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Apple's Jobs Takes Sudden Medical Leave

Wednesday, 14 Jan 2009 07:32 PM

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SEATTLE – Apple Inc. co-founder and Chief Executive Steve Jobs said Wednesday he is taking a medical leave until June, even though just a week ago the cancer survivor tried to assure investors and employees his recent weight loss was caused by an easily treatable hormone deficiency.

Apple's stock dropped nearly 7 percent.

Jobs, 53, said in a letter last week that he would remain at Apple's helm despite the hormone problem, and that he had already begun a "relatively simple and straightforward" treatment. But in an e-mail to employees Wednesday, Jobs backtracked.

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

Apple's shares have surged and crashed over the last year in step with rumors or news about the CEO's health and his gaunt appearance. While the top executive's health is an issue for investors in any company, at Apple the level of concern reaches fever pitch because Jobs has a hand in everything from ideas for new products to the way they're marketed.

Jobs co-founded Apple with Steve Wozniak in 1976 at the dawn of the personal computer revolution. He was forced from the company in 1985 but returned as CEO in 1997, slashing unprofitable product lines and helping rescue the company from financial ruin.

Since then, under Jobs' demanding leadership, Apple has churned out a string of sleek gadgets, from the iMac and the iPod to a new line of aluminum-covered Macbooks and the coveted iPhone. Many investors fear that without Jobs, Apple would not be able to sustain its growth or its high-end minimalist style.

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. It came on the eve of Macworld, the biggest Apple trade show of the year, and Jobs said he wanted everyone to relax and enjoy the event.

Even so, the limited amount of information in that announcement did little to soothe Wall Street's nerves. Medical experts not involved in Jobs' treatment said it was unclear what was behind his weight loss, but some specialists said Jobs' past pancreatic cancer could be the problem.

Apple's history of keeping information about Jobs' health under wraps is only fueling the speculation. The company waited until after Jobs underwent surgery in 2004 to treat a very rare form of pancreatic cancer — an islet cell neuroendocrine tumor — before alerting investors. That type of cancer is easily cured if diagnosed early, unlike the deadlier and more common adenocarcinoma.

And last summer, Cupertino, Calif.-based Apple insisted Jobs' weight loss was due to a common bug, even as The New York Times cited anonymous sources who said Jobs had undergone "a surgical procedure" to address the problem.

Apple spokesman Steve Dowling would not elaborate on Jobs' condition or what he discovered in the past week.

"They'll tell you the least they can tell you," longtime industry analyst Roger Kay of Endpoint Technology Associates said after Jobs' disclosure Wednesday. "They're trying to have it both ways, to protect their guy's privacy and feelings and at the same time somehow signal the market."

Apple's chief operating officer, Tim Cook, will take over Jobs' responsibilities while he is on leave, though Jobs said he plans to remain involved in major strategic decisions.

Cook is seen as one of Jobs' most likely successors, along with Apple's top marketing executive, Philip Schiller. American Technology Research analyst Brian Marshall — who last week predicted Jobs would step down this year — said Wednesday's announcement tips the bets in Cook's favor.

"The company has been soft-signaling to the Street for a while now that Steve Jobs is not going to be CEO forever," he said. "This will be sort of a trial period for Cook to be chief executive."

Cook, 48, lacks Jobs' charisma and showmanship, but is seen as a solid pick otherwise.

"Tim Cook is a very experienced and highly regarded chief operating officer," said Calyon Securities analyst Shebly Seyrafi. "He's qualified."

Apple's shares slid $5.78, or 6.8 percent, to $79.55 in extended trading after Jobs announced his leave. The shares have traded between $79.14 and $192.24 over the past year.

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