Perspective: Why Apple can't send Jobs packing

It's been a memorable month for Apple.

• Wall Street creamed the company's shares after forward earnings guidance left many investors unimpressed.

• Cisco Systems sued after Apple used the iPhone trademark without receiving prior permission.

• Apple assessed a silly surcharge on some notebook customers that only raised more questions than it answered.

• Norway's consumer watchdog declared iTunes illegal because Apple prevents users from playing downloaded songs on other companies' devices.

At any other tech outfit, this would be cause for prolonged nail biting. But I wouldn't get too concerned at the headlines. After all, this is Apple, the longest-running soap opera this side of Days of Our Lives. The company has weathered worse--a lot worse--and has still emerged in fine fettle.

Apple will make up with Cisco, which has little interest in picking a fight over a trademark it couldn't care much about. Maniac day traders who thought Apple shares would soar straight to 120 with nary a timeout will calm down. Besides, the big institutions still remain bullish on Apple's prospects.

What happens when Apple's survival instinct butts heads with the imperatives of corporate governance?

Regarding the surcharge nonsense, even though Apple's corporate public-relations department further botched the situation with a painfully confusing explanation, nobody's going to remember the episode six months hence. As for Norway, which we all love, let's get real: the Norwegians would have far more influence if they declared a smoked-salmon embargo. No nova lox for the morning bagel run? Now that is the sort of prospect that would bring nations to their knees.

Apple's biggest headache concerns the questions surrounding what Steve Jobs did or did not know about the Apple options affair. An internal review discovered irregularities in Apple stock option grants made between 1997 and 2001, including a grant to Jobs. The company is now taking an $84 million charge for misdating more than 6,400 options.

At the same time, a former company attorney reportedly made up minutes of a board meeting that outlined the terms of Jobs' grant at a meeting that never took place.

Apple's board--whose roster includes former U.S. Vice President Al Gore--cleared Jobs of wrongdoing. Press reports say government investigators subsequently interviewed Jobs. It's safe to assume that the conversation extended far beyond his personal views about the future for digital music.

There's no way that anyone outside of the upper corporate echelons of the company knows whether we're talking about a passing tempest or the opening chapter of Apple's version of Watergate.

But ever since this story first came to light last year, Apple and its Wall Street apologists have circled the wagons. They badly want this story to disappear, with understandable reason: other CEOs have been forced to walk the plank simply for the appearance of impropriety. At last count, more than 160 companies (including News.com publisher CNET Networks) were being investigated because of their option-granting policies. If Jobs got forced out, Apple would lose its leader, savior and prophet in one swoop.

Who's next in line? Chief Operating Officer Tim Cook? Marketing boss Phil Schiller? Um, I don't think so. A Jobs resignation would lead to an immediate 25 percent drop in the stock--and that would just be the start of a long time of troubles. Simply put, Apple's future as a company is more tightly bound up with the fortunes of its co-founder than any other company in the computer industry. You take Steve Nash off of the Phoenix Suns, and that squad becomes a .500 basketball team. You remove Steve Jobs from Apple, and you're left with just another company.

So it's not hard to speculate what happens when Apple's survival instinct butts heads with the imperatives of corporate governance. The U.K.'s Financial Times recently ran a column titled "Apple's ethics" (registration required), asking whether Jobs should have been fired by the board for his involvement.

But as long as investigators can't pin Jobs with any criminal activity, Apple won't climb on the horns of that dilemma. Too much is riding on a happy outcome for the board to send its Teflon CEO packing.

Biography
Charles Cooper is CNET News.com's executive editor of commentary.

More Perspectives

[pjianwei]

Jobs has got cancer b4.

Not exactly the greatest news for its long term prospects going by the article. A leader shall not only be judged on his successes on his watch but also after he leaves.

[rapier1]

Something to keep in mind

If a company is defined by a single individual then the company
doesn't have the best long term prospects. If Jobs leaving, dying,
resigning, whatever will lead to a 25% drop in the stock price then
what does that mean about the real viability of the company?
Perhaps we are all overestimating the real value of Jobs but if not
then Apple will eventually have to face soem very difficult times.

[sbwinn]

Job's Cancer

It was a rare, curable, pancreatic cancer. If it had been more
serious, he'd be dead by now.

[The_Dude7]

:D

it will take alot more then this for Jobs to leave.

[zeeboid]

Apple Can Do No Wrong

Or at least thats what the cultish mac users think.

want to Microsoft Bash? Let the Mac user who's company is without wrongdoing throw the first stone.

oh well, at least I can install my copy of Windows on any computer I want. Even ones I build. how's that for "Individual" and "thinking diffrent"???

[BlackMicro]

Oh well

"oh well, at least I can install my copy of Windows on any computer
I want." ...except when I upgrade my machine or try to install it on
my new machine or... blah blah blah

[eldernorm]

Sounds like you are worried!!

I always get a kick out of PC users complaining about Macs.
Hey, if you like your PC, be happy.

OH wait, Apple OS runs on the new Macs as well as Windows.
You should be even happier. Now you can run windows
everywhere. :-)

But now, I see more and more Windows people complaining
about Apples little 5% and growing share. Are you worried?
Why?
Maybe what the Apple guys say is true.

Elder Norm

[calpundit]

Apple apologists?

It seems that the degree to which "Apple apologists" want the
story to go away is equalled, if not surpassed, by the desire of
the current tech power structure to keep the story alive. After all,
there are some 200 tech companies being investigated for stock
backdating. This pro-MS, pro-"old guard" bias is evident in the
lead of your piece. A casual reader would conclude that only bad
things happened to Apple in January, forgetting that

-- Apple posted record earnings for the most recent quarter,
including its first-ever $1 billion profit.
-- That despite its recent stock dip, most if not all Wall St.
analysts have reemphasized their bullish guidance on Apple
stock.
-- Oh, yes, and Apple unveiled a game-changing phone that has
gotten more publicity than all of the stock stories combined.

Steve Jobs is an arrogant jerk. Many gifted people are. If he's a
crook, he should go to jail. But let's not kid ourselves about who
has a real rooting interest in this case.

It's not the "Apple apologists" ... it's all those tech giants who are
still playing catch-up 30 years on.

[YankeePoodle]

IPhone and 6 month wait

There are phones out there in Asia and Europe that will kick the hell out of IPhone. The touch screen telephone is supposed to be in June. I have news for you, touchscreen phones are already available in Europe and Asia. There is only cool factor associated with IPhone nothing ground breaking. Just like a cultish brand, apple will not allow third parties to put applications on its phone platform.

Steve Job committed Fraud, I would like US to investigate him and drag his sorry # to jail.

[john55440]

iTunes - More Than Just Norway (Link)

"Torgeir Waterhouse, senior adviser to the Norwegian Consumer Council, who originally launched the complaint, told the Financial Times he was in negotiations with pan-European consumer groups to present a unified position on iTunes' legality.

Sweden and Finland have already backed Norway's stance, but have yet to take action, and Mr Waterhouse said the campaign was joined yesterday by Germany and France.

"We are satisfied the Federation of German Consumer Organisations and the French UFC Que Choisir are addressing this important issue. It means that iTunes is now being told by more than 100m European consumers to offer them a fair deal," he said."

<a class="jive-link-external" href="http://www.ft.com/cms/s/4367dfae-ac1a-11db-b011-0000779e2340.html" target="_newWindow">http://www.ft.com/cms/s/4367dfae-ac1a-11db-b011-0000779e2340.html</a>

[Jay Jennings]

Norway Being Pro-MS

And do those "good" music services allow me to buy their music?
Not that I've seen, because I'm a Mac user. Why aren't those
services penalized for locking me out?

[eldernorm]

MS for sure

Hmmmm, in my opinion, this is a BIG MS issue.

Plays for sure songs CANNOT be translated to iPods or Macs.
Period. Buy Norway does not care.

Zune will not play on plays for sure. Period.

Apple iTunes songs are the only ones that can be converted
LEGALLY to play on any player, even Zune.

Are the Norway people STUPID or just corrupt?? How many MS
dollars did it take to get them to go after Apple first??

Sorry, by any reasonable consideration, this approach is just so
full of legal holes that it smaks of politics or greed or corruption
or all three.

JMHO.

Elder Norm

[kylegas]

Why would they want to?

Hello Charles Cooper,

Why would Apple want to send "Jobs Packing" as your article suggests they might? He's the linchpin keeping that company on the uptrack, stock options issues or no. Do you have some sort of information to backup your claim that the Apple board wants Jobs gone, or was this just a pure "what if" scenario?

[tundraboy]

Apple stockholder's quandary

No doubt the stockholders are the damaged party in Apple's options backdating. On the other hand, as a stockholder who is interested in the continued (stellar) success of the company, nobody will be doing me any favors if Jobs is forced out. This is not sentimentality here, just cold-hearted analysis of what I think is best for the continued growth of the value of the stock.

Apple will probably continue to prosper even without Jobs, but I don't really care to find out right now. Not while the company is in the middle of transitioning from a niche software and computer maker to a multi-line consumer electronics &#38; entertainment coompany.

Of course if criminal acts have been committed, the conversation changes totally.

[Jay Jennings]

Criminal Acts? So What.

So what if criminal acts were committed, does that change the
fact that Apple and shareholders are better off with Steve Jobs at
the helm?

If he committed a "crime" (as determined by a bunch of suit-
wearing power-hungry politicians) then why exacerbate the
situation by hurting all the stockholders?

Just create an oversight team who can monitor his financial
actions for a while and let him continue to work magic on his
company.

[Brian OConnell]

Apple

Is C-Net owned by Microsoft? It seems they never miss an opportunity to bash Apple yet they're constantly propping up Microsoft.

[Vegaman_Dan]

CNET isn't biased for or against Apple

Look at the number of anti-Vista stories and recommendations currently being posted. They don't even suggest you install Vista at this point. That's not very pro-Microsoft.

Apple ads are on nearly every page loaded on CNET. That's not biased either. I see Microsoft and other ads too.

I think you're only reading in what you want, Brian. Go back to drawing naked bunny art. :)

[mbenedict]

One good reason to oust Jobs

Apple is too dependent on one person. What if Jobs falls down the stairs and breaks his neck? Apple employees and shareholders deserve better.

Jobs should do the right thing and plan his own succession now, much like Bill Gates did in becoming Chairman while delegating the CEO job to Ballmer (and recently the Chief Software Architect role to Ray Ozzie.)

Doesn't mean Jobs can't still be the religious prophet, messiah, whatever it is Apple fans worship him as.

[Macsaresafer]

Laughable

Bill Gates doesn't compare to Steve Jobs. Steve is an innovator
who cares as much about quality as innovation. Bill is just a rat
leaving the ship before the crew knows it's sinking. He's ridden
the OS monopoly that IBM handed him as far as it can be ridden,
and he knows it. Microsoft has two successful products and
they're both becoming increasingly irrelevant: Windows and
Office. When those cash cows stop milking, Microsoft is done. It
will take a while before the rank and file know it, but Bill was
smart enough to see the writing on the wall back when he
announced he would be leaving. The whole Vista debacle is the
beginning of the end.

Sure, Steve should plan for the day that he leaves Apple. He
probably has, but it's doubtful any of us will know until the time
comes. In any case, you haven't given any reason to oust Jobs.

[eldernorm]

Why?

Why is everyone (except those who enjoy Apple products) so
concerned about Steve Jobs??

Does Apple threaten the PC and windows market that they
should be so concerned???

What if the Zune does not sell? LOL

What if VISTA does not sell until SP1, or two?? :-)

What if Microsoft cannot force the PC makers to install VISTA on
their machines???

Gee, shouldn't we all worry and conplain about Microsoft??

LOL,
JMHO
Elder Norm

[discern]

No no no! You've got it all wrong.

WE should be boycotting Norwegian salmon. The Norwegians
poison thier rivers to prevent encroachment of competitive
species. Their salmon farms cause a net protien deficit (more
fish must be harvested from the ocean to feed these salmon
than is produced by the salmon themselves)... not to menton the
pollution. The (Wild) Alaskan salmon fishery is, on the other
hand, extremely sustainable.

Anyway back on topic... If you want to suggest a way Norway
could have more impact than shutting down the iTunes Store,
how about suggesting an oil embargo? They are now the country
with the highest per-capita income and highest standard of
living, and it's all come from their oil profits.

[sbwinn]

Let's fix the bullet points

? Wall Street creamed the company's shares after forward
earnings guidance left many investors unimpressed.

That should read: Apple stock surged upward on the iPhone
announcement, profit taking kicked in, and now the stock is
right back where it was.

? Cisco Systems sued after Apple used the iPhone trademark
without receiving prior permission.

Ok, I can't fault this one. It is essentially factual without too
much in the way of slanted language. We all know just how
much Cisco cared about the iPhone trademark. If memory
serves Apple registered iphone.com years ago.

? Apple assessed a silly surcharge on some notebook customers
that only raised more questions than it answered.

Sarbanes-Oxley is ridiculous and the charge for upgrading
Apple's laptops is a case in point. If anyone thinks Apple WANTS
to nickel and dime people and that $1.99 per update is
somehow worth all of this bad press, they are CRAZY!

? Norway's consumer watchdog declared iTunes illegal because
Apple prevents users from playing downloaded songs on other
companies' devices.

News Flash! A(nother) European socialist nation doesn't like
capitalism! I know I'm stunned.

So, just to recap: the stock is not "creamed", it is really the
Government's "silly surcharge" not Apple's, and European
socialists (so far Norway, France, and in the future probably
several more) don't like iTunes.

I appreciate that the article goes on to downplay each of the
bullet points, but why hype them up in the first place as if
everyone should be running for cover?

The stock options backdating is an issue, but not a big one. The
tech press is making a much bigger deal about it than it really is.
This just in! Stock options backdating is a widely used practice!
Flash! You take your accounting charge and move on! It's
probably not a great practice to continue. Film at 11.

[john55440]

Speaking of Apple's stock...

So far today, Apple is -1.33% and Microsoft is +1.05%, according to Bloomberg.

[jmdecombe]

A tempest in a teapot

As you say, this is just another episode of the longest running
soap opera in the computer industry. I mean, the story of Apple
should be available on the iTunes Music Store, in the TV Shows
section.

All will most likely be forgotten within six months. Steve Jobs
has given his take on the backdating situation and I believe him.
Besides that, it can only be pure speculation on anyone's part.
Some ex-C-level people may however get in serious trouble.

Nobody wants to really see Steve Jobs leave, even competitors in
the industry because he is so gifted at changing the game and
opening new market opportunities for everyone. He is the king,
not of invention, but of innovation, no doubt.

[SystemsJunky]

Blah blah blah

"He is the king,
not of invention, but of innovation, no doubt. "

Ah, he's not either. John Carmack is a real innovator in the true sense of the word..ppl throw the work innovator around a little too much..The iPod isnt innovative, the Mac is not either...

[YankeePoodle]

I just want to imagine

I just want to Imagine if Bill G, was in some kind of options-backdating. That would on the frontpage of every newspaper day-in and day-out. The media did not take an aggressive role in this backdating scandal, may be because of its sympathy, hip for, or whatever it has for Apple Inc.

Dont we believe in justice, and dont we really think that Mr.Steve Jobs even though he is an avatar of God for Apple, committed a fraud. It sounds ridiculous that Steve Jobs got the options backdated and he is Cleared of "any" wrongdoing.

There is lack of accountability so prevelant that people think they should be exempted given their rock-star status.

This is one more example of lack of accountability and the sorry state of corporate governance. I thought we all learned the lessons from Enron.

[retiarius]

Microsoft's backdating is well known

Here's a cnet article about it:

<a class="jive-link-external" href="http://news.com.com/5208-1047_3-0.html?forumID=1&#38;threadID=23868&#38;messageID=223069&#38;start=-1" target="_newWindow">http://news.com.com/5208-1047_3-0.html?forumID=1&#38;threadID=23868&#38;messageID=223069&#38;start=-1</a>

[rapier1]

One other thing

All of your talk about the imminent demise of MS ignores one
small factor. They have enough cash on hand so that they
wouldn't have to sell a single copy of Vista or Office and still be
able to continue as is for 5 to 8 years. As much as you'd like
them to they aren't going anywhere any time soon.

What's funny is that if Apple was in the toilet there is a much
better chance MS would be broken up and you'd see real change
in the market. However, with the continued strength and growth
of Apple MSFT is in *less* danger of a significant market altering
event then they have been in almost 10 years. A happy Apple is
one of the best strategic assest for MSFT around. Irony is a b*tch
ain't it?

[rapier1]

Actually a reply to 'macsaresafer'

I hit the wrong damn link. What did I say about irony being a b*tch?
sigh.

[Macsaresafer]

I didn't say MS's demise was imminent.

Large corporations do things at a glacial pace, that includes
imploding. Of course, if they didn't sell a single copy of Vista or
Office, it would be a lot less than 5 years before their stock tanked.

I accept that they won't just disappear. I think the long, slow
decline into oblivion that awaits them is possibly an even more
painful, and fitting end.

[catbus99]

Jobs IS Apple

With Apple's turnaround and continuing innovation under his leadership, Jobs is one of the few corporate execs who is actually worth an eight-figure income.

This is an old (and slow) link, but I think it says it all: <a class="jive-link-external" href="http://www.macdirectory.com/newmd/mac/pages/REVIEWS/jobs/" target="_newWindow">http://www.macdirectory.com/newmd/mac/pages/REVIEWS/jobs/</a>

[rapier1]

This isn't a good thing though

If Apple is Jobs and vicer versa then what happens when Jobs does
leave? He will not, he cannot, be around for ever. No matter how
much he is deified he is still mortal and will eventually die.

[ogcreid]

Jobs will run Apple from Jail if he has too

They aren't going to fire Jobs. If he is found guilty he will position it
as a technicality he did not understand, pay the fine, apologize ,
and stay in the job.

Actually I think Rove has had the prosecutor changed to go
aggresively after embarrasing Al Gore if posssible.

[Vegaman_Dan]

Well, it does sort of fit, Jobs and Gore

Jobs has been heard to say he invented the personal computer.

Gore has been heard to say he invented the Internet.

They go together quite well. Neither statement is true and was taken out of context, but both comments were by the original owners. Straaaaange bedfellows.

[scweezil]

Options backdating

MS backdated options throughout the nineties
<a class="jive-link-external" href="http://www.google.com/search?" target="_newWindow">http://www.google.com/search?</a>
client=safari&#38;rls=en&#38;q=backdating+options
+microsoft&#38;ie=UTF-8&#38;oe=UTF-8

If Apple's FairPlay is under fire in norway...all other forms of
DRM should be also. This is a non-issue. The iPod plays plenty
of different standard formats. You never have to buy one song
from iTunes &#38; apparently most people don't. It's pretty easy to
strip the DRM.

This is more disturbing:

On Friday the ECIS described Vista as ?the first step in
Microsoft?s strategy to extend its market dominance to the
Internet.? Microsoft?s XAML markup language inside Vista was
designed to replace HTML (Hypertext Markup Language), an
industry standard used for publishing material online, it claimed.

XAML is designed to be dependent on Windows, and therefore
not interoperable with other systems, ECIS said.

In addition, Vista and Microsoft Office 2007 will introduce the
Open XML file format called OOXML in a move to replace the
ODF industry standard.

?Unlike the ODF file format which operates on multiple vendor
platforms, Microsoft?s OOXML today only runs seamlessly on the
Microsoft Office platform,? ECIS said.

?With XAML and OOXML Microsoft seeks to impose its own
Windows-dependent standards and displace existing open
cross-platform standards which has wide industry acceptance,
permit open competition and promote competition-driven
innovation,? said Thomas Vinje, a partner at law firm Clifford
Chance and legal advisor to ECIS.

?The end result will be the continued absence of any real
consumer choice, years of waiting for Microsoft to improve ? or
even debug ? its monopoly products, and of course, high
prices,? he added.

[mbenedict]

In the 90s????

Welcome to 2007!!!

In 2002, a little piece of law called Sarbanes-Oxley was passed, and backdating options more than 2 days became illegal.

Maybe Apple is still stuck in the 1980s? Where's that Apple ][e ?

[MACchine]

Then they have to get rid of him now before it gets worse ...

If getting rid of him is too costly then they MUST DO IT NOW before it gets worse.

30 years from now is SJ going to roll out in his Apple nuclear powered robotic legs and do a flip and tell everyone, "JUST ONE MORE THING", the Apple hearing aid inegrated wearable personal computer !!!

[sakcee]

Apple is Jobs

Apple is nothing with Jobs

[nmehta0]

You Fools - You would be left with Ballmer and Gates!

I am simply amazed at the silly comments by people on this site.
Do you really want to send Apple to Jail for greed and wrong
doing? What wrong doing are you talking about? Remember
that Jobs has taken $1 for salary for years. What does Larry
Ellison take home? Mark Hurd? The crowd at Dell? Think for a
minute before you write silly posts.

Now lets come to the products themselves. Please take a close
look at what Microsoft produces, even with their latest Genius
OS - VISTA? Have compared it to Tiger, let alone Leopard?

You've got to be kidding. There are few true inventors left in the
consumer PC business. Jobs is one of them. Lets leave him
alone.
Nimish

[Andy kaufman]

If Apple goes out of business

we still have Linux and *BSD Unix.

<a class="jive-link-external" href="http://www.pcbsd.org/" target="_newWindow">http://www.pcbsd.org/</a>
<a class="jive-link-external" href="http://fedoraproject.org/" target="_newWindow">http://fedoraproject.org/</a>
<a class="jive-link-external" href="http://www.ubuntu.com/" target="_newWindow">http://www.ubuntu.com/</a>
<a class="jive-link-external" href="http://www.gnustep.org/" target="_newWindow">http://www.gnustep.org/</a>

Since Mac OSX is based on *BSD Unix, Mac Users can easily switch to PCBSD Unix and run GNUStep on it to look like OSX with an Aqua skin from GNOME. You really won't notice a difference. Apple borrows so much code from open source projects like *BSD Unix, that most OSX programs can easily be converted and recompiled to run on BSD Unix or Linux. XCODE is based on GCC, Aqua is based on GNOME and KDE, Safari is based on KHTML, etc. All of those things existed before Mac OSX was even thought of.

[toosday]

Celebritity CEOs Make Me Uncomfortable

I've never felt comfortable when a CEO is BIGGER than the company
he/she works for. That's why I'm glad Bill Gates is stepping down
his "day-to-day activities". (Although I don't think he's been bigger
than Microsoft in quite a while.)

The best companies are well-oiled machines that can keep on
running with or without their current leadership. I'm unsure if
Apple can survive without Steve Jobs. It'd be interesting when he
does finally step down.

[i_made_this]

The primary reason Apple can't send Jobs..

...packing is it is he along with his old colleague &#38; friend the CEO of Google who sits on Apple's Board just as Jobs sits on Google's that, together, will arrange the merger and or acquisition of Apple and Google.

[Andy kaufman]

Apple is the new Enron

because these are the warning signs that Enron had, before their CEO screwed everyone over and killed the company.

If Apple won't get rid of Jobs due to all of these issues with him, Apple will become the next Enron.

[djchrysys]

Jobs and Apple

Ok so Jobs has Gore who is a member of one of the most corrupt presidents party since I don't know when on his side, when are people going to wake up. Apple and MS both are screwing things up, makes ya kinda wonder if Jobs and Gates meet in secret to see how much havoc they can cause and look like bitter rivals hmmm sounds too much like an episode of CSI Miami but both companies have been the center of massive scandles and yet the money keeps on rollin in. I for one would swear off both companies but as we all know they have wormed thier way so far into the technology we use and depend on that even work would be impossible. I am so sick of rich people getting away with murder practically and smiling about it and if I or any other ordinary person did just what they did we would rot in prison for life. Give the little guy a break big corporate America is killing our image and will kill this nations economy, not to mention the consumer will eventually get sick of the poor business ethics of all these bloated money grubbing CEO's. Really are people happy spending the money they make to just barely get by on what Jobs, Gates and so many others seem to think we should have crammed down our throats while they get so rich they couldn't spend it all if they tried and still think they need to steal and cheat to get more?

[djchrysys]

so true

Apple was so uptight about upgrades and users doing things to the Imacs that they bought that you had to have a special tool (also known as a mac cracker) to get into the Macs. Atleast with a pc anyone with common sense and a screwdriver can upgrade their machine rather than pay some tech $75 an hour to do it or have to buy a new one every time they update the hardware since there really is not much of an upgrade option with most Apple hardware anyways.