Apple CEO Steve Jobs Steps Down...Temporarily
Wednesday, January 14, 2009SUZANNE PRATT: Apple CEO Steve Jobs said he's taking a medical leave of absence because of health problems. The stock plunged as much as 9 percent in reaction. The bombshell comes a week after Jobs insisted his recent weight loss was tied to a easily treatable hormone imbalance. The charismatic CEO now says the problem has become more complex. Jobs has the board's full support and he hopes to be back by the end of June. Apple Chief Operating Officer Tim Cook will run day-to-day operations in his absence. Joining me now to talk more about that situation at Apple is Standard & Poor's analyst, Tom Smith. Tom, thanks for joining us.
TOM SMITH, EQUITY ANALYST, STANDARD & POOR'S: Hi, thanks for having me.
PRATT: So, Tom, tell me what is your reaction to this news from Apple?
SMITH: Well, it's a disappointment because Steve Jobs had been a strong charismatic leader for the company, a strong visionary and a pitchman and we'll miss him for that even if it's just for six months. Perhaps he will come back. Perhaps the whole story will unfold some other way, but I think that the company is well managed. We like it as a "strong buy." And it has a number of virtuous attributes as a tech company in this downturn.
PRATT: What can you tell us about Tim Cook? Is he an able manager? Is he going to be able to hit the ground running do you think?
SMITH: Yes, I think so. In fact he has been running many aspects of the company for some time. He's the COO. You hear him on the calls. He runs things. He brings a background as corporate supply chain manager with experience at Compaq and IBM before that, an MBA from Duke, industrial manager, industrial engineering degree from Auburn. He's a capable guy for keeping the company going. I think the question investors might have is can he lead the company in the visionary ways that Steve Jobs had in terms of new product design for having a flock of ardent followers that will hang on his every word as he describes where he wants to go with his next round of gadgets.
PRATT: What about the stock? As you just heard it's down sharply in after-hours trading. Is it going to take a big hit tomorrow morning?
SMITH: I would expect there would be some follow-through but you never quite know. After-hours trading is thin. It generally moves pretty sharply. It gives you an indication of direction but sometimes the force (ph) doesn't remain. I think we've had some chance now for several years to think about Steve Jobs' health and what the company might be like without him. Now that event is unfolding. I think some of that is in the price. I think investors have thought about it already. I think just on fundamentals, you still have a strong company in terms of debt. large cash on hand, organic growth and several strong product lines where they're gaining share in smart phones and PCs.
PRATT: So would you be a buyer of the stock tomorrow morning? You said you had a "buy" on the stock. Is this an opportunity to get in at a lower price?
SMITH: Yes, that's right. We like it even better at the lower price to get in.
PRATT: OK. And any disclosures that you need to make for us this evening?
SMITH: Well, I don't own any of the shares. I'm an S&P equity analyst and that's it.
PRATT: OK. Thanks, Tom. Thank you for joining us this evening.
SMITH: Thank you.
PRATT: My guest, Tom Smith, equity analyst at Standard & Poor's.
