The tech industry received a shock this morning after Apple announced chief executive Steve Jobs would take another medical leave of absence , in a move similar to the one he made two years ago while battling pancreatic cancer.
The announcement sent Apple shares plummeting in after-hours trading in Europe, with investors understandably fretting over the direction of the company.
Chief operating officer Tim Cook will take over day-to-day operations, as he did during 2008-09, according to a press release issued by the company.
Jobs sent an email to all employees, saying that he will remain as chief executive and be involved in “major strategic decisions”.
“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,” Jobs said.
“I love Apple so much and hope to be back as soon as I can. In the meantime, my family and I would deeply appreciate respect for our privacy.”
Jobs’ leave of absence comes at a critical time for the company. Various reports and rumours suggest it is about to announce a new subscription model for the iPad, along with an announcement from News Corp regarding a new daily publication for the tablet.
Jobs was rumoured to be scheduled to appear at the News Corp announcement, but news of his absence has put that speculation to rest.
Apple is also expected to launch a brand new iPad in the next few months, along with updated iPhone and iOS releases in the middle of this year. These are significant product releases, as a large bulk of the company’s revenue comes from its iOS devices along with app sales.
As a result, investors are clearly worried about the tech giant – shares dropped over 9% or $US20 in Germany overnight, despite the company making the announcement on a non-trading day in the United States.
However, some analysts have pointed out the company has no need to be worried. Jobs took a similar leave of absence two years ago after contracting pancreatic cancer in 2004. He underwent a liver transplant, and made a full recovery which led to his return.
During that absence, Cook took over day-to-day operations and oversaw some of the company’s biggest announcements, including the launch of the iPhone 3GS.
But despite proof the company can run day-to-day operations without Jobs, there are still questions surrounding how Apple would survive if Jobs were to never return – he is one of the company’s original founders and is credited with turning the company around from near-bankruptcy in the late 1990s to the largest tech company in the world with a $US300+ billion market capitalisation.
He started Apple in 1976 with co-founder Steve Wozniak. After listing in 1980, Apple debuted the Macintosh in 1984 with uncommon features such as a disc drive and a mouse.
But in 1985, following a leadership struggle within the company, Jobs resigned.
During the next 10 years, Apple made a series of landmark innovations, while Jobs founded NeXT Computer.
But during the 1990s, Apple’s position in the market began to worsen. A series of product flops saw it lose market share next to Microsoft, whose Windows platform was taking over the personal computing market.
In 1996, Apple was at a crossroads. Gil Amelio took over from Michael Spindler as chief executive, and attempted to make several changes – starting with employee layoffs and changes to the Mac operating system.
But in 1997, Apple stock hit a three-year low, and according to several testimonies was merely months away from bankruptcy. Jobs, who had that point had become an Apple advisor after the company bought NeXT, became interim CEO.
Jobs is then credited with turning the company around with a new iMac line, along with the introduction of the iPod, which virtually changed the personal music format forever. Apple’s products also adopted a sleeker, more modern design under Jobs, compared to the rigid and square-based gadgets of the 1990s.
Jobs has given no indication of when he may return.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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