Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Apple's Jobs takes medical leave, remains CEO; Succession planning in focus

By Larry Dignan | January 17, 2011, 6:11am PST

Summary: Apple CEO Steve Jobs is taking a medical leave to focus on his health. He will remain CEO, but Tim Cook, chief operating officer, will run Apple day to day.

Cook takes over day to day as CEO Jobs takes medical leave.

Apple said Monday that CEO Steve Jobs is taking a medical leave to focus on his health. He will remain CEO.

As Jobs takes his leave, Tim Cook, chief operating officer will take over Apple’s day-to-day operations. In early 2009, Jobs went on a medical leave for six months in early 2009 to have a liver transplant. During that time, Cook filled in and Apple didn’t miss a beat. Jobs is a pancreatic cancer survivor.

Here’s what Jobs sent to Apple employees:

Team,

At my request, the board of directors has granted me a medical leave of absence so I can focus on my health. I will continue as CEO and be involved in major strategic decisions for the company.

I have asked Tim Cook to be responsible for all of Apple’s day to day operations. I have great confidence that Tim and the rest of the executive management team will do a terrific job executing the exciting plans we have in place for 2011.

I love Apple so much and hope to be back as soon as I can. In the meantime, my family and I would deeply appreciate respect for our privacy.

Steve

The news is likely to put Apple succession planning back on the front burner. Earlier this month, a pension fund proposed that Apple become more forthcoming about its succession planing for Jobs, who is a pancreatic cancer survivor. Details of Jobs’ latest medical leave were disclosed.

In that proposal, which was detailed in Apple’s proxy statement, the Central Laborers Pension Fund in Jacksonville, Ill. argued that Apple do the following:

Apple’s board will review the succession plan each year;
Develop criteria for the CEO position and a process to evaluate candidates;
Identify internal candidates;
Begin a “non-emergency CEO succession planning” process, three years before a transition;
Report the succession plan to shareholders each year.

Apple urged a vote against the proposal.

Jobs’ latest medical leave is likely to put the succession planning on the front burner again. Here are a few thoughts since Jobs’ health will be a key issue again.

The medical leave hand-off at Apple has been well established from the first time Jobs took time off. Cook has proven that he can run Apple on a day-to-day basis.
There will be more probing about Jobs’ health and what exactly he’s doing. Obviously, Jobs wants his privacy, but shareholders are going to want more details.
The succession planning proposal in Apple’s proxy statement may get more serious consideration as Jobs take leave.
Details of the duration of Jobs’ medical leave are likely to impact Apple shares. If it’s a short leave—quite possible since Jobs is still CEO—then the damage will be minimal.
Now it’s clear why Cook is one well-paid operating chief. Cook made $59 million in Apple’s fiscal year.

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Topics

Job, Steve Jobs, Leave, Apple Inc., CEO, Team Management, Vertical Industries, Healthcare, Corporate Governance, Benefits And Compensation, Recruitment & Staffing, Human Capital Management, Management, Business Operations, Corporate Law, Human Resources, Workforce Management, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

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RE: Apple's Jobs takes medical leave, remains CEO

marco5811 5th Sep

apple will be fine the next few years, but the lack of his vision will show after a while. apple will become something ordinary in the long run. tipy

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RE: Apple's Jobs takes medical leave, remains CEO

markh789 17th Jan 2011

Wow, any clue what medical condition he is suffering?

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RE: Apple's Jobs takes medical leave, remains CEO

Badgered 17th Jan 2011

@markh789

"my family and I would deeply appreciate respect for our privacy."

I realize people always have the want-to-know, sometimes for the best reasons... but with Apple being the secretive company that it is, if he can avoid telling anyone, my guess is he will. Quite frankly, I wouldn't blame him either.

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If anything, this does not end Apple's power

DeRSSS Updated - 17th Jan 2011

Because both Thomas Cook, Jonathan Ive, and others, expressed compete compliance with Jobs' principles about products development and quality.

They just need to continue to run the company the way they do now, and Apple will be fine.

So no doom and gloom for Apple, whatever happens.

And yes, get well to Jobs.

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Maybe not so true

John Zern 17th Jan 2011

@denisrs, only because while they were running the company in Steve Jobs' absence the last time, people where allways secure in the knowledge that Steve Jobs was still there for advice or input, if needed, that he was coming back soon.

Hopefully this isn't anything too serious, but unfortunately if it is, things may be different if it looks like he won't be coming back soon.

At the moment though, lets hope for a good recovery.

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But chances are high that it is true

DeRSSS Updated - 17th Jan 2011

@John Zern: if fact, to release such products as Apple does one may not need to be absolutely unique. Steven Jobs is about:
1) perfectionism (attention to detail, quality is here);
2) minimalism (simplicity of UI, product lines, clarity in everything is here);
3) confident bold moves (not being sorry or feared to let go, be ready to move to the future technology and force everyone around to do it).

People around Jobs are such (or else he would not tolerate them around).

The only thing these may lack is so-called:
4) visionary.

These people may continue to do HQ products and move technology rapidly, but these may not able to grasp tiniest bits of emerging technology to later turn around whole industries or invent new categories of products.

That "Thomas Edison" quality is, most probably, unique. People like that do not appear on the stage of progress much often than couple of times in a Century.

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100% agreed

banned from zdnet 17th Jan 2011

@denisrs
if he really doesn't come back, apple will be fine the next few years, but the lack of his vision will show after a while. apple will become something ordinary in the long run. i have the felling this is a sad day and i really, really hope i am wrong. get well soon, steve!

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RE: Apple's Jobs takes medical leave, remains CEO

illegaloperation 17th Jan 2011

@denisrs
Last time Tim Cook took charge, he let iPhone 4 happen. Before somebody said that iPhone 3GS wasn't release yet, remember that iPhone 3GS was already in the pipeline and iPhone 4 was being developed.

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Only Time will tell

Mister Spock 17th Jan 2011

@denisrs. as there appears to be disagreement on that point
On one side you have
Should something happen to Jobs, he has created a "model that Walt Disney gave us," Bajarin said. "Disney died relatively young, but what Disney did before he died was to create an incredible vision and creative team and management who fully understood his vision of the future. Disney didn't suffer at all ? it had some ups and downs, but ultimately it fulfilled Walt's dreams.

Yet on the other side you have:
You can?t easily separate the company from the man or the man from the company. This makes his departure increasingly painful the longer he is away because more and more of what made Apple successful will be less and less evident. Initially the problem will be a lack of high-level excitement at new product launches, but the products will still have Steve?s fingerprints on them. "Eventually even these fingerprints will be gone and the company will become more like most consumer electronics companies with growing lines of increasingly less-interesting products. The most noticeable moment will likely be when Apple tries to launch its next big thing in a few years. The iPod, iPhone, iPad amazing line of successes may well end with the iPad."

Only time will give us the correct answer.
plain

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RE: Apple's Jobs takes medical leave, remains CEO

gtdworak 17th Jan 2011

Get well soon Steve. Being a cancer survivor myself, I can relate.

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Sounds bad

NoAxToGrind 17th Jan 2011

Sounds as if things are not good at all.

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RE: Apple's Jobs takes medical leave, remains CEO

The Danger is Microsoft 17th Jan 2011

@NoAxToGrind - don't read too much into it and just wish Steve well in getting healthy.

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RE: Apple's Jobs takes medical leave, remains CEO

james347 17th Jan 2011

Best wishes and hoping for a quick recovery.

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RE: Apple's Jobs takes medical leave, remains CEO

Dorkyman 17th Jan 2011

Once worked for Apple, talked with Jobs from time to time.

I wish him a successful recovery from whatever health issue he is currently suffering.

I also would not want to be an Apple stockholder at this time. The stock is wildly overpriced and poised for a disastrous plunge, since so much of the perceived success of the company is tied up with Jobs.

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no

banned from zdnet 17th Jan 2011

@Dorkyman
you don't know what you are talking about. with an 2011 P/E of 16 (ex-cash 13) the stock is not overpriced. if anything it is very cheap (for reference amazon has a P/E of 70).

the stock price will suffer anyhow as the market is not behaving rational in the short term and of course steve jobs not coming back would be a gigantic loss for the company (and the world) and thus will affect the stock price negatively.

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?

Dorkyman 17th Jan 2011

@banned from zdnet

On my Yahoo analysis pages, HP/Microsoft/Cisco trade at about 12-13. AAPL is at 23, about double. Are they inherently worth twice as much as other well-regarded companies? Don't think so.

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RE: Apple's Jobs takes medical leave, remains CEO

msalzberg 17th Jan 2011

@ Dorkyman

He mentioned Amazon, not HP/Microsoft/Cisco. But even so, compare earnings growth. That's what people use to determine if a PE ratio is too high. Apple's earnings growth is much larger than that of the other companies you mention.

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RE: Apple's Jobs takes medical leave, remains CEO

Scrat 17th Jan 2011

@banned from zdnet uttered the following:
"of course steve jobs not coming back would be a gigantic loss for the company (and the world)..."

Do you really think the whole world would be "at a gigantic loss" if SJ wasn't around anymore? (I'll help you with the answer: NO)

The passing of SJ would be news for about a day outside the US, and that's about it.

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Wishing him the best recovery.

ye 17th Jan 2011

I owe a lot of what I've got to the two Steves.

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RE: Apple's Jobs takes medical leave, remains CEO

Loverock Davidson 17th Jan 2011

Are we going to get more articles about the ZDNet bloggers crying about their stocks like we did last time Steve Jobs when on medical leave?

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Really?

sportmac 17th Jan 2011

@Loverock Davidson There are times in life when one steps back and says to themselves "now's not right, give it a rest". This would be one of them.

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RE: Apple's Jobs takes medical leave, remains CEO

Loverock Davidson 17th Jan 2011

@sportmac
I agree. But it didn't stop the bloggers. I'm just wondering if we will have a repeat of that.

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RE: Apple's Jobs takes medical leave, remains CEO

maskman01 17th Jan 2011

@Loverock Davidson

Classless. More so then usual.

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RE: Apple's Jobs takes medical leave, remains CEO

Loverock Davidson Updated - 17th Jan 2011

whatever do you mean?

(edited as it was posted in the wrong post)

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RE: Apple's Jobs takes medical leave, remains CEO

maskman01 17th Jan 2011

@Loverock Davidson

You are a lonely troll who's only purpose for posting is to get attention. If what Zdnet posted really bothered you then you would not be here. Instead you seek attention with posts that are designed to create anger with their lack of facts (or outdated facts).

As a person who lost a very close family member to pancreatic cancer I have huge respect for people that beat the odds. Illness is offlimits for your classless trolling.

I will not wish ill will on you, even though your lack of class deserves it.

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RE: Apple's Jobs takes medical leave, remains CEO

Loverock Davidson 17th Jan 2011

@maskman01

I don't post to get attention, my posts get attention because people don't like what I have to say because its the truth.

Instead you seek attention with posts that are designed to create anger with their lack of facts (or outdated facts).
I did post a fact. It is a known fact and you can do the search yourself that all the ZDNet bloggers were soooo concerned about their precious stocks instead of the wellbeing of Steve Jobs the last time he went on medical leave. Case in point:
http://www.zdnet.com/blog/btl/jobs-medical-leave-right-to-privacy-vs-right-to-know/11498?tag=nl.e539

Illness is offlimits for your classless trolling.
That would assume I'm trolling, which I'm not. I simply asked a question, one worth inquiring about to show just how heartless these ZDNet bloggers can be. I wish Steve Jobs well just like I did last time he went on medical leave. I said the bloggers should leave him alone instead of trying to dig up dirt on him and his health to protect their stocks. So before you make baseless attacks on me you should read my posts so you don't look like the troll you are.

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RE: Apple's Jobs takes medical leave, remains CEO

daikon 17th Jan 2011

Loverock
You are heartless, attention seeking troll.

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Contributr

RE: Apple's Jobs takes medical leave, remains CEO

sldiaz Updated - 17th Jan 2011

@Loverock Davidson
As the author of the "Case in point" post you linked to, I resent that you would use that post as an example of "all ZDNet bloggers" being concerned about "their precious stocks."

If you would go back and read that post - which clearly you didn't do the first time - you would see that I never make any reference to my own personal portfolio. In fact, I don't even own any shares of Apple, so the company's performance doesn't impact me on a personal level one bit.

That post referenced the buzz on Wall Street over his leave - and whether anyone likes it or not, that discussion was a very real thing at the time. That post was meant to open a forum for people to chime in on a larger debate going on at the time - the question over a person's right to privacy versus a public company's obligation to disclose all material information. And that's exactly what happened there. People chimed in on that debate.

For as long as I've been writing for this blog, I've kept silent about the trolling comments you make here - largely because it's so obvious that other readers point it out so I don't have to. But I take great exception to you linking back to one of my posts and then trying to categorize it into some category of me being more concerned about my stock portfolio than I would be about the life of another human being.

If you don't like my writing or the things I have to say, then I can accept that. (And I'm trying to restrain myself from writing what I really think of your comments...) But don't go linking back to one of my posts as a way to make the bloggers on this site look like cold-hearted demons.

When you do something like that, it says more about you than it does me... And congratulations. You certainly got the attention you wanted today, didn't you?

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RE: Apple's Jobs takes medical leave, remains CEO

Loverock Davidson 17th Jan 2011

@sldiaz
Sorry dude but that is exactly what happened. I remember clearly when Steve took leave the first time the bloggers were getting into a tizzy about Apple stocks.

That post talked referenced the buzz on Wall Street over his leave - and whether anyone likes it or not, that discussion was a very real thing at the time.
And you honestly think its going to be different this time? I don't.

But I take great exception to you linking back to one of my posts and then trying to categorize it into some category of me being more concerned about my stock portfolio than I would be about the life of another human being.
I apologize if I lumped you into this category. I'm stating what was based on fact of past history, soon as Steve left for medical leave ZDNet was full of stories about Apple's stock. Some thinking they had to right to know of his condition, why he was out, and other private info they weren't allowed.

I don't give a crap what you think about me. I state my opinions because this is a talkback and that is what its for. I didn't post this for attention, I posted it because myself and the rest of your readers don't want to see that ugly stock excuse come up again over someone's health.

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RE: Apple's Jobs takes medical leave, remains CEO

msalzberg 17th Jan 2011

@Loverock Davidson

How many different places have you posted this same thing? I'm glad you can cut and paste, but really, give it a rest.

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RE: Apple's Jobs takes medical leave, remains CEO

Loverock Davidson 17th Jan 2011

@msalzberg
As many times as it takes for ZDNet to get the point. We want to hear about Steve Jobs, not their stocks.

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RE: Apple's Jobs takes medical leave, remains CEO

msalzberg 17th Jan 2011

@Loverock Davidson

And yet, you are the only one bringing up the stock price issue. You're complaining about yourself. As are the rest of us.

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RE: Apple's Jobs takes medical leave, remains CEO

Pete "athynz" Athens 17th Jan 2011

@Loverock Davidson Dude, just let it go...

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RE: Apple's Jobs takes medical leave, remains CEO

Loverock Davidson Updated - 17th Jan 2011

@athynz
Alright.

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That's the way it should work

John L. Ries 17th Jan 2011

Jobs took medical leave and explicitly put someone in charge in his absence. If he dies, Tim Cook will be acting CEO until the board fills the vacancy.

If Apple's stockholders have so little confidence in the board that they feel compelled to enact exact procedures for choosing a successor to Jobs, the proper way to proceed would be to replace the board.

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My recommendation would be for them to sell their shares of AAPL.

ye 17th Jan 2011

@John L. Ries: If Apple's stockholders have so little confidence in the board that they feel compelled to enact exact procedures for choosing a successor to Jobs, the proper way to proceed would be to replace the board.

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That is the conventional approach

John L. Ries 17th Jan 2011

@ye
But the more I think about of it, the more it looks like a cop out to me. Besides, I've long thought that selling something that one thinks is a bad buy is unethical.

Putting ones vote where one's mouth is strikes me as more responsible.

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Nothing unethical about it as long as the buyer has full disclosure.

ye 17th Jan 2011

@John L. Ries: I've long thought that selling something that one thinks is a bad buy is unethical.

As long as the seller is not hiding information or otherwise being deceiptful I see nothing unethical about it.

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RE: Apple's Jobs takes medical leave, remains CEO

Digger_z 17th Jan 2011

i believe there will be a large push by pension funds and other major stockholders for Jobs to release at least some details of his reason for the sick leave, as they will definitely be concerned that the stock price will suffer if Jobs is not able to return soon.

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That's exactly WHY he took a leave of absence.

matthew_maurice 17th Jan 2011

@Digger_z If he were to stay in place, he'd have to release some info about his condition, but by taking a leave he can now keep happily, and legally, private.

Let's not forget, Steve really doesn't think much of external shareholders. He's never gone out of his way to endear himself to them, and so it would be out of character for him sacrifice his own privacy just to assuage their concerns.

Expect AAPL to lose 10-12% by mid-afternoon Eastern time tomorrow, and then have gained back 5% at close. Q1 Results numbers were baked-into Friday's close, so tomorrow's after-market call won't do too much. AAPL will hover just below whatever closing was Friday until the iPhone release on VZW. A few news stories of all-night lines of people waiting will stiffen some resolve, and then expect a climb as iPad 2 rumors start to gel and a Cupertino event invite gets sent out.

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Hopefully...

jessiethe3rd 17th Jan 2011

Steve has a quick recovery...

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Guys, when you will learn not to feed the troll?

theo_durcan 17th Jan 2011

just look how Rockhead polarized the thread in a tangent direction, and everybody followed.
Best wishes, Steve for a prompt recovery.

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Get Well Steve Jobs....From a Microsoft Fan..

SmoothDouglas Updated - 17th Jan 2011

I'm definately more of a Microsoft fan than Apple lover. I don't like some of the tactics of Apple and their cult. That being said....

However, I do have to commend Steve Jobs on his vision and guidance of Apple. Apple has made great strides in Consumer Electronics and it only pushes other companies (Such as MS) to do better.

The world would be a much better place with Steve Jobs. I wish him well. I just hope that the pancreatic cancer hasn't returned. The reality is that pancreatic cancer is extremely difficult to beat. Good Luck, Steve.