By Gabriel Madway
SAN FRANCISCO (Reuters) – Apple Inc chief and tech visionary Steve Jobs will take a leave of absence till end-June because of health problems “more complex” than thought, backtracking on reassurances, stunning investors and sending its shares skidding 10 percent on Wednesday.
Jobs, a pancreatic cancer survivor, dropped his bombshell in a cryptic announcement on Wednesday — only nine days after he soothed jumpy investors somewhat by saying his dramatic weight loss over the past seven months was due to an easily treatable hormone imbalance. He had promised to remain at the helm throughout his treatment.
Wednesday’s revelation, which contained scant detail on Jobs health, comes at a difficult time for the company behind iPod media players and iPhones but now grappling with a slowing product line, rapidly worsening consumer spending and an uncertain succession plan.
Jobs, 53, vowed to remain involved in major strategic decisions while he’s away. Chief Operating Officer Tim Cook will take over day-to-day operations in what experts say could be a dress rehearsal for a more permanent CEO performance.
It will be a familiar role for Cook, who stepped in to run the company in 2004, when Jobs sought treatment for cancer.
“Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well,” Jobs said in a letter to employees that was released by the company.
Analysts were divided over the longer term impact were Jobs to take himself out of the equation. Some were confident a successor will rise from within Apple’s ranks, others lamented the loss of the firm’s helmsman and inspiration.
“It’s the classic blind man feeling around the elephant. We are all dealing on partial information,” said Collins Stewart LLC analyst Ashok Kumar.
“There’s no individual or even a management team that can fill his shoes. That being said, there is hope that the management bench is deep enough to continue the track record and also that Steve will be able to return in some capacity or the other to the company in the near future.”
Speculation about Jobs’ health resurfaced in June 2008, when he appeared dramatically thinner at an Apple event. Jobs is viewed as the driving force behind Apple’s consumer-friendly products, which also include Macintosh computers.
“The next six months are going to be basically a trial period for Tim Cook to be CEO,” said Brian Marshall at Broadpoint Amtech.”
“If that period goes well, my expectation is that Steve will pass the baton over to Tim in June and basically Steve will be his senior adviser.”
But with details scarce in Wednesday’s statement, fears about Jobs’ health will continue to haunt markets. Investors have blasted the company for failing to announce a succession plan, considering how vital Jobs is to Apple’s success.
“Apple is more dependent on its CEO than most other companies,” said Roger Kay of Endpoint Technologies. “Steve is a critical judge of the company’s business, and that maestro role that he performs is what makes Apple great. But there is no maestro-in-training to take over Steve’s role.”
A DIFFICULT YEAR
Indeed, legal experts said investors are likely to take the firm to court for less-than-timely disclosure — and they would have a case. Jobs and the firm have remained close-mouthed amid swirling speculation in the media and on the Internet about his health.
“It is extremely difficult because it is the most private part of his life,” Steve Williams, a plaintiffs attorney for Cotchett Pitre & McCarthy, said. “At the same time, Apple is Steve Jobs.”
Some investors had long since bet on Jobs’ imminent departure. Adam Harter, an analyst at Financial Enhancement Group, said last week that his company had added to its position in Apple a couple of months ago when the stock was trading in the mid-$80s, thinking that the so-called “Jobs premium” had been discounted from the share price.
Jobs’ apparently seesawing health also complicates what was already expected to be a difficult year for Apple and the electronics industry, as a severe downturn saps consumers’ spending appetite.
Some fear that Jobs’ absence will mean no big product launch — such as last year’s 3G iPhone — in 2009, and hence put a dampener on the firm’s share price.
“Steve Jobs is known as the company but we have to see how well his ‘support system’ — the people he put in place — will hold up,” said Tom Sowanick, chief investment officer of Clearwater Financial.
Customers at a bustling Apple store in San Francisco said they knew about Jobs’ health-related issues from the media, but thought his absence from the company wouldn’t immediately influence their buying decisions.
“A visionary man draws visionary people to him, so even if he isn’t at the helm, the company is still in good hands,” said Sam Brown, a 22-year-old Pittsburgh resident.
Jobs, 53, turned around a once-moribund Apple in large part due to the blockbuster success of the ubiquitous iPod. A showman, he often unveiled the latest Apple products at trade shows and conferences amid cheers and applause from thousands of software developers, customers and employees.
Jobs, a college dropout, started Apple Computer with his friend Steve Wozniak in the Jobs family garage in Silicon Valley more than 30 years ago. The company soon introduced the Apple 1 computer. But it was the Apple II that became a huge success and gave Apple its position as a critical player in the then-nascent PC industry.
Today, Jobs is a board member and the largest individual shareholder of Walt Disney Co, a position he took when Disney bought his animation company, Pixar Animation Studio, now known as Disney-Pixar, in 2006.
Disney did not respond to queries about whether Jobs would continue to serve on the company’s board.
Apple’s stock fell as much as 10 percent following Jobs’ announcement, before paring losses to trade at $79.64 after hours. The stock had closed down 2.71 percent at $85.33 on Nasdaq.
(Additional reporting by Anupreeta Das, Jonathan Stempel, Rodrigo Campos, Jennifer Ablan, Yinka Adegoke, Sinead Carew, Jim Finkle, Nichola Groom, Gina Keating, Lisa Baertlein and Muralikumar Anantharaman; Editing by Edwin Chan, Richard Chang)