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Apple’s Steve Jobs Takes Second Medical Leave; Shares Fall

17 January, 2011

Apple Chief Executive Steve Jobs is taking medical leave for the second time in as many years, sending shares tumbling close to 10 percent as the news revived concerns over the long-term future of the iPhone- and iPad-maker.

The news, which was disclosed early on a U.S. holiday when markets were closed, came nearly two years to the date after Jobs first took a six-month break to undergo a liver transplant.

“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 but he would continue to be chief executive and be involved in major strategic decisions.

“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.”

Apple shares fell 8.3 percent in Frankfurt by midday. Nasdaq futures were down 1.4 percent. Monday is a holiday in the United States and markets are closed.

Apple’s destiny has been closely tied to the charismatic Jobs, who revived the computer maker’s fortunes 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, but his absence would be a worry if it became prolonged. Cook ran day-to-day operations during Jobs’ last absence in 2009.

“It wasn’t expected. 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.”

Richard Windsor, global technology specialist at Nomura, agreed that a 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.”

Jobs still appeared thin 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 build on momentum of the popular iPhone and earlier iPod.

 


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Apple’s Steve Jobs Takes Second Medical Leave; Shares Fall

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