This isn't the first time Apple Inc. (Nasdaq: AAPL) Chief Executive Steve Jobs has given investors a scare.
And each time before, Apple has navigated the crisis – and soared to even greater heights.
Will that pattern repeat itself again? Or has Apple's fortunes soured this time around?
Jobs on Jan. 17 e-mailed Apple employees to say that he was taking time off for undisclosed medical issues.
"I love Apple so much and hope to be back as soon as I can," Jobs wrote. "In the meantime, my family and I would deeply appreciate respect for our privacy."
Apple Chief Operating Officer Timothy Cook will oversee day-to-day operations in Jobs' absence.
All eyes turned to Apple stock in the days following as fearful investors worried shares would drop like the last time Jobs required a health-related leave. Apple followers worry that Jobs' absence might disrupt the company's profit-churning momentum.
"A lot of people will hit the ejection handle," Brian Marshall, an analyst at Gleacher & Co., told MarketWatch. "The stock will come under a lot of pressure."
U.S. markets were closed Jan. 17 to observe Martin Luther King Jr. Day. But Apple shares fell 8% on German exchanges after the news broke. On Jan. 18, the company's shares fell as much as 6.5% in U.S. trading, eradicating about $20 billion in market value, before corrected to close 2.25% lower than Friday's closing price.
Apple stock has fallen about 2.3% since Jobs announced his leave.
The news was similar to the CEO's 2009 announcement that he was leaving for six months to undergo a liver transplant. On Jan. 14 of that year, Jobs admitted his health issues were "more complex than I originally thought," and Apple shares hit a low of $78.20 on Jan. 20. Then the stock rallied with the overall market, reaching $144.67 on June 5, 2009 and climbing to a record high $348.48 last Friday.
Jobs also left in 2004, after he was diagnosed with pancreatic cancer.
Many investors say that Job's vision and hands-on stewardship of the company is directly responsible for Apple having been able to eclipse Microsoft Corp. (Nasdaq: MSFT) in market value. Those same investors believe that Jobs' presence is vital for Apple's success, and worry that without him, the company's ability to innovate will wither.
Apple's tight-lipped policy on who else is behind the booming success of such products as the iPhone and iPad has also frustrated investors. Highlighting the company's lesser-known supporting cast – including industrial designer Jonathan Ive, marketing guru Philip Schiller and iPhone software specialist Scott Forstall – might bolster investor confidence in Apple and its future.
"If you can show us the process behind the vision, and show that it's not all Steve Jobs, then I think the valuation will persevere," Kim Caughey Forrest, an analyst for the Fort Pitt Capital fund, told MarketWatch.
But many experts think Apple's product pipeline boasts enough technological advancement and creative energy to prevent a decline in value.
Apple followers are expecting a new version of the iPad in the spring, and the iPhone 5 in the summer. The company is also bringing the iPhone to Verizon Communications Inc.'s (NYSE: VZ) 93 million subscribers in February.
This prompted last week's Money Morning "Question of the Week": Do you think Apple can continue to thrive without CEO Steve Jobs? Why or why not? Are you bullish or bearish on Apple shares? Should the company be more open about its future, including a plan for Jobs' successor?
The following reader responses show a divided view of Apple's future without Jobs.
Glory Days Are Over
No question. If Steve's health status is getting worse this stock will drop like a rocket!
I don't think Apple can keep going much higher, especially without its dedicated leader. I wish I had gotten in on it last time [Jobs was sick] and taken some of those 400% gains, but I missed it.
I think it might go on for a bit, the stock price, but competition is eventually catching up to the iPhone and iPad, and without its CEO things won't be the same.
I hope it surprises us and remains strong, but I think it'll slip from the top soon.
– Helen B.
Nah, I hate to say it but I don't see Apple being as great without Steve Jobs. Every company has struggles and it's been on a good run for a while…time for a break.
Apple: Onward and Upward
Yes, they can. Apple can handle a little rockin' the boat…at least, I'm keeping my shares. They have knocked it out of the park this year with their goods and they aren't going anywhere but up.
– Brian E.
Yes, no man is irreplaceable.
– Randy H.
Apple is a machine.
Buy them and IBM at the same time, that's what I say.
Be sure to answer next week's question: How would you rate U.S. President Barack Obama's 2011 State of the Union address? Did he adequately address economic issues? What parts of his speech did you agree or disagree with? Did he change the way you feel about the year to come? Are you more hopeful – or less hopeful – about the country's economic future?
Send your answers to firstname.lastname@example.org.!
Is there a topic you want to see covered as a "Question of the Week" feature? Then let us know by e-mailing Money Morning at email@example.com. Make sure to reference "question of the week suggestion" in the subject line. We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate – via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
- Money Morning:
Hot Stocks: Steve Jobs Health Concerns No Reason to Bail on Apple Inc. (Nasdaq: AAPL)
Jobs absence seen pressuring Apple on succession
- The Wall Street Journal:
Are Apple's Best Years Over?
- Money Morning News Archive:
Question of the Week Feature