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Steve Jobs’ health is a worry for investors
July 23, 2008
Sadly, Apple is now stuck with a question that many people are asking, even if they feel awkward and guilty about doing so. Is Steve Jobs ill again?
The question has been around since Mr Jobs appeared at the iPhone 3G launch event in June looking very pale and gaunt, was put to Apple executives during Monday’s results conference call, and the reply did not help.
“Steve loves Apple, he serves as CEO at pleasure of Apple’s board and has no plans to leave. Steve’s health is a private matter,” said Peter Oppenheimer, Apple’s chief financial officer. That, combined with a downbeat earnings forecast, sent the company’s shares sharply lower.
Henry Blodget has retorted that Apple shareholders have a right to know whether Mr Jobs’ pancreatic cancer, for which he had surgery four years ago and seemed to have recovered, has recurred. Meanwhile, others retort that it is a private matter and we should not probe further.
With caveats, I think Mr Blodget is right. Mr Jobs’ health is clearly a material issue for Apple’s shareholders. Indeed, in many ways it is the most material issue of all. Apple’s fortunes have varied over the years according to whether Mr Jobs is in charge and he still embodies the brand.
There are lot of private matters that politicians and celebrities must endure being dragged into the public realm. Issues from whether they are straight or gay, are having affairs, or have drug-taking children or spouses, find their way into the media as a reflection of their characters.
Rightly, chief executives do not generally have to endure such scrutiny. It does not generally affect investors whether a senior executive has a racy private life or not. Providing he or she can do the job, that can be kept under wraps.
Even when executives do get ill, there is often no need for investors to be told all there is to know about their condition or their prognosis. Some take breaks to recover from conditions from cancer to depression and then return to work without the need for full disclosure.
But when a chief executive of a public company is so ill that his or her performance is seriously affected, then investors eventually have to be told. That is particularly so when he or she personifies the company.
McDonald’s was punctilious about disclosing the illness of Charlie Bell, its former chief executive, who died of colon cancer in 2004. It disclosed that he was being treated for the condition well before he eventually stepped down.
In Apple’s case, the level of investor uncertainty now means that it ought to make some disclosure about Mr Jobs’ state of health. It need not go into too much detail but it must provide some clarity.
There are few circumstances in which investors have to be told about the private life of a chief executive but this is, unfortunately, one of them.
This piece is mistaken. Steve Jobs’ health remains a private matter until the company sees poor health will affect his work. The company’s statement tells us his work is not affected, nor about to be affected. It even tells he has no plans to leave Apple. That is not something investors would usually know.
It is also sloppy thinking to suggest that Steve Jobs is the company. Certainly he has created it, but it now knows its own identity quite precisely, and has a programme of development ahead of it that can last 10-20 years. Attributing the company’s future earnings to Steve Jobs is almost as silly as thinking a building will fall down if its architect dies.
This nonsense presented another instance of the short selling hooliganism that the SEC turns a blind eye to. As a high profile, high P/E stock, Apple is susceptible to coordinated shorting action; it just needs a starting signal; any event preceding a news free interval will do - earnings reports are good. Successfully synchornizing a recycled rumour in the New York Post makes a golden opportunity. The shorts can get in and out of the trade with hardly any risk.
Apple were correct not to be sucked into commenting on rumours. They don’t, and we have to live with that. Just as we have to live with synchronized shorting raids.
Posted by: sleepy | July 23rd, 2008 at 6:33 am | Report this commentFinally, you can see the supposedly “very pale and gaunt” keynote Steve Jobs being interviewed at http://www.youtube.com/watch?v=RNZngL29M9M
Or watch the whole keynote on Apple’s web site.
I don’t see the “pale”, or the sickly part of “gaunt”. Just very thin. But that’s not unhealthy.
Posted by: sleepy | July 23rd, 2008 at 6:52 am | Report this commentJob’s health determines the price of AAPL, and the portfolio of many individuals, including retirement funds. There fore, how could his health be a private matter?! If he wanted it to be a private matter, then he should not have been associated with Apple in the first place.
Posted by: K | July 23rd, 2008 at 4:53 pm | Report this commentIf someone banned for life from the securities industry instigated a rumor potentially affecting a security you owned, would you give it credence?
“In 2002, then New York State Attorney General Eliot Spitzer, published Merrill Lynch e-mails in which Blodget allegedly gave assessments about stocks, which conflicted with what was publicly published.[5] In 2003, he was charged with civil securities fraud by the U.S. Securities and Exchange Commission.[6] He settled without admitting or denying the allegations and was subsequently banned from the securities industry for life. He paid a $2 million fine and $2 million disgorgement but kept millions more he earned in fees while promoting investments in stocks which failed.[7]” Wikipedia
Posted by: Clay Tedeschi | July 24th, 2008 at 5:13 pm | Report this comment