Strong Sales of New iPhone Offset News of Apple CEO Steve Jobs' Liver Transplant

By Bob Blandeburgo
Associate Editor
Money Morning

Shares of Apple Inc. (Nasdaq: AAPL) opened yesterday (Monday) in a tug-of-war after a revelation that the health issues of Chief Executive Officer Steve Jobs are more serious than previously thought and its new iPhone 3GS sold more than one million units in its first three days.

Jobs, who has been on a leave of absence since January and is expected to return at the end of this month, reportedly traveled to Tennessee in April to undergo a liver transplant, The Wall Street Journal reported Saturday morning. "Steve continues to look forward to returning at the end of June, and there's nothing further to day," Apple spokeswoman Katie Cotton told The Journal.

Apple's lack of disclosure - specifically that Jobs had a liver transplant - raises questions about how much should be disclosed about a CEO of a publicly traded company.

"In the interests of transparency, I think it would be necessary for them to disclose something as serious as a liver transplant," Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware said in an interview with Bloomberg News. "Investors want to know if he's healthy and if he can continue to run the company."

There are no laws requiring executives at public companies to disclose the state of their health, but proponents of such legislation are out there.

"The SEC lacks specific guidelines regarding executive health disclosures," Dr. Perryman, assistant professor of management in the Neely School of Business at Texas Christian University told Newswire Business News. "This leaves companies to decide what does and does not constitute material information."

Jobs, 53, first disclosed his health issues in an open letter on January 5, in which Jobs' doctors blamed his much talked about weight loss on a hormonal imbalance. The following week, Apple disclosed in an SEC filing that Jobs' health-related issues "are more complex" than first thought.

Demonstrating how important investors believe Jobs is to Apple's operations, the company's shares closed at $78.20 on January 20, a 52-week low that was down from $94.58 just 15 days earlier. However, shares for Apple are now in the 130s, and they have outpaced the Standard & Poor's 500 Index by six times since Jobs began his leave.

Since then, Apple's stock has rebounded thanks to key product releases, such as a more affordable notebook computers and Friday's release of the third iteration of its popular iPhone, the 3GS. In that time, Chief Operating Officer Tim Cook has been running the company's day-to-day operations.

Cook, 48, oversaw Apple in 2004 when Jobs was diagnosed and successfully treated for pancreatic cancer. He was named COO in 2005, and is a likely candidate to succeed Jobs when the time comes.

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