Apple

Apple CEO Steve Jobs briefly addressed his state of health onstage at an Apple event last October.

(Credit: James Martin/CNET News)

Steve Jobs is on track to return to the helm of Apple this month after nearly six months of medical leave, according a report in The Wall Street Journal that cited unnamed sources.

Jobs announced in January that he would be stepping down temporarily from the chief executive post while recuperating from a hormone imbalance, and a return to the company this month could coincide with an appearance at the Worldwide Developers Conference, which opens Monday in San Francisco. The centerpiece of the conference is expected to be the App Store and the new features of the iPhone OS 3.0, but there has also been speculation that Apple will unveil a new iPhone as well.

Jobs, 54, has been the subject of heated speculation regarding his health since last June's Worldwide Developers Conference, when he appeared to have lost a great deal of weight. At the time, Apple insisted that Jobs' health was a private matter but revealed in early January that Jobs was suffering from a hormone imbalance that was impeding his body's ability to absorb certain proteins.

"He was one real sick guy,'' said a source whom the newspaper described as having seen Jobs in recent weeks. "Fundamentally he was starving to death over a nine-month period. He couldn't digest protein. (But) he took corrective action.''

Last week, Apple co-founder Steve Wozniak told the Journal that Jobs seemed healthy and energetic.

In August 2004, Jobs underwent successful surgery to treat a rare form of pancreatic cancer, which sidelined him until September of that year. Much of the speculation over the past year had been over whether that cancer had returned.

Tim Cook, Apple's chief operating officer, has been running the company during Jobs' absence. Apple has said Vice President of Marketing Philip Schiller will deliver the WWDC keynote address, assuming Jobs' customary role as he did at the Macworld conference earlier this year.

Valleywag is reporting that Apple CEO Steve Jobs is undergoing surgery at Stanford Hospital on Monday.

The report did not explain what type of surgery Jobs might be having. It cited a secondhand account passed along from a employee at Stanford.

Jobs is currently on medical leave from Apple while he recuperates from health problems that have caused him to lose significant weight over the last year.

Bloomberg reported two weeks ago that Jobs was considering a liver transplant. A Stanford Hospital representative would only say that "due to federal patient privacy laws, we're unable to provide any information on any patient."

Apple declined to comment on what a representative called rumors and speculation.

It is a hoax, Wired reported Thursday -- an article that looks like a story on Wired.com and that claims Apple CEO Steve Jobs has had a heart attack.

"A widely-circulated URL which points to an image that purports to be a wired.com story about Steve Jobs health is a hack job," Wired.com said. "We won't provide the URL here but the Twitterverse quickly surmised that the item was not correct." It appears to have first been reported by Mashable.

Someone created a legitimate-looking Web page using Wired's public upload image viewer, which generates a page containing an image under a Wired logo banner, Wired.com said. The hole has been patched, the news site added.

While characteristics of the fake post--such as the Wired logo, byline, and accompanying related stories list--make it look legitimate, the post is plagued with misspellings and grammatical problems.

Rumors about Job's health have been a big deal for the last 12 months, including a fake news item in October about Jobs purportedly having a heart attack. That allegation was reported on CNN's iReport citizen journalism site and led to a drop in the price of Apple stock.

Jobs, who had surgery for pancreatic cancer in 2004, announced this month that he will take a medical leave of absence to treat a hormone imbalance.

Mashable got a screen shot of the fake Wired.com page with the Steve Jobs hoax report.

(Credit: Mashable)

Securities and Exchange Commission investigators are reviewing the way Apple handled the disclosures surrounding the health of CEO Steve Jobs, according to a Bloomberg report citing a person familiar with the matter. Earlier this month, Jobs announced he would take a six-month medical leave.

Apple, whose CEO's health has been a concern to investors over the past six months following his gaunt appearance at the Worldwide Developers Conference in June, announced in mid-December that Jobs would not be speaking at the January Macworld and that Apple would not participate in the event going forward.

At the time, Apple said Jobs would be sitting out Macworld and that its marketing chief would fill in. Then, on the eve of Macworld, Jobs disclosed that he had a hormone imbalance that was "straightforward" in its treatment.

A week after Macworld, Jobs announced new information had come to light regarding his health and it was more complex than earlier thought and that he would be taking a six-month medical leave of absence.

According to the Bloomberg report on Wednesday, SEC investigators are looking into whether Apple's previous disclosures misled investors.

Apple has been enshrouded in controversy over its disclosures regarding Jobs' health, with a number of investors expressing frustration that such disclosures did not come sooner given Jobs' increasingly gaunt appearance.

Apple's share price has also suffered a bout of turbulence with each news report and company disclosure regarding Jobs' health; the iconic leader's vision is considered paramount by many investors in driving the company into new markets and products.

In 2004, Jobs underwent treatment for a rare form of pancreatic cancer, which he has said was successfully treated.

Last week, Bloomberg reported that according to people "monitoring his illness" Jobs is weighing his options regarding a possible liver transplant because of complications following his cancer treatment.

A spokesman for the SEC declined to comment on whether the agency was reviewing Apple's actions regarding Jobs health disclosures.

The SEC does not disclose its investigations unless an enforcement action is taken either through the courts or with an administrative law judge.

Apple was not immediately available for comment.

Apple CEO Steve Jobs introduces new MacBooks in October, his last public appearance.

(Credit: James Martin/CNET News)

Apple CEO Steve Jobs' disclosure that he'll have to take some time off to tend to his health did not clear up any of the mystery surrounding exactly what is ailing the man.

By any measure, Jobs has lost a lot of weight over the last year. He has only said that he is suffering from some sort of hormone imbalance that is preventing his body from properly absorbing protein and therefore is causing weight loss. The problem has apparently become "more complex" in the last several days.

Let's look at what we know and what we're hearing.

What we know

Jobs underwent surgery in August 2004 to remove a cancerous tumor growing on his pancreas. Usually, pancreatic cancer is a death sentence, but Jobs had a rare type of tumor known as an "islet cell neuroendocrine tumor," according to a Fortune magazine article from last year that Apple has not disputed.

That type of tumor is treatable by a procedure called the "Whipple," named after the doctor who invented it and much easier to pronounce than pancreaticoduodenectomy. During the procedure, part of the pancreas is removed and the rest of the surrounding organs are rearranged to keep the digestive process intact.

According to the University of Southern California, this is considered a relatively safe surgical procedure. However, there can be side effects such as mal-absorption, which appears to be what Jobs is suffering from, according to his statement on January 5.

In June 2008, attendees at Apple's Worldwide Developers Conference were troubled by Jobs' appearance, as he appeared to have lost a lot of weight. Apple initially refused to comment on his health, but finally acknowledged the hormone imbalance in January and said Wednesday Jobs would take a six-month medical leave of absence to recuperate.

What we're hearing

Both The New York Times and The Wall Street Journal reported Thursday that Jobs' cancer has not returned, citing anonymous sources. It's not clear whether this is an Apple-directed attempt at damage control at this point, given that both the Times and CNBC have reported in the past that Jobs is "fine," citing anonymous sources.

Bloomberg interviewed a doctor who has performed the Whipple procedure, and he said it's possible that Jobs' pancreas might have to be removed entirely as a result of the complications. That doctor, of course, is not part of Jobs' medical team and therefore doesn't really have any idea of his exact status, but cited the possibility of removing the entire organ as a potential course of action in Jobs' treatment.

An Apple spokesman declined to elaborate beyond the e-mail Apple released to the public describing Jobs' current health.

Apple may have wanted to protect Steve Jobs' privacy with the way it chose to address his health. But the end result is a credibility problem that will not go away easily.

After initially reassuring the public that Jobs' health issues were real, but not all that serious, Apple's statement Wednesday that his problems had grown "more complex" outraged many investors and corporate governance experts. Jobs will remain Apple's CEO, but he is turning the responsibility for day-to-day operations over to COO Tim Cook until the end of June to focus on his recovery.

Now that Jobs' health issues seem far more serious than Apple initially indicated on January 5, investors are not satisfied with the cryptic "more complex" explanation provided by Apple, and are publicly wondering if the company has been deceiving them all along.

Questions about Steve Jobs' health intensified following his appearance at Apple's Worldwide Developers Conference in June. He appeared to have lost a significant amount of weight.

(Credit: James Martin/CNET News.com)

"The most indispensable chief executive in the United States, beloved by customers and investors for his magnificent turnaround of the company he founded -- and for the amazing gadgets his company produces -- can no longer be trusted on the subject of whether he is healthy enough to continue running the company," wrote Joe Nocera, columnist for The New York Times and one of the few people in the financial media who has spoken directly with Jobs concerning his health.

The main question? After months of insisting that Jobs' health was a private matter, why did Apple release two vaguely worded statements within days of each other, one saying he was fine, and the other saying he was going to have to take some time off?

Apple's responsibility to disclose the true state of its CEO's health has been discussed numerous times in the past several years. While there are no strict guidelines regarding disclosures as they relate to executive health, any health issue that affects a CEO's ability to run the company can be considered "material," and therefore needs to be disclosed to the board of directors and the public.

There are many potential scenarios for how this saga came to pass. It's quite possible that the true source of Jobs' pronounced weight loss was uncovered in the days between its first disclosure on January 5 and Wednesday's announcement. Anyone who has dealt with serious health issues knows that initial test results aren't always accurate, and that doctors can disagree on diagnoses.

But it seems more likely that Apple has had to beg Jobs to be more forthright about his health, and Jobs, a famously hard-headed man, resisted. CNBC reported Wednesday that two prominent tech industry executives considered close friends of Jobs believed him to be very ill and in "serious denial" regarding his health and its effect on his ability to run Apple.

When Jobs was first diagnosed with a rare form of pancreatic cancer in October 2003, he kept the diagnosis secret for nine months while pursuing alternative medical treatments that troubled some of his confidants, according to a March 2008 Fortune story. That strategy ended once his tumor began to grow, and Apple announced that he had undergone successful surgery to remove the tumor after the operation.

In the years that followed, Apple occasionally had to deal with rumors regarding Jobs' health, but nothing like what followed his appearance at Apple's Worldwide Developers Conference in June--he appeared to have lost a significant amount of weight. At that time, Apple insisted Jobs' health was a private matter.

It might have taken the intervention of Apple COO Tim Cook to force Steve Jobs to talk about his health, and the issue will not go away for Cook as he runs Apple during Jobs' medical leave.

(Credit: Apple)

When Apple announced that Jobs would be skipping Macworld, it stuck with that communications strategy, deflecting all questions about his health even though the decision appeared to happen very quickly and took IDG completely by surprise.

A few weeks later, a Gizmodo report that his health was "declining rapidly" finally appeared to spur Apple into commenting directly on Jobs' health just before Macworld started. But the information they released on January 5 does not square with the information released Wednesday, and regardless of the company's intent, that is troubling to outsiders.

Jobs is widely believed to personally approve every piece of official communication that emerges from Apple. It seems clear that he detested having to make the initial statement, writing "so now I've said more than I wanted to say, and all that I am going to say, about this."

But as much as Jobs may have liked that to be the case, it was never going to be so. That's because once Apple opened the door to the idea that Jobs' health was public information, there was no going back. And if it wasn't completely forthright about the state of Jobs' health on January 5, it has also opened the door to legal action.

Did Jobs deceive Apple and shareholders regarding his health? No one has uncovered hard evidence that he did. But it sure looks bad, and securities lawyers are sure to exploit the situation given the drop in Apple's stock in after-hours trading Wednesday and a further drop Thursday.

Apple is a notoriously secretive company. That strategy has allowed better than perhaps any company in America, but it could have backfired in a big way Wednesday. So how can Apple respond?

Lay bare the succession plan, said Patrick McGurn, special counsel at RiskMetrics Group's ISS Governance Services. Tim Cook will run Apple while Jobs is recuperating, but the board of directors needs to reassure investors that it has a long-term plan for providing Apple with leadership, whether that's Cook or anyone else on the management team.

"That's where the uncertainty is. No one can predict the health issues, (but investors are) looking for some level of assurance that the board does have a plan in place" for a post-Steve Jobs Apple, McGurn said.

Apple has hinted at such a plan in the past, but hints won't cut it anymore. And that's going to be a very difficult thing for a company raised in a culture of secrecy to do, especially while Jobs is still its CEO.

Apple will be fine without Steve Jobs for six months, but better have a plan concerning the longer-term issues.

(Credit: James Martin/CNET News)

How will Apple fare without CEO Steve Jobs at the helm for six months? History provides some indication.

Clearly, Apple will miss its legendary CEO while he takes a leave of absence to recuperate from health problems that are apparently much more serious than previously thought. But Apple is in far better shape in January 2009 than it was in August 2004, when Jobs announced he had undergone surgery for pancreatic cancer and would have to take a few months off.

These days the company has three strong product lines, a worldwide network of retail stores and, with $24 billion in the bank, the financial resources to outlast a deep recession. Flash back to the summer of 2004, when Apple was a very different place.

At the time, Apple was just getting onto solid financial ground, growing revenue by 30 percent compared with the previous year while posting net income of $61 million. By contrast, Apple recorded a net profit of $1.14 billion during the fourth fiscal quarter of 2008.

While the Mac was starting to make a comeback, that resurgence wouldn't really start in earnest until 2006 when Apple switched its processor supplier to Intel. Behind the scenes, Jobs and Co. were hard at work on that transition. The project involved a massive overhaul of Apple's code even though for years, the company had maintained a laboratory version of Mac OS X that was compatible with Intel's chips.

The iPhone was barely a concept, about to make the leap from vision to hardware, according to a Wired article detailing the behind-the-scenes development of the product that has become one of Apple's most important cash cows. It would be years--and many redesigns--later before the iPhone came to resemble the product we now know.

And the iPod was about to make a huge leap, with game-changing products such as the iPod Nano and iPod Video in development before their eventual release in 2005.

The point? These were all crucial projects that were under way when Jobs took his first medical leave of absence, from August 2004 to October, when he returned to full-time duties. And Apple managed them well enough.

This is the likely scenario for the next five months or so, while Jobs recuperates and Apple COO Tim Cook runs the company. We don't know exactly what kinds of projects Apple is working on behind closed doors, but Apple has shown in the past it can continue to develop crucial projects while its leader is sidelined, something they'll have to prove again in 2009.

Piper Jaffray's Gene Munster might have said it best late Wednesday: "While the iconic leadership of Steve Jobs cannot be fully replaced, we believe his core attributes as a CEO, operationally and with products, can be replicated."

But therein lies the question: what will Apple do in the long term?

CNBC reported Wednesday that two prominent tech industry executives have recently expressed "dire concerns" over Jobs' health. While unpleasant, Apple has no choice but to consider the possibility that Jobs' absence could be longer than anticipated.

That potential challenge, more than anything else Apple will do this year, is what Cook and Apple's board of directors must tackle in the coming months. The products? They'll be fine.

Updated at 2:33 p.m. with updated after hours trading information.

Apple shares plunged 10.8 percent a share in after-hours trading Wednesday, after the company announced CEO Steve Jobs would take a medical leave until June.

Jobs said he would take a medical leave after learning his situation was more complex than initially believed.

Apple's shares fell as low as $76.11 a share in after-hours trading, down 10.8 percent from its close of $85.33 a share at the end of the regular trading session.

Wall Street analyst Gene Munster with Piper Jaffray said on CNBC that he still considers Apple a buying opportunity.

"No doubt that Apple is losing the greatest pitchman on earth, but people still want to buy Apple products," Munster said.

He added that the stock is grossly undervalued and presents a buying opportunity.

"Apple investors need to look at the big picture. They need to look at the new products, the balance sheet...this is a storm that will pass," said Munster, who noted Apple has a deep bench of talent.

The analyst pointed to Tim Cook, who will oversee Apple's daily operations during Jobs' absence.

"Tim Cook is a pretty unemotional person, but his ability to run a company is second to none," Munster said. "He is very capable of running the operations of the company."

Munster also noted that while investors may be "frustrated" with how Apple has handled the disclosures regarding Jobs' health, they should not be dissuaded from investing in the company.

Here's the full text of the e-mail Steve Jobs sent to his employees about stepping down as Apple CEO for a medical leave of absence.

Team,

I am sure all of you saw my letter last week sharing something very personal with the Apple community. Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well. In addition, during the past week I have learned that my health-related issues are more complex than I originally thought.

In order to take myself out of the limelight and focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence until the end of June.

I have asked Tim Cook to be responsible for Apple's day to day operations, and I know he and the rest of the executive management team will do a great job. As CEO, I plan to remain involved in major strategic decisions while I am out. Our board of directors fully supports this plan.

I look forward to seeing all of you this summer.

Steve