hope to be back as soon as I can,” Mr Jobs said in an e-mail to staff. “In the meantime, my family and I would deeply appreciate respect for our privacy.”

He continued: “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.”

The announcement follows a recent increase in speculation about his health. Mr Jobs did not appear on stage during last week’s announcement that the iPhone would be coming to Verizon Wireless next month, ending a four-year exclusive US relationship with AT&T.

And a joint appearance with Rupert Murdoch, News Corp’s chief executive, in San Francisco, scheduled for tomorrow, was ostensibly delayed in order to give Apple more time to work through software changes to its iTunes online store. News Corp is looking to launch a subscription news product for the iPad.

Apple has a strong management team, including Mr Cook, who is head of logistics and manufacturing, as well as top industrial and software designers. But more than any other group of its size, it is seen as the embodiment of one man’s vision. Mr Jobs makes all of the big design decisions and picks which projects the company will pursue.

“Steve gets up and says we have 15 fantastic ideas, but we’re only going to do these three,” said one longtime employee.

He is an ardent and sometimes temperamental perfectionist, on occasion ignoring the of a prototype to focus on one tiny aspect of its presentation.

In Apple’s early days, the introduction of the original Macintosh personal computer popularised the easy-to-use graphic interface, helping to transform the industry.

Mr Jobs did it again for the music industry in the last decade with the iPod music player and iTunes online store. He then shook up the mobile phone industry with the introduction of the highly successful iPhone in 2007.

The introduction of the iPad tablet, last year, looks to transform the landscape for mobile computing.

Mr Jobs is also the force behind Apple’s wildly successful approach to marketing, which includes great secrecy.

His absence could raise questions about continued improvements to his latest pet project, Apple TV, an internet connected set-top box.

The succession issue is one that has dogged Apple for years. The company this month opposed a shareholder proposal that would have asked it to make its plan public.

Apple has said that it has one in place and that the board reviews it regularly but refuses to give any details.

“My suspicion is there’s quite a good succession plan already in place, so there won’t be much immediate impact,” says Richard Windsor, a technology analyst with Nomura in London.

“But sentiment is a completely different kettle of fish. The sentiment is that he’s the heart and soul of the company.”

Additional reporting by David Gelles and Paul Taylor in New York and Richard Waters in San Francisco

Copyright The Financial Times Limited 2017. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

EMAIL BRIEFING

Sign up to #techFT, the FT's daily briefing on tech, media and telecoms.

Sign up now

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE