UPDATED 11:11 EDT / JANUARY 17 2011

NEWS

Steve Jobs Medical Leave Stirs Speculation about Apple’s Direction

Apple Chief Operating Officer Tim Cook has been tapped to take over the software and mobile mega-giant in CEO Steve Job’s absence as he goes on holiday to focus on his health. Jobs’s medical history now has become a rocky road filled with strange adversity after he was diagnosed with pancreatic cancer in 2004. Since then, Jobs has on and off exhibited heath issues and taken medical leave for vague reasons.

Over at The Wall Street Journal, issues raised by his sudden leave are being speculated on and what this might mean for the eventual direction for Apple,

Mr. Jobs’s leave raises uncertainty for Apple. While Mr. Cook previously stepped in to run the company during Mr. Jobs’s last medical leave, the CEO is closely identified with Apple and turning around the company last decade. He has introduced a succession of hit products such as the iPod music player, the iPhone and iPad tablet computer.

Last year, Apple passed Microsoft Corp. in market capitalization to become the world’s most valuable tech company. Apple reports quarterly earnings on Tuesday. Mr. Jobs was expected to announce with News Corp. a new digital publication for the iPad this week, but the event was postponed last week.

While speculation seems extremely hasty at this point, the market (especially stock markets) are quick to react to small stimulus. So when the article mentioned that Apple stock in Frankfurt had dropped, it didn’t surprise me—U.S. Stock Market remains closed through Martin Luther King Day, so we won’t know until tomorrow how investors have reacted to the news. However, it’s best to keep in mind that initial reactions are all about people feeling uncertain and not about the actual stability or real uncertainty of Apple’s future.

COO Tim Cook has before taken the reins of the company from Steve Jobs during medical absences. Writes the Wall Street Journal article, “Mr. Cook joined Apple in 1998 after stints at Compaq Computer Corp. and other companies. Mr. Cook stepped in during Mr. Jobs’s 2004 leave; during Mr. Jobs’s 2009 leave, Mr. Cook emerged as one of the most visible stars on Apple’s bench and won praise for his ability to make Apple’s sprawling operations move on time.” So even if CEO Jobs ends up remaining out of the game for an unexpectedly extended period of time to convalesce, Cook has already had experience being Apple’s interim conductor.

The near future for companies like Apple rarely depends hugely on the status of the CEO—the momentum that giant corporations strain under won’t suddenly veer in any given direction even if nobody is at the wheel, and with Cook taking over this isn’t one of those cases. Apple has seem some extremely strong years with the iPhone and iPad and just opened up the iPhone for Verizon’s network (with the launch announced recently.)

The upcoming News Corp. announcement postponement doesn’t really raise any concerns for me, either, because it’s just keeping pace. The publication service for the iPad could launch without much hullabaloo and still enter into the digital publication ecology just fine.

What the health of a CEO does do, however, is change public and investor perception of a company and its overall health. It’s a sociological effect that goes back to tribal expectations about kings and countries. In mediaeval England and tribal Ireland, the chieftain or king and the land were considered the same—as the king ailed, so did the land. It’s the same with the stock market expectations and corporations. The presence of a strong, healthy, honest CEO sitting in the audience chamber radiates a sense that the company itself is strong, healthy, and honest.

To enough of the investing population uncertainty about the health of the CEO translates therefore into uncertainty about the health of the company.

Not to paint Steve Jobs too much like King Arthur or perhaps the iPhone as the Holy Grail, but we’ve seen a lot of beautiful products out of Apple, especially during Jobs’s reign. I do not doubt that COO Cook will do an excellent job holding his audience in the chamber of the excused king; but I await, with bated breath, the return of CEO Jobs to his proper throne so that the rest of the world continues to feel good about Apple because it will help them continue to do great things.


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