Buffett: Apple should have disclosed Jobs' surgery
Though Apple has chosen to remain quiet about the health of CEO Steve Jobs, a prominent investor criticized the handling of the situation.
In an interview on CNBC Wednesday morning, Berkshire Hathaway CEO and iconic investor Warren Buffett said Apple should have disclosed the seriousness of Jobs' illness, describing it as a "material fact" for shareholders of the company.
"If I have any serious illness, or something coming up of an important nature, an operation or anything like that, I think the thing to do is just tell the American, the Berkshire shareholders about it. I work for 'em. Some people might think I'm important to the company. Certainly Steve Jobs is important to Apple. So it's a material fact. Whether he is facing serious surgery or not is a material fact. Whether I'm facing serious surgery is a material fact. Whether (General Electric CEO) Jeff Immelt is, I mean, so I think that's important."
Buffett's criticism--which joins a growing chorus--resonates more than others perhaps since he has dual roles as the face of his company as well as an investor in others. In this case, he's clearly taking the side of the investors. A material fact, as he references, is information necessary to make an informed decision. For Apple investors, knowing how sick Jobs actually was--forcing him to take a six-month leave of absence and receive a liver transplant two months ago--could arguably help them decide whether to put their money in Apple stock.
However, Apple has wiggle room since there aren't strict legal guidelines for companies to follow in making decisions about how and what to disclose involving the health matters of their executives.
This is also not the first time Apple has kept quiet about the status of Jobs' health. In 2004, he hid a diagnosis of pancreatic cancer for nine months, secretly undergoing surgery, and not revealing it to employees and shareholders until after the fact.
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica. 
I do own stock in Apple and I have to say with or without him the company will go on.
They are not asking if he has erectile dysfunction they are asking for very basic information.
Imagine if you have 100 shares in Apple stock at over $130 each and this man dies from a procedure you didn't know about and all of a sudden Apple stock goes from $132 to $87. You just lost a huge amount of money which means less money to provide to your family all because the company wanted to be greedy and keep their stock high by failing to disclose a simple piece of information.
Apple has already proven that they need Jobs more then he needs them.
"The Company?s success depends largely on the continued service and availability of key personnel." (Source: SEC 10-Q, Item IA, "Risk Factors", filed 4/23/09).
It's about the seriousness of the illness in question and the subsequent surgical procedure, the risks involved, the chance that he might not return (e.g., dying on the operation table, suffering from a massive post-op infection). We're not talking about Steve going to the podiatrist to get some corns removed. We're talking about a liver transplant.
Of course they've been fine for 6 months...it's only 6 months. If all of a sudden news came out that Jobs died during the operation, AAPL would tank so fast your head would spin. If you deny that, you're entirely ignorant of the actual workings of finance.
Jobs was the one that pulled them out of the rut.
Without Jobs they would of never been able to compete with Microsoft and probably would have already filed for bankruptcy.
As for competing with Microsoft if Apple where to fail another company would step up and try that's the world of business when one falls another arises.
Jobs is not Apple, Jobs is a CEO which means he has some type of vision for where to take the company and what people to put in place to get there even if he is not there.
That is business.
What did his replacement provide while he was away? Absolutely nothing.
Shareholders are entitled to know if the guy running the show and the one who has saved the companies ass is at risk of dying.
Apple knew if it disclosed the seriousness of Steve's health there would be a run on the stock. The people making these "judgement calls" ("We really care about Steve's privacy!") at Apple stand to gain or loose millions of dollars based on the valuation of their stock. Hmmm, that seems like a good decision making tree. Luckily for them (so far) there weren't additional complications or they would have been tied up in courts for years. Imagine if the headlines started with "Steve Jobs has slipped into a coma and doctors fear....." in June.
If you want to go public and make a huge fortune by people buying part of your company you can't pick the good pieces (We sold 1 million new units of 3GS woooo peee!) and ignore the bad ("Oh our CEO has a couple of personal issues - mind your own business")
Without Jobs' manic attention to detail, Apple and Apple products will not be what we have come to admire.
Actually, yes, I have seen many demos given by Steve Jobs that went wrong. I was present for these ones:
1) at Macworld SF in 2000, Jobs couldn't get iTools to work. Server issues, apparently.
2) at MW SF 2001, Jobs had issues with the flat-panel iMac. This was also the scene of the infamous camera-throwing incident. It wouldn't turn on, so he tossed it off the stage. It hit the floor and the batteries spilled out.
3) at MW SF 2007, Jobs had problems with his clicker (AKA presentation remote). He was clicking furiously, but the slides wouldn't advance. Luckily, someone handed him a backup clicker. Otherwise, I think he was about to blow his top.
4) at MW SF 2008. Jobs couldn't get the AppleTV to show Flickr photos. Hard to say whether it was an issue with the AppleTV or with Flickr. However, the AppleTV was able to show photos from .Mac and videos from YouTube, so it's likely that Flickr was the guilty party here. Jobs also had several mental glitches, notably when he kept saying "Tiger" when he meant to say "Leopard".
I have probably witnessed more, but these are the ones that come to mind. Looking back, none of these were catastrophic. Not like some of the train-wreck demos that Bill Gates has suffered through. Jobs dealt with most of these incidents in good humour before falling back to backups systems (which _did_ work properly). The only time that he looked noticeably upset was with the wonky digital camera because it was nearly a showstopper.
Hey!... I just found a compilation of MW bloopers. You can see some of the ones that I've described at:
http://www.youtube.com/watch?v=_QwKmFGIb-M
Is a publically traded company required to disclose anything more than the finacial statements at their earning calls as far as investors are concerned? I've never been a CEO or legal council for a corperation so I really do not know the answer to this."
I have asked that question several times over the last few months, I asked it earlier today, someone else asked a similar question today. However, I have have not yet seen an answer to that question. Maybe this time we will get something other than the opinion of a barracks room lawyer.
You would get a fuzzy answer because it's all doing to come down to companies have to disclose material facts. What a material fact is depends. Enron clearly didn't disclose a lot of material facts. It kep their stock artificially high.
Like it or not, Jobs is Apple and the market would punish Apple stock if he left. Never mind all the internal talent Apple has. That makes it a material fact when he has a life threatening illness that requires a transplant. If the interns all came down with swine flue. It's not material. Some random VP? Maybe material, maybe not.
20/20 hindsight when you get it wrong is about the only sure wasy to determin what's mateiral.
Its not like the shareholders are asking if he has hemoroids.
Here's full disclosure: He could die. So could you. So could I. So could anyone. If you think that the company is so weak that one man could bring you to financial ruin, I'd suggest you don't invest in that company. Whining seems to be a much more common pastime in this country than prudent action. It's the stock market, not government insured bonds. If you're looking for certainty in your investments, might I suggest funeral homes and tax preparation businesses?
Personal, this is the key word, especially when it comes to health problems. It is none of anyone's business.
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Wrong answer. When you are a leader of a public company it is the shareholders business. Simply put the board was wrong in not communicating what was happening...... again.
It's the business of every shareholder Apple has. They need information to make decisions. A key decision could very well be if Job's can't run the comapny to sell the stock.
You don't have to like it but it's reality. If your business partner gets terminal cancer and can't help you run your business. You have to adapt. If your partner gives you a buch of excuses while your partnership goes bankrupt from the lack of help, he's not held up his in of the partnership.
It's not the illness. It's the obligation to the shareholdersand public (and it's a public corporation, not a private one) to dislose that needs to be met.
You dont need to be a layer to undersand the principal, or to look it up on the net.
But, seriously if I could just ask a simple question here. Is Steve Jobs required by any law or regulation of the FTC to even report his health to Apple and/or it's board. Is any employee required to go into detail about medical problems to their employer? Because no matter what you feel personally this applies equally to all employees of publically traded companies not just Steve Jobs. Unless of coarse California or the Federal Government granted Mr. Jobs his very own law. I've read comments in threads on various sites where people are saying that shareholders should have complete access to all of his records, medical, financial, legal etc.. and that is should be made available to the public to view at all times because he is an employee of a publically traded company. Fine make it a law or FTC regulation that employees of publically traded companies have to do so.........for every last employee, right down to the night janitor. There should not be any discrimination between positions in the company.
People say that Apple is different because Steve Jobs is Apple, but I say that same thing was said about Microsoft and Gates or about many many other companies over the years.
Does it matter if it's public or private? Yes- when the company has made such an icon of Jobs as the representative of all things Apple, then it's an important thing to consider.
Apple has handled this whole thing poorly.
In case you hadn't noticed the title of the article or hadn't bothered to read it, the entire point was that Apple had been handling this poorly and full disclosure is warranted. You don't have to agree with me, but at least acknowledge that the media is the one bringing up the point. I happen to agree with it.
"'I'm sure they don't know what they're doing"
Again, read the article. Read up on the background to the story. Even the SEC is inquiring why this information has been quietly kept hidden away. Do a Google or Bing or whatever search you want and you can be informed about a subject to make comments from an educated viewpoint.
I'm sorry if you feel threatened by the truth, but that's what it is. Sometimes the truth hurts.
I'm afraid I cannot claim the title of King of FUD on these boards. I will claim the title of "Exposer of Lies", and "BS Challenger" though.
@protagonistic:
As I do not have any relation to CNET, their financial situation, or speak for that company, then my medical condition does not relate in any way. But since you asked, I have a slight head cold currently. Got a tissue?
Are you ready to tell all those groups they are wrong as well? Looks like it's news and information that people want to know the answer to.
You don't have to like the situation, but you do have to acknowledge it.
Jobs is synonymous with Apple and more importantly with its success. During the Sculley years (sans the ousted Jobs) the company reached a point of profitability and then promptly faltered for a number of reasons. It was at that circling-the-drain moment that Steve Jobs came back to Apple and is credited with nothing short of being some messianic figure that delivered them from the brink. His arrogance, energy, enthusiasm and charisma instantly forge a love/hate response that has both invigorated and revitalized Apple to new heights. It's not that he alone is responsible for Apple's ascent but he's the galvanic force at its core. In Jobs, Apple has a tirelessly beguiling cheerleader that everyone looks to regale them with wonder about the newest Apple seeds. He is the heart and soul of that company.
Sorry Mr. Buffett, I know you've done great things but you'll never garner a following anywhere close to that.
- by eswinson June 25, 2009 12:31 AM PDT
- We have the right to privacy of our health and medical conditions. Even US presidents have had secret procedures and operations while in office without disclosing it to the public. If you choose to release that information or not is a personal choice that no company can decide for you. Regardless of what investors want.
- Like this Reply to this comment
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Showing 1 of 2 pages (59 Comments)Like it or not, Jobs and Apple will do what they want and the rest of the world can debate it ad nauseam. If we start letting investors decide that protecting their investment means violating a person's rights to privacy where will it end? Do we tell Steve he can't fly in a private plane, drive himself, eat fatty foods, consume too many carbs or has to work out 3 times a week because he may die and Apple will spin out of control and become "beleaguered" again?
Steve may have vision but he built a good team to execute it. Would it be 100% the same without him? probably not, but it would go on and still be successful and who knows, maybe even better.
Buffett should take his own advice to investing and look at the whole business before investing. If you think the business is all about 1 person you should feel uncomfortable with that regardless of their health. If not, roll the dice and and ride it as long as you can.