Cupertino (CA) – Barely a week after Steve Jobs and Apple’s board of directors posted an open letter to the Apple Community in which the CEO cited “hormone imbalance” as the “root cause” of his ongoing body mass loss, announcing he would be spending holidays with his family, earlier today Jobs informed Apple employees via an internal email that his health issues are “more complex than originally thought.” In a shocking move, Jobs also said he would take a leave of absence from his day to day CEO duties until the end of June. The CEO appointed Apple’s operations chief Timothy Cook to lead the company during his absence, noting that he will remain involved in “major strategic decisions” during the absence.
The last time Cook stepped in as the CEO was when Jobs underwent a surgery to treat rare form of pancreatic cancer in 2004. The company’s stock fell 8 percent to $78.40 following the news before trading was halted in regular-hours markets. A high-profile Mac analyst, Gene Munster of Piper Jaffray, estimated last year that Apple shares would instantly lose 25 percent of their value should Jobs for any reason leave the company. A week ago Munster said that shares would lose 10 percent of their value if Jobs left Apple, erasing about $8.4 billion of the company’s market cap.
The analyst attributed the notable discrepancy between the two figures to the fact that most analysts have already factored the risk of Jobs leaving into their estimates. “Given all of the concern, investors have baked in part of the risk of Jobs abrupt leave,” Munster told Bloomberg last week.
Reacting on the news, Munster said on CNBC that Jobs’ medical leave or even permanent leave should not impact Apple’s abilitiy to deliver great products. “No doubt that Apple is losing the greatest pitchman on earth, but people still want to buy Apple products,” the analyst said adding that the company’s stock is greaty undervalued.
“Apple investors need to look at the big picture,” Munster said. “They need to look at
the new products, the balance sheet…this is a storm that will pass,” he concluded.
Tim Bajarin, president of
consulting firm Creative Strategies, think this is “tough news” for Apple, mainly due to the lack of Steve’s
ongoing leadership. “I don’t think it will have that much of an impact or
disruption on Apple in the short term,” adding that Apple may live purely off Jobs’ work at Apple until 2010. “All of the products Apple has been working on that will be released in
the next 18 months are already cast in stone and were developed with
Steve’s leadership and direction,” Bajarin said. He also noted that “Wall Street has been asking for honesty from Apple and they’re getting it.”
Calyon Securities analyst Shebly Seyrafi dubbed the latest development “clearly negative but not a complete shock.” She told CNN Money that Apple has, contrary to the popular belief, succession plan in place. “Apple has a deep bench of executive talent and Cook
is certainly a capable leader,” said Seyrafi.
A copy of Jobs’ email to Apple employees follows in its entirety:
I am sure all of you saw my letter last week sharing something very personal with the Apple community. 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. In addition, during the past week I have learned that my health-related issues are more complex than I originally thought.
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.
I have asked Tim Cook to be responsible for Apple’s day to day operations, and I know he and the rest of the executive management team will do a great job. As CEO, I plan to remain involved in major strategic decisions while I am out. Our board of directors fully supports this plan.
I look forward to seeing all of you this summer.
Apple CEO Steve Jobs pictured on September 2007 (left) and a year later in September, 2008 (right), following those who observed his frail appearance even at Apple’s annual developer conference as far back as June of 2008.