Apple Says Steve Jobs Will Take a New Medical Leave

By MIGUEL HELFT
Published: January 17, 2011

http://www.nytimes.com/2011/01/18/technology/18apple.html?ref=business

Steven P. Jobs, the co-founder and chief executive of Apple, is taking a medical leave of absence, a year and a half after his return from a liver transplant, raising questions about both his long-term prognosis and the future of the world’s most valuable technology company.

Justin Sullivan/Getty Images

The Apple C.E.O. Steve Jobs at Apple’s headquarters in Cupertino, Calif., last October.

Mr. Jobs, who recovered from pancreatic cancer after surgery in 2004, is going on leave at a critical time for Apple.

While the company has outflanked most of its rivals in the technology industry, creating a string of products like the iPhone and the iPad that have been blockbuster hits with consumers, it is also facing ever more intense competition from giants like Google, Microsoft and Samsung. Some of those rivals have narrowed Apple’s lead or even surpassed the company by some measures.

Mr. Jobs’s leave is certain to cause anxiety with investors and even consumers. Perhaps more than any other chief executive, he is seen as inseparable from his company’s success.

“He may be the most vital C.E.O. of our era,” said Michael Useem, a professor at the Wharton School at the University of Pennsylvania and director of its Center for Leadership and Change Management.

Mr. Jobs is known for his hands-on management style and his obsessive attention to the most minute details of Apple’s products. He is also credited with anticipating the needs of consumers time and again, leading Apple to create one breakthrough product after another.

Mr. Jobs, who is 55, announced his leave on Monday in an e-mail to employees that said he was stepping aside “so I can focus on my health” but would continue to be involved in major strategic decisions at the company.

“I love Apple so much and hope to be back as soon as I can,” Mr. Jobs wrote in the message, which was made public by Apple.

Timothy D. Cook, 50, the company’s chief operating officer, will run day-to-day operations, Mr. Jobs said. Mr. Cook performed the same duties during Mr. Jobs’s medical leave in 2009.

“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,” Mr. Jobs wrote.

Unlike his prior leave, when Apple said Mr. Jobs would be gone for six months, this time Mr. Jobs did not say how long he expected to be out. Analysts said the announcement raised questions as to whether Mr. Jobs would come back to lead Apple.

“It raises the bigger question about whether he’ll ever return,” said Toni Sacconaghi, an analyst with Sanford C. Bernstein & Company.

Medical experts said that recipients of liver transplants often suffer from a variety of medical problems that are not life-threatening.

A person with knowledge of the situation said that Mr. Jobs suffers from immune system issues common with people who have received liver transplants and that, as a result, his health suffers from frequent “ups and downs.”

In recent weeks, Mr. Jobs began a down cycle and slowed his activities at Apple, said the person, who refused to be identified because he was not authorized to discuss Mr. Jobs’s condition. Mr. Jobs has been coming to the office about two days a week and has appeared increasingly emaciated, the person said. He has frequently had lunch in his office, rather than in the company cafeteria, the person said.

During his prior leave of absence, Apple kept details of Mr. Jobs’s health private, prompting criticism among some shareholders who contended that the company had an obligation to be more forthcoming with information.

In his message to the staff on Monday, Mr. Jobs said, “My family and I would deeply appreciate respect for our privacy.”

An Apple spokeswoman, Katie Cotton, said Apple would have no further comment beyond Mr. Jobs’s statement.

Apple’s stock immediately dipped on foreign exchanges Monday, falling 7.6 percent in Frankfurt. Financial markets in the United States were closed on Monday in observance of Martin Luther King’s Birthday.

“It is natural that investors will expect the worse,” said Charles Wolf, an analyst with Needham & Company, noting that Apple has a history of “minimal disclosure” and “obfuscating” details about Mr. Jobs’s health.

Mr. Wolf said that regardless of whether Mr. Jobs returns to Apple, the company would probably continue doing well for the foreseeable future, though its long-term prospects are more uncertain.

“Right now Apple has a management team that is one of the greatest in American business,” Mr. Wolf said. “Whatever trajectory the company is on will continue for two to five years, regardless of whether Steve comes back.”

Still Apple faces increasing competition, especially in the smartphone market, where handsets powered by Google’s Android software recently began outselling the iPhone in the United States. Some analysts said the rise of Android led to Apple’s recent decision to begin offering the iPhone on Verizon Wireless starting next month, ending more than three years of exclusivity on AT&T.

Apple also faces sharper competition in tablet computers. The company’s iPad, introduced last spring, became an instant hit with consumers. But less than a year later, companies like Samsung, Research in Motion and others have introduced or announced a string of credible competitors.

Analysts said that during Mr. Jobs’s 2009 leave, Mr. Cook successfully steered the company as it developed critical products like the iPhone 4 and the iPad.

“Last time, Tim elevated his status with shareholders and employees,” Mr. Sacconaghi said. “The company did very well in Steve’s absence and various constituencies were pleased with that.”

In January 2009, Mr. Jobs went on a medical leave. During the leave Mr. Jobs secretly flew to Tennessee for a liver transplant.

In June 2009, Apple said Mr. Jobs was back at work, and he reappeared in public for the first time in September of that year. While he was energetic and exhibited his unique brand of salesmanship as he unveiled new products during 90-minute event, he continued to look gaunt. Since then, Mr. Jobs has headlined a string of product introductions, including the iPhone 4 and the iPad and a new line of MacBook Air laptops, where he was equally energetic and focused, but still looked frail.

At one such event in July 2010, a reporter asked Mr. Jobs about his health, and he replied, “I’m feeling great.”

In recent months, he has looked increasingly frail, according to people who have seen him.

Dr. Lewis W. Teperman, the director of transplant surgery and vice chairman of surgery at the Langone Medical Center of New York University, said a variety of problems could affect someone with a liver transplant. Dr. Teperman has not been involved in Mr. Jobs’s care and said he had no knowledge of the case.

“It’s very common for transplant patients to have issues that are not life-threatening,” Dr. Teperman said. “We give them very strong, high-powered medications, immunosuppressants, to prevent rejection. It’s a delicate balance, more art than science.”

Side effects from the drugs can make patients ill, and sometimes the regimen has to be changed, a process that can take days and weeks. The side-effects include high blood sugar and diabetes, kidney damage, diarrhea, high blood pressure, high blood fats and cholesterol, rashes and low counts of white blood cells. The drugs leave patients prone to infection.

Rejection of the transplanted liver is also a possibility, but Dr. Teperman said it was extremely rare for a liver transplant to be totally rejected.

The original reason for Mr. Jobs’s transplant was never publicly disclosed. At the time, doctors not involved in his case said the most likely reason was that his pancreatic cancer had spread to his liver. If that was the case, it is possible that cancer has recurred; the anti-rejection drugs can increase the odds of cancer recurrence. A recurrence may be treatable. But so little information has been disclosed that it is impossible to tell, Dr. Teperman said.

“There are lots of bumps in the road with transplantations, and people usually get through them,” he said.

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