Even without Steve Jobs, Apple 'can clearly execute,' says analyst

Apple CEO says 'more complex' health problems necessitate six-month medical leave

Little more than a week after acknowledging a hormone deficiency, Apple Inc. CEO Steve Jobs on Wednesday said he is taking a medical leave of absence from his job because his condition is "more complex" than originally thought.

Apple stock reacted in after-hours trading by dropping more than 7% to just above $79, its lowest level since November 2006. In regular trading earlier, the stock was off 2.7%, to $85.33.

Analysts were surprised by the move, if only because Jobs' Jan. 5 public announcement was followed so quickly by today's. "I certainly didn't expect the two to come so close together," said Ezra Gottheil, an analyst at Technology Business Research Inc.

"I was a little surprised," agreed Van Baker, an analyst at Gartner Inc. "But I don't think there's any subterfuge or deception here. Clearly, [Jobs' health] is a moving target, and after interacting with his doctors, [he] decided that it was more complicated than he thought."

The effect of his absence may be minor, said both Gottheil and Baker -- if Jobs is out for only a few months. If he is unable to return on time or resume his post as CEO, however, Apple's future is more difficult to predict.

"I don't think that there will be any changes visible in that period of time," said Gottheil, talking about the time between today and the end of June. "Apple can clearly execute, so if Jobs is able to do what he says and come back in June full-bore, the effect will be zero."

"This is no big deal," said Baker, referring to a six-month absence by Jobs. "I don't think he was [running] day-to-day [operations] for quite some time anyway. But if he doesn't come back in June, then there will be some impact."

In the message to Apple employees that the company made public, Jobs provided no details about his ailment, a move that will be certain to raise additional questions about his health and the ramifications to Apple if he is unable to return.

"During the past week, I have learned that my health-related issues are more complex than I originally thought," said Jobs. "In order to take myself out of the limelight and focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence until the end of June."

Jobs said that Tim Cook, the company's chief operating officer, will be in charge of day-to-day operations in his absence. Cook stepped in for Jobs in 2004 when the CEO took off the month of August to recuperate after cancer surgery. "As CEO, I plan to remain involved in major strategic decisions while I am out. Our board of directors fully supports this plan," Jobs said.

Jobs' health has been a matter of concern for some Wall Street analysts and a topic of discussion among Apple users and investors for months. The speculation began last June, when Jobs' gaunt appearance during the company's Worldwide Developers Conference (WWDC) fueled talk that he might again be seriously ill. In 2004, Jobs announced that he had had surgery to remove a cancerous tumor in his pancreas.

After Jobs revealed last week that he was suffering from what he called a "hormonal imbalance," one noted endocrinologist said that Jobs may have symptoms that resemble Type 1 diabetes and that he could be treated with insulin.

Apple has a history of keeping a lid on information about Jobs' health. The company waited until after his 2004 pancreatic surgery before notifying investors. Last summer, after rumors began circulating about his WWDC appearance, Apple initially said that Jobs was suffering from a "common bug," an explanation some analysts found hard to believe. Last week, when Jobs himself disclosed a continued health problem, he swore that it would be his last missive on the subject. "So now I've said more than I wanted to say, and all that I am going to say, about this," he said then.

An Apple without Jobs, said Gottheil, would still be a remarkable company, but with less of the competitive edge that Jobs helped create. "If he isn't able to return, I think you'd see a high-functioning company, but one without the lightning strike of genius. They'd have a human batting average."

"Look, Jobs is not throwing in the towel here," countered Baker. "He clearly anticipates that he will be coming back."

For Gottheil's money, Apple faces a tough future even if Jobs was at the helm. "The big thing coming up is how hard the recession is going to hit them, not Jobs' absence," said Gottheil. "If he were not there [in the future] and the recession hits harder than they planned for, then it might cause them to wobble."

If Jobs permanently steps away, Gottheil noted, don't look for Apple to go outside the company for a new chief, as Yahoo Inc. did just this week by hiring Carol Bartz, the former CEO of Autodesk Inc.

"In Apple's case, absolutely they'd promote from within," said Gottheil. "There are just not that many companies that have the orientation that Apple has."

Baker said to expect Apple to put out some additional information about Jobs' health, perhaps indirectly, between now and June, to provide investors a status update. "Not more than once, though," he said.

"I feel bad for the guy," Baker added. "Not only does he have to deal with a health issue, but he has to do it in the public eye."

Copyright © 2009 IDG Communications, Inc.

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