Jobs Tries on Retirement for Apple's Good

Apple [AAPL] CEO Steve Jobs sent a letter to employees today declaring his intention to take a leave of absence from the company until June. Shares of AAPL dropped about 6% in after-hours trading, as of this writing.

Since blaming a "hormone imbalance" for "robbing" his body of nutrition in a similar letter last week, Jobs and his board have found themselves inundated with morbid speculation about the CEO's health, and by association, the future of the company. Jobs said last week the solution to his precipitous weight-loss would be a "simple and straightforward" nutritional treatment, but that hasn't stemmed the tide.

Wired glibly suggested that his initial explanation "didn't make sense." WebMD devoted a panel of four doctors to discussing the treatability of a so-called protein-robbing hormone imbalance (they found Jobs' explanation tenable). Some bloggers have summoned all their humanity (and condescension) and exhorted the media to leave Steve alone; other outlets have rightly acknowledged that Apple's board may have a legal obligation to keep its shareholders apprised of Jobs' health.

But unless you're a personal friend of the Apple co-founder, the details of Jobs' bodily mechanics will soon be moot. As I argued in December, many of Apple's runaway successes -- the Apple Store, the iPod, the original iMac -- are more accurately credited to other brilliant minds at Apple than to the man himself. (Witness the buzz for the Palm Pre, which was created by an Apple refugee.) With this hiatus, Jobs is trying to prove that very point.

So yes, Steve is dying -- and all of us over the age of 20 are slowly doing the same. Someday, there will be an Apple without him, but insecure investors are terrified of the scenario. Jobs has seen the hair-trigger reactions of the market to the news of his health, and he's decided to try to disconnect the yoke between his health and Apple's share price by simply taking some time off.

Once the markets see that Apple doesn't up and combust without him on the campus, the company will be more insulated from any further health fluctuations, and from his eventual fade-out. After all, preserving stock price is part of his job. And he knows that his eventual retirement will severely damage Apple's share price, which in turn hurts Apple's market cap and shrinks the company's equity.

And since no one knows how deep this recession will take us, it's wise for Jobs to try to mitigate that shrinkage now--just in case the company needs to borrow against its worth soon after he departs.

That's not a medical emergency; it's just what a good CEO would do.

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4 Comments

  • Chris Dannen

    It's probably a bad time to sell, David -- AAPL will inevitably rebound after Steve is gone for a few weeks. Amtech changed its rating of AAPL to this morning (1/15), Thomson Reuters has maintained a Neutral rating, and S&P analysts still consider the stock five-star rated.