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Apple’s Investors Get Used to Life Without Jobs (Update3)


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By Connie Guglielmo and Joseph Galante

June 19 (Bloomberg) — Apple Inc. shares have climbed 63 percent since Chief Executive Officer Steve Jobs went on medical leave, signaling investors are confident the maker of the iPhone can succeed without its co-founder at the helm.

Jobs, who in January turned over day-to-day operations to operating chief Tim Cook, should give up the CEO job permanently when he returns later this month, said Michael Obuchowski, chief investment officer at First Empire Asset Management Inc. in Hauppauge, New York.

“For investors, it would be better if Steve doesn’t return to be as hands-on as he was,” said Obuchowski. “He has created a good team, and investors would be comfortable with that team and having Steve in more of an advisory role.” His firm manages assets of about $40 million, with Apple shares accounting for 2 percent of most accounts.

Jobs, a cancer survivor, could take a new position, possibly as Apple’s chairman, letting him guide the company with less scrutiny of his health, Obuchowski said.

Apple hasn’t disclosed the exact nature of Jobs’s medical condition. He said on Jan. 5 that he was suffering from a hormone imbalance, and announced nine days later that his health issues were more complex than he thought. Cook and a team of product and marketing executives have raised their profiles in Jobs’s absence, unveiling updated Macintosh computers and iPod media players. The company also is releasing a new iPhone today, generating buzz even though Jobs, 54, didn’t introduce the device.

‘Strategic Decisions’

Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to be specific about the date of Jobs’s return or whether his role will change. He also wouldn’t say how or if Apple will announce that Jobs is back at work. Apple said in January that Jobs would remain involved in “major strategic decisions” during his leave.

“We look forward to Steve returning at the end of June,” Dowling said. Jobs wasn’t available to comment for this story, he said.

Apple’s directors, led by Intuit Inc. Chairman Bill Campbell and Genentech Inc. Chairman Arthur Levinson, either declined to comment or didn’t respond to requests for comment.

Apple shares have outpaced the Standard & Poor’s 500 Index during Jobs’s leave by almost sevenfold. The stock rose $3.60 to $139.48 today in Nasdaq Stock Market trading.

“If you look at the performance of Apple over the last year from a fundamental point of view, it’s been terrific,” said David Pearl, who helps oversee $6 billion in assets, including Apple shares, at Epoch Investment Partners in New York. “They’ve proven the company can run without him being there day to day. No one lives forever, and you have to build the company with the talent to succeed the founders.”

Stock Fluctuations

Apple’s stock has fallen frequently over the past year on speculation that Jobs’s health was deteriorating. The shares reached a two-year low of $78.20 on Jan. 20, six days after Jobs announced his leave. They have jumped 78 percent since then, buoyed by a stock market rally and fiscal second-quarter earnings that topped analysts’ estimates.

Cook filled in when Jobs took a monthlong medical leave in August 2004 to recover from surgery to remove an islet cell neuroendocrine tumor. Apple said in January that it has a succession plan should Jobs decide to leave for any reason. The plan is confidential, the company said.

“Transparency in this area is critical,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “The transparency issues throughout his illnesses have raised concerns among investors.”

Developer Conference

Jobs’s weight loss last year sparked concerns that his health was deteriorating. In June 2008, he appeared at Apple’s developer conference looking thinner. The company said he was suffering from a “common bug” and then declined to comment further on his health, saying it was a private matter.

“I wish they would take the time to be a little more communicative,” said Ryan Jacob, head of the Jacob Internet Fund in Los Angeles, which owned 17,000 Apple shares as of March.

Jobs co-founded Apple in 1976 with Steve Wozniak. He was fired by the board after a management dispute in 1985 and then returned to lead the company in 1997. Under Jobs’s tenure, Apple’s sales have surged to more than $30 billion a year. The stock has risen to more than $138 from $3.42 in July 1997.

It’s unclear what role Apple’s board had in managing Jobs’s health disclosures, Elson said. In addition to Jobs, Campbell and Levinson, Apple’s directors include former U.S. Vice President Al Gore, Google Inc. CEO Eric Schmidt, J. Crew Group Inc. CEO Millard “Mickey” Drexler, Avon Products Inc. CEO Andrea Jung and former International Business Machines Corp. finance chief Jerome York.

Celebrity Guests

Over the past five months, marketing chief Phil Schiller and chief designer Jonathan Ive have helped Cook handle Apple’s product introductions. In the past, Jobs served as master of ceremonies for these events, which drew standing ovations from Apple’s fans and included celebrity guests such as Bono and John Mayer. On June 8, Schiller filled in for Jobs at Apple’s developer conference, unveiling the new iPhone.

While Apple can’t replace Jobs, the company needs to prepare for a future without him, said Epoch’s Pearl.

“He’s a creative genius, without question,” Pearl said. “At the same time, the company is building itself for the day Steve isn’t there, whether it’s next year or in 10 years.”

Cook was first mentioned as a possible heir in 2004 when he ran the company during Jobs’s leave. His position as second-in- command was cemented in October 2005, when he was promoted to operating chief.

“If you had an arrangement where Steve focused on Apple’s strategic products and Tim took care of all the other stuff, I would say it wouldn’t really change the complexion of Apple,” said Charlie Wolf, an analyst at Needham & Co. in New York. “It’s just a question of title.”

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This entry was posted on Sunday, June 21st, 2009, 2:47 am and is filed under Business, Stock Market. You can follow any responses to this entry through RSS 2.0. You can leave a response, or trackback from your own site.

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