xxxx

It was recently reported that Apple CEO and co-founder Steve Jobs had a liver transplant a little over two months ago, which was kept quiet until last weekend. However, the news about its iPhone sales spread like wildfire and was highly touted by the company. So why would the company keep the news about its CEO quiet from the world?

It matters because it looks like investors in Apple care what is going on with Jobs’ health. He is the face of the company and seen as the major creative force behind the Apple products. He was the one who reinvigorated the company by going on and seeing what the target market was looking for in products, he listened when it seemed like no one else would to the newest techie generation and ended up making a lot of money for the company by taking this approach. If you watch the stock prices for Apple with every little bit of bad news about Jobs’ health, you can easily tell how people feel about him and what it means if he were to leave the company altogether.

In response to why the news about Jobs’ liver transplant came from the Wall Street Journal and not from Apple, companies don’t have to give updates on the health of their executives. Health isn’t seen as “material information” as per the rules of the SEC. Material information means information that regards earnings, mergers, and acquisitions as well as new products, bankruptcies, and things of that nature. Information like stock ownership is material information, while the health issues of an executive is not considered material information unless his health hinders his ability to be an executive in the company. Since Jobs has been on medical leave for the past few months, there is no issue here.

Since the information regarding Jobs’ health was not considered material information, it was left up to the board to decide whether or not to make the information about Jobs’ health public. Since the board must act in the interest of stockholders, then I can understand why they would not want the information to be known.

In the case of Jobs and his liver transplant, it may have been best for the board to tell the public about his health issues simply because most people feared the worst when he took a sudden medical leave of absence in January. When he announced that, the stock for Apple shed 7% and on Monday of this week it fell another percentage point because of the news about his liver transplant. If investors had known about the transplant ahead of time, this drop in stock price may have simply happened at the same time the leave of absence was announced.

I believe that Apple is afraid, without Jobs, it will no longer be seen as the company that it currently is and its stock will fall and it will lose the market share it has worked so hard to obtain. This is a company that, before Jobs came back years ago, was on the brink of bankruptcy. It’s time for Apple to become a company that is apart from its CEO.

Jeremy

View all posts by Jeremy
Jeremys website