Apple's Jobs takes 3rd medical leave, stock slumps

SAN FRANCISCO/LONDON Mon Jan 17, 2011 6:01pm EST

Apple CEO Steve Jobs unveils the latest improvements to the company's Mac software during a news conference at Apple Inc. headquarters in Cupertino, California October 20, 2010. REUTERS/Norbert von der Groeben

Apple CEO Steve Jobs unveils the latest improvements to the company's Mac software during a news conference at Apple Inc. headquarters in Cupertino, California October 20, 2010.

Credit: Reuters/Norbert von der Groeben

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SAN FRANCISCO/LONDON (Reuters) - Apple Inc Chief Executive Steve Jobs is taking medical leave for the third time since 2004, sending its shares tumbling more than 8 percent as the surprise revived concerns over the long-term future of the iPhone- and iPad-maker.

The company disclosed the news early on a U.S. holiday when U.S. markets were closed and did not specify why or for how long its visionary leader would be absent. Jobs' latest leave comes nearly two years to the date after he took a six-month break to undergo a liver transplant.

"At my request, the board of directors has granted me a medical leave of absence so I can focus on my health," Jobs, 55, wrote in an email to staff published on a regulatory newswire. "I love Apple so much and hope to be back as soon as I can."

Unlike the previous announcement, Apple did not say when Jobs would return, driving up the worst fears about Jobs' medical condition. An Apple spokesman declined to comment further.

"This time around you have to question his ability to bounce back," said Hudson Square Research analyst Daniel Ernst.

Jobs, a survivor of pancreatic cancer, said Chief Operating Officer Tim Cook would take responsibility for day-to-day operations once again, but he would remain as CEO and be involved in major strategic decisions.

Apple shares closed 6.2 percent lower in Frankfurt. Nasdaq futures fell 1.29 percent.

In recent days, Apples shares reached new all-time highs after announcing its iPhone would be available to customers of Verizon Wireless, the largest U.S. mobile operator.

Kaufman Bros. analyst Shaw Wu said the news may present a buying opportunity for investors: "Obviously the stock is going to get hit tomorrow. But I see no reason why this stock won't continue to work."

JOBS KEY TO APPLE REBIRTH

Apple's destiny has been closely tied to Jobs, the short-tempered and charismatic leader who rescued the computer maker from near death in 1996 after a 12-year absence from the company he co-founded.

The launch of the iPhone, a smartphone with a touchscreen in 2007, and the iPad, a tablet computer in 2010, forged new business lines for the company that created the personal computing category and helped lead the technology industry into new directions.

Analysts said the effect on Apple's operations should be limited in the short term, since its product line-up was strong.

The next version of the iPad, the iPad 2, is still expected to be announced in the coming weeks. The splashy debut of a digital newspaper with News Corp, though delayed by a technical glitch, is also on track to be launched shortly.

Jobs' absence would be a bigger concern if it became prolonged. Cook ran day-to-day operations during Jobs' last absence in 2009.

"This will come as a surprise to Apple investors and definitely take some shine off the Apple stock," said Alexander Peterc, an equity analyst at Exane.

"But even if Steve Jobs never returns to Apple, I would not expect a visible, tangible impact on how Apple is executing over the next couple of years."

Although Apple has not articulated a clear succession strategy, Cook, whose name routinely appears on the short list for top jobs at other technology firms, is widely seen as the heir apparent.

Between the announcement of Jobs' 2009 medical leave until his return, Apple shares rose 60 percent under Cook's watch.

Still, it is far from certain whether Cook has the strategic vision that Jobs so famously possesses.

Cook was named COO in 2005 and is seen as a master of Apple's complex and far-flung supply chain. He also manages sales, service and support and leads the company's Mac computer division, where sales have been surging over the past few years.

Cook took over day-to-day operations in 2009 when Jobs took leave to have a liver transplant. He also steered the company in 2005, after Jobs had surgery for pancreatic cancer.

APPLE'S FUTURE

Gleacher & Co analyst Brian Marshall said investors would undoubtedly question Apple's long-term momentum, given Jobs' outsized role in developing the company's hit products.

"Clearly Steve is a visionary. And at $350 a share this is going to weigh on investors," he said.

Richard Windsor, global technology specialist at Nomura, agreed that Jobs' absence should not have a fundamental effect, but added: "Perception of the company is another matter."

"Steve Jobs is seen by the market to be a major force in Apple's strategic direction. If his pancreatic cancer has returned, one could be quite worried."

Apple has been notoriously close-mouthed about Jobs' medical condition. He had surgery in 2004 for an unusual type of tumor on his pancreas called a neuroendocrine tumor -- which often is not quite as deadly as pancreatic cancer. The tumors can cause hormone imbalances, like the one that prompted Jobs to take medical leave in 2009.

Jobs had a liver transplant in 2009, and organ transplant recipients sometimes have recurring health issues for life, in part because they often must take immune-suppressing drugs to prevent organ rejection.

Jobs was noticeably thin following his transplant surgery in 2009, and he still appeared so at recent Apple events, something that did not go unnoticed.

But the CEO said last summer he was feeling "great," in response to a question from a reporter.

Apple is due to report quarterly results on Tuesday, and is expected to say that revenues rose 50 percent as sales of its iPad tablet computer grew on momentum of the popular iPhone and earlier iPod.

(Reporting by Gabriel Madway in San Francisco, Georgina Prodhan, Kate Holton and Paul Sandle in London, Tarmo Virki in Helsinki, Maggie Fox in Washington D.C., and Sweta Singh in Bangalore; Editing by Savio D'Souza, Martin Golan and Richard Chang)

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Comments (10)
msidoric wrote:
Get well soon Steve. Your work has changed the world – may it long continue. The entire Apple family has you in our thoughts and prayers.

Jan 17, 2011 9:53am EST  --  Report as abuse
emc2 wrote:
Buy opportunity…

Jan 17, 2011 10:44am EST  --  Report as abuse
TomMariner wrote:
Not good news not only for Mr. Jobs and then for Apple, but for the rest of us mere mortals as well. Steve has turned out to the Chief Innovation Officer for all of us since he decisively proved that obsoleting your own products can make the biggest market cap company on the planet.

Pancreatic Cancer is a very serious diagnosis. Even after survival, the damage done to that big, vital organ can cause other ailments and after the run that Mr. Jobs has had, he sure deserves some down time.

I’m betting that although he certainly deserved to be the face of the string of “i” products, there are enough certifiably crazy, irresponsibly enthusiastic techies in power at Apple to keep it up.

So, although we have concern for the company, our real prayers go with Steve himself.

Jan 17, 2011 12:41pm EST  --  Report as abuse
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