* Jobs relinquishes CEO role to Cook, longtime No. 2
* Questions swirl over Jobs' health
* Shares stabilize, drop 1.65 percent in early trading
By Poornima Gupta and Edwin Chan
SAN FRANCISCO/LOS ANGELES, Aug 25 Apple Inc
(AAPL.O) began a new era on Thursday without Steve Jobs as
chief executive, a momentous shift that surprised investors,
but barely dented confidence in the near-term outlook for the
In announcing that he could no longer fulfill his duties,
Jobs stepped away from his CEO duties and cleared the way for
Tim Cook to take over leadership of one of the world's best
known and valuable companies.
Cook, 50, must now convince investors that Jobs' vision and
spirit have been institutionalized within Apple, a company that
revolutionized entertainment and communication with its iPod,
iPad and iPhone devices. Jobs, who has been on medical leave
since January, will stay on as chairman.
"Investors are coming to the realization that this is a
natural transition. It may have already been built into Apple's
valuation," said Hendi Susanto, a Gabelli & Co analyst.
Apple's shares were down less than 2 percent in early
trading on Thursday, showing more resilience than when the
departure was initially announced late Wednesday.
"Over the course of last year, investors have become more
comfortable with the idea of life after Jobs," said Bill
Kreher, an analyst with Edward Jones. "I think it is
encouraging that he will remain with the company as chairman
but the real story is that Tim Cook has emerged as a capable
Jobs, who has fought a rare form of pancreatic cancer, is
deemed the heart and soul of a company that became the most
valuable in the world for a brief period this year.
"I have always said if there ever came a day when I could
no longer meet my duties and expectations as Apple's CEO, I
would be the first to let you know. Unfortunately, that day has
come," Jobs wrote in a brief letter announcing his
While it is unlikely that his departure as CEO will derail
Apple's ambitious product-launch roadmap in the near term,
there are concerns about whether the company will be as
creative without its founder and visionary at the helm.
Jobs' battle with pancreatic cancer, which has stretched
over several years, has been of deep concern to Apple fans,
investors and the company's board.
Over the past two years, even board members have confided
to friends their concern that Jobs, in his quest for privacy,
was not being forthcoming with directors about the true
condition of his health.
Wall Street also wanted a clearer picture of plans at
"I think a lack of clarity of its succession plan in the
past has been a distraction so we appreciate that this plan
represents a smooth and orderly transition," Kreher said.
Jobs, 56, has been on medical leave since Jan. 17, with his
duties being filled by Cook, who was chief operating officer.
Jobs had briefly emerged from his medical leave in March to
unveil the latest version of the iPad and later to attend a
dinner hosted by President Barack Obama for technology leaders
in Silicon Valley.
But his often-gaunt appearance had sparked questions about
how bad his illness was, and his ability to continue at Apple.
Cook, a former Compaq executive and an acknowledged master
of supply-chain management, has taken over the helm in each of
Jobs' three health-related absences. [ID:nN1E77N23J]
One Silicon Valley CEO, who declined to be identified
because of the sensitive issues involved, said the tone of
Jobs' statement indicated his health may be worse than feared.
The Apple chieftain has earned a reputation for commanding
every aspect of operations -- from day-to-day running to broad
strategic decisions -- suggesting he would not give up the job
if he had a choice.
"It's really sad," the CEO told Reuters. "No one is looking
at this as a business thing, but as a human thing. No one
thinks that Steve is just stepping aside because he just
doesn't want to be CEO of Apple anymore."
"It feels like another shoe is going to drop."
Brand research company Millward Brown said Apple's brand,
which it values at over $153 billion, should remain intact.
"Steve Jobs resignation from Apple is sad for him as it
presumably presages more illness. However he has left the Apple
Brand in rude health so that the company is still poised for
future growth," global brands director Peter Walshe wrote.
"The future direction is mapped out, the successor is in
place (also a designer by background), and consumers rate the
brand uniquely 'creative', 'fun' and 'adventurous.'"
TAKE A LOOK [ID:nN1E77N227]
NEWSMAKER-Steve Jobs [ID:nN1E77N266]
NEWSMAKER-Cook's vision at center stage [ID:nN1E77N23J]
INSTANT VIEW [ID:nN1E77N21P]
Major product launches: link.reuters.com/fet38r
Cook's impact at Apple: r.reuters.com/vuq28r
While Jobs did not give details on the state of his health,
oncologists who have not treated the Apple founder said he
could be facing several problems tied to his rare form of
pancreatic cancer and subsequent liver transplant.
Such problems include possible hormone imbalances or a
recurrence of cancer that is harder to fight once the body has
already been weakened.
"Steve Jobs is the most successful CEO in the U.S. of the
last 25 years," Google Inc (GOOG.O) Chairman Eric Schmidt said
in a statement.
"He uniquely combined an artist's touch and an engineer's
vision to build an extraordinary company."
Nokia NOK1V.HE CEO Stephen Elop said in a statement:
"Steve Jobs is a visionary in the computing industry. We look
forward to both Steve and his team having a positive impact on
our industry for many years to come."
Elop was appointed last year to lead Nokia's fightback
against Apple, whose iPhone posed a challenge that the world's
biggest cellphone maker has yet to meet.
Analysts again expressed confidence in the Apple bench,
headed by supply-chain maven Cook.
"I will say to investors: 'Don't panic and remain calm --
it's the right thing to do. Steve will be chairman and Cook is
CEO," said BGC Financial analyst Colin Gillis.
Nomura's Global Technology Specialist Richard Windsor
agreed, although he said rival smartphone makers would be quick
to take advantage of any Apple weakness.
"This looks like a pretty smooth transition with the slight
risk of a dent to its image if the next product launches are
not perfect. Its competitors are waiting to pounce and here we
think that HTC (2498.TW) has the most to gain," he wrote.
Apple previously did not have a chairman, but had two
independent co-lead directors.
(Additional reporting by Bill Rigby, Alexei Oreskovic, Sarah
McBride and Jim Christie in San Francisco, Lisa Richwine and
Nichola Groom in Los Angeles, Peter Lauria, Paul Thomasch,
Liana B. Baker and Tiffany Wu in New York, Tarmo Virki in
Helsinki and Georgina Prodhan in London)
(Editing by Andrew Callus and Maureen Bavdek)