Will Jobs' absence hurt Apple?

The tech giant's CEO is taking another medical leave. But this time, the company seems well-prepared to march on.

By Kim Peterson Jan 17, 2011 11:46AM
Credit: (© Paul Sakuma/AP)
Caption: Apple CEO Steve JobsSteve Jobs delivered a devastating blow today: He's taking another unexplained medical leave of absence.

The message, sent by e-mail to Apple (AAPL) employees, said that although he's leaving to focus on his health, he will continue as chief executive. Chief operating officer Tim Cook will run day-to-day operations. "I love Apple so much and hope to be back as soon as I can," Jobs wrote.

Apple's shares are likely in for a significant drop when the markets reopen Tuesday. They're already falling overseas, down 7.5% today in Frankfurt. If the stock loses 7.5% when the markets open Tuesday, that would wipe out nearly all the 8% gain the stock saw in 2010.   

Investors have been through this before. Cook led the company for the first half of 2009 while Jobs was recuperating from liver transplant surgery. This new leave of absence has raised all kinds of fears about Jobs' health, his future with Apple and Apple's ability to remain the superstar it has become in the past five years. Will Jobs come back? Can Apple make it without him? Jobs is so dominant at Apple, such a force in every aspect of its operations, that the idea of surviving without him seems nearly impossible. Post continues after video:
But let's give Jobs credit for this much: He has put the company in the best possible position to go on, whether he's at the helm or not. In fact, the Apple we see now is a much better company than the Apple of early 2009, when Jobs was temporarily gone.

The iPad business is stronger than most people expected, with surprisingly solid sales and, if reports are to be believed, a new version coming out in spring. The device will be able to survive the onslaught of rivals expected out this year and retain its market-leading spot.

The iPhone has just been expanded to Verizon Communications (VZ), and Jobs was likely a key figure in wresting it from AT&T's (T) exclusive grasp. This was exactly what Apple needed to keep the phone strong against an army of new devices using Android software from Google (GOOG).

Mac sales are stellar, and Apple is finally making some headway in getting into large corporations -- a place where the company has traditionally been ignored.

So, yes, Jobs' departure is a huge blow. But the news isn't as panic-inducing as it might have been in the past. Apple is resilient and innovative, and it's on its way to becoming the most valuable company in the world. With or without Jobs.

Apple's 8% rise in 2010, by the way, is the 29th-best among the Nasdaq-100. The index is up 4.8%, and Apple is still about 22% of the Nasdaq-100 market cap.

Here's what others are saying about today's news:

Henry Blodget at Business Insider seized upon Jobs' comment about loving Apple so much. "Those are not the words of someone taking a short leave who is confident he will be back at the company soon (or ever). Rather, in our opinion, they read like the tragic, heartfelt sentiments of someone who thinks he might never be coming back."

Kara Swisher at ATD: "In the both times he has taken time off for health reasons, Jobs has come back with fierce and game-changing innovation. The iPhone came out after his first big bout with his illness, the iPad after the second."

Daniel Ernst, analyst at Hudson Square: "This time around you have to question his ability to bounce back. They've never discussed a succession plan, but it's pretty clear that Cook is the guy. . . . I think that people undersell the depth of the team at Apple. There's no operational risk to the story, but there's perceived risk."

Fortune: "With COO Tim Cook running the show, Apple is in good hands. Each time he has stepped in for Jobs, the company's performance -- already pretty strong -- has improved. But that won't stop speculators from punishing the stock when the market opens Tuesday."

Benedict Evans, analyst at Enders: "The editing and the quality control he provides on what they ship has been so crucial to Apple's success, and so on a two- and three- and four-year view, that is where Apple would really start to feel his absence. If he isn't able to play the role in Apple he has in the past, it is in the two-to-three-year view the product line will be affected."

Tim Sheperd, analyst at Canalys: "This is bad news for Apple inasmuch as investors will be concerned about Steve Jobs' position longer term. But the real impact on the company and its operations will be limited. Jobs is continuing to be involved in major decisions, and Tim Cook has good experience of the day-to-day running of the company."

Charley Blaine contributed to this report.

3Comments
Jan 17, 2011 1:50PM
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Mr Jobs, may you have a speedy recovery.  Keep fighting this demon, we call cancer.

I am hoping this will not be the catalyst for a big sell off, in the overall market?  But it certainly is not good news, for APPLE, or tech in general.  Fear will probably set in tomorrow, as the market has completely gotten ahead of itself,  IMO.  The one thing I keep learning in this venue, is uncertainty ( much like our lives on this planet) rules. Timing is everything. Fear and greed dominate the market's direction.  This news could hold APPLE share price down for a while? Earnings are coming out this week, and if they don't  "Wow," it could be a double whammy.  And a possible buying opportunity?  Good luck everyone.  What a run since 09, when it was in the $ 80 dollar region.


Jan 17, 2011 4:11PM
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The tech giant's CEO is taking another medical leave. But this time, the company seems well-prepared to march on.
hmmm last time he was ill(they say he wasn't) the stock dived....he got his azz back and since then they have tried ways to secure the stock/company after him leaving or periodic handling of the company.......once he's left apple becomes a microsoft.......noth​ing but pure hyped upped garbage scamming the consumer and the consumer takes it up the preverbal..... whilst they take in billions!  when is the EU going to sue MS the vista cr@p politicians won't stand up for the north american consumers as gates is democratic socialist and loves to hire CHEAP FOREIGN LABOR!
Jan 17, 2011 1:28PM
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The unknown is how well the reality distortion field will keep operating if Jobs is gone for good.  The iPhone on AT&T has been a PR disaster for AT&T because of the RDF.  Nobody has really questioned if APPLE is the problem and not AT&T.  If Jobs stays gone, and the iPhone is a disaster on Verizon, will Verizon be blamed, or will Apple?  That is the real question.  Apple's single greatest asset isn't the iPod, iPad, iPhone, iTunes, iOS, OSX or the Mac.  It's the reality distortion field that has consumers lapping up beautiful devices with second-rate software and hardware at inflated margins.

 

How long will that last without Jobs?  Because that's at least 40% of Apple's valuation.

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