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Let me start with full disclosure: This post is being written on a MacBook linked to a large Apple cinema display screen. This MacBook is the latest in a string of Apple computers I’ve owned over the last decade and a half. I also own an iPod and that little miracle, the iPhone. In fact, I have been using Apple products for so long that the other day, when writing a document on a PC using the Windows version of Word, I could not remember the keystrokes necessary to save the file.
While I am a fan of the elegant, intuitive, state-of-the-art products, I do not drink the corporate Kool-Aid; I have reservations about some of Apple’s anti-competitive corporate practices, and I am not a member of the Steve Jobs Cult of Personality, although I’m happy to acknowledge that he is clearly a brilliant and imaginative innovator.
What I am about to write may have Apple addicts shunning me the way the Amish community treats an apostate, but as a journalist and a media trainer, I have to say it: I can think of no better parallel to Apple’s opaque and evasive handling of the Steve Jobs health issue than the North Korean government’s communications about Kim Jong-Il’s August 2008 stroke.
While the “Great Leader” was being worked on by teams of Chinese doctors, the North Korean propaganda apparatus denied he had any health issues. Months passed before Kim made any public appearances at all. His most extensive (and totally controlled) exposure to the captive North Korean media came on April 5, nearly 8 months after the stroke, when he attended the launch of a multi-stage rocket that crashed into the Pacific instead of achieving its announced goal of placing a satellite in orbit. (This parallel can be taken too far. Apple has acknowledged its CEO’s health problems--to a degree--while North Korea continues to deny Kim had any health issues. In our free and open society, Apple is subject to criticism, even unfounded and baseless criticism like the witless, pointless online screed the New York Times published about the iPhone, while the North Korean media is so totally controlled, it broadcast patriotic music and claimed it was “beamed from space” by the satellite it failed to launch.)
While Apple generally enjoys glowing praise for its products (well-deserved in my opinion), the company’s media relations are aggressive and controlling. It has sued bloggers who have had the temerity to report on Apple’s future product plans -- threatening to take one of them all the way to the Supreme Court. At the same time it gains great traction by having its products in movies. Former Vice President Al Gore, a member of the Apple board of directors, ran his slideshow from an Apple laptop in the Oscar-winning documentary, “An Inconvenient Truth.” Apple products also show up on popular TV shows. The psychologist on HBO’s “In Treatment” uses a MacBook Pro; the widow of a 9/11 firefighter on “Rescue Me” accuses a teenager of stealing her iPhone; everyone on NBC’s “30 Rock” uses Apple computers and Tina Fey’s iPhone had a pivotal role in one plot turn -- she left it in a cab and the driver held it for ransom because there was a nude picture of her in its photo library. In these media appearances, Apple products define cool and cutting-edge. Scientists and artists love Apple’s computers. I do a lot of media training for NASA and when workshop participants haul their laptops out of their briefcases, MacBooks generally outnumber PCs by a ratio of four-to-one.
Now on to the CEO: Jobs, one of Apple’s founding fathers, was forced out of his own company in 1985. This was akin to the Continental Congress forcing George Washington from the Presidency. Jobs spent 11 years in the wilderness -- well, hardly the wilderness; he did start Pixar animation and NeXT computers. The Jobs legend has it that during his absence Apple nose-dived, but the real story is more nuanced. During those years Apple introduced the Powerbook, its first, groundbreaking laptop. It also brought out color computers, upgraded its operating system and adopted the RISC chip (Reduced Instruction Set Computing), a high-performance processor developed jointly by IBM, Motorola and Apple that gave Apple Power Macs impressive processing speed. Management also made a series of bad business decisions, yielding ever-increasing margins of the computer business to PC-based machines. Jobs returned in 1996 and under his guidance -- actually, under his vision -- the company enjoyed a sustained spurt of creativity and innovation, increased its market share and become quite profitable. It is no exaggeration to say that every other company in the computer and mobile phone business is playing catch-up. One indicator of that prodigious success: the announcement in April that iPhone customers had downloaded one billion applications from Apple’s Apps Store.
Since Jobs was seen as the Apple’s savior, it was a shock to investors when, in 2004, he underwent surgery to remove a cancerous growth from his pancreas. Before the surgery, Jobs tried several months of holistic treatment, but during that period no announcement was made about the cancer. Because the Jobs cult of personality had led the public--and stockholders--to think Jobs was Apple Computer, the stock price is tied tightly to his continued run as CEO.
During 2008, Jobs, a vegetarian who was never particularly chubby, lost 30 pounds, giving rise to rumors that his pancreatic cancer had returned. For months, the company vehemently denied that he was seriously ill. Then Jobs cancelled his keynote address at the MacWorld conference in San Francisco. Initially, Apple claimed there was no new product big enough to warrant his appearance; then the story changed and Apple said Jobs was suffering a hormonal imbalance.
If this statement was supposed to quiet investor concerns about his cancer, it is likely Apple’s publicists slept through high school biology, missing the lesson about how the pancreas makes hormones, including insulin. Insulin regulates metabolism and an insulin imbalance can result in radical weight change. If someone who has had cancer of the pancreas has a hormonal imbalance, alarm bells should ring. At very least journalists should ask which hormone or hormones were out of balance. Business reporters appear to have slept through high school biology, too, and that vital question was either unasked or, if asked, unanswered. Very few stories on Jobs’ health made the direct connection between the pancreas, insulin and weight change.
Shortly after Jobs’’ non-appearance at MacWorld, there came an even more stunning announcement. Posting an online message, Jobs wrote the “hormonal imbalance” was “more complex” than first thought and he would take a six-month leave of absence from the company to concentrate on battling the problem. The company said Jobs would be actively involved in new product development during that time. That announcement resulted in an immediate seven percent plunge in Apple’s stock price.
Apple’s often contradictory and opaque handling of Jobs’ health issues finally forced journalists to do real reporting. Some of them actually read last week’s Apple Q-10 filing with the SEC, instead of just reprinting the company’s press release. Their big discovery? Apple had paid Jobs nothing in the first quarter of 2009 for use of his Gulfsteam V jet and only $4,000 for corporate travel on the plane in the last quarter of 2008. Compare that to $891,000 the firm paid him for the jet in Apple’s last corporate year. Business reporters took this to be an indication of how complete the leave of absence was and how uninvolved Jobs was with the company during the quarter. (Apple’s press release about the filing contains no reference whatsoever to Jobs.)
Which brings us to today -- Is there light at the end of the tunnel? I dusted off my old reporter’s hat and read the same 10-Q filing. In it Apple lists risks to its business plans. One of the risks: “Much of the company’s future success depends on the continued service and availability of skilled personnel, including its CEO, its executive team and key employees in technical, marketing and staff positions... The company’s CEO has taken a medical leave of absence until the end of June and has been involved in major strategic decisions during his leave. There can be no assurance that the company will continue to successfully retain key personnel.”
During an April 22 earnings conference call, Apple CFO Peter Oppenheimer was asked if Jobs would be returning at the end of June. His answer, opaque as always, is more instructive for what he didn’t say than what he did say: “We look forward to Steve returning to Apple at the end of June.” Anyone see the word “yes” in that answer? I thought not.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.