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Yes, Jobs' health is investors' business

Apple's resistance to dealing with reality ....

January 15, 2009|MICHAEL HILTZIK

Many years ago, a dear relative of mine had a medical condition that snowballed: It started as serious but not critical, yet with every visit to the doctor, the news got worse -- and got worse faster and faster.

It's still too early to know if that's the pattern we're seeing with Apple Inc. and Steve Jobs, who announced Wednesday that he would take a six-month medical leave from his CEO post. To address the most important point first -- the concern that Jobs is gravely ill -- this is news that nobody wanted to hear. Everyone I know is hoping that the more dire implications of the announcement don't materialize.

That's the question of Jobs' health. On the question of Apple's handling of the issue, the news is equally disturbing. But at least it's something we can examine more clinically.

When I addressed this matter last week, it was already plain that Apple had allowed its institutional arrogance, its culture of secretiveness, and possibly its solicitude for and fear of Jobs to lead it down a path of rank corporate irresponsibility.

The elements were these: 1. Steve Jobs is a uniquely important chief executive. 2. He is a survivor of pancreatic cancer. 3. Speculation about his health and his continued ability to lead the company was rampant and by no means baseless.

Instead of confronting the situation head-on, Apple dissembled. The company didn't even announce Jobs' 2004 cancer surgery until it was over. Last June, when Jobs looked shockingly wan and thin at a public appearance, Apple ascribed his condition to a "common bug."

Last week, when Jobs was unable to make speculation go away about the reason for his absence from the annual Macworld expo in San Francisco, he released a note stating that he had been suffering a "hormone imbalance that has been 'robbing' me of the proteins my body needs to be healthy."

Given that this condition certainly covered the period when he had been supposedly fighting a "common bug," his statement instantly rendered the previous explanation "inoperative," to resurrect a Nixon-era term meaning "a lie."

The tone of last week's statement was characteristically truculent. Jobs groused about having to deal with "another flurry of rumors about my health" and said he was coming clean "so that we can all relax and enjoy the show."

A few investors took this as good news and bid up Apple shares, and in the media advised gossip mongers to (in the words of one) "go slinking back into the shadows."

Jobs' letter to employees Wednesday (in which he said that "during the past week I have learned that my health-related issues are more complex than I originally thought") has now made last week's statement "inoperative." And while the new letter consigned all that was left of Apple's credibility to the dustbin, it didn't solve the fundamental problem that Jobs' health presents for the company: How can it transition to new management?

For one thing, the announcement still leaves Jobs' role ambiguous. He says he plans to "remain involved in major strategic decisions" during his absence. That sounds like he's burdening his designated stand-in, Chief Operating Officer Tim Cook, with about 20 tons of dead weight.

Cook by many accounts is a skilled executive -- his is the first name on lists of potential Jobs successors. But it won't be easy for him to exercise authority over his putative equals and rivals in the organization when many of them may think they can appeal any decision they don't like to the still-leader Steve Jobs. After all, Jobs' letter said he'd be back to take up the reins after June.

Jobs says the Apple board is cool with this arrangement, which only raises the further question: How come? One answer may be that the eight-member board, which besides Jobs includes Al Gore and the chairmen of Intuit Inc., Genentech Inc. and Google Inc., is totally his creature. There's no designated chairman, and on the evidence, no one to take charge in what may well be a management crisis.

In fact, this is the same situation behind much of the financial crisis: CEOs who think they're invincible, and toothless boards doing their bidding.

For years, Apple has maintained that Steve Jobs' health is a personal matter and none of the business of the employees, customers, suppliers and investors who have ridden along as he steered the company to great heights since 1997.

But there's nothing personal in the curiosity that the issue has generated since 2004. It's just business. From time to time, Jobs himself undoubtedly has taken actions in the name of business that have had negative personal effects on individuals.

The consequences of Apple's resistance to dealing with reality are coming home, and this vibrant, important and ever-youthful company should have grown up long ago.

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Michael Hiltzik's column appears Mondays and Thursdays.

You can reach him at michael.hiltzik@latimes .com and read his previous columns at www.latimes.com /hiltzik.

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