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  • The Apple CEO Succession Scheme

    December 31st, 2008

    Despite Apple’s mixed signals of silence and denial, rumors continue to grow that CEO Steve Jobs is seriously ill, perhaps about to breathe his last, and that he can no longer continue to run the company he co-founded.

    Now rumors are a dime a dozen, I suppose, but just what is contributing to this one, which rears its ugly head over and over again? Well, for one thing, it’s really all Apple’s fault, because they are not giving the facts the media needs to put this claim to rest once and for all.

    What do they need? Well, a few photos of Steve in action in his office at Apple, or perhaps even a quick appearance on his favorite cable TV news channel, MSNBC, to talk a little about Apple’s stellar year and prospects for 2009. It doesn’t have to be a long interview. A fast four or five minute segment showing a vigorous-looking Jobs would be sufficient to satisfy everyone, and it can be taped at Apple’s campus, so he wouldn’t even be forced to drive to the studio.

    So why isn’t that happening? Sure, I agree that his health is essentially a private matter, except insofar as it prevents him from fulfilling his responsibilities at Apple. If that’s what’s really happening, the board of directors bears the responsibility to make that fact public and to set forth their plans for his successor. If they fail to do so, they might face the wrath of the SEC.

    Now maybe the present SEC leadership doesn’t care about such things. It’s not as if they did very much to stop a certain Ponzi scheme peddler from stealing $50 billion from unwary investors. But with a new administration about to take office, maybe the standards won’t be quite so lax.

    The problem with a sudden announcement about Steve’s departure, however, is that Apple’s stock price, already at its lowest levels in quite some time, would completely tank. How much it would be impacted is anyone’s guess. I’ve heard estimates of 25% to 40%, and these estimates might indeed be conservative.

    In the end, a post-Jobs Apple might not change all that much, but the psychological impact would be severe and it might take months or years for the stock price to recover, along with confidence in the company.

    On the other hand, what if Apple’s board, observing the apparent failing health of their CEO, and the fact that he’s spending less and less time at the office, devised a gradual succession scheme?That way, while there would be a negative impact once the truth gets out, but it would not be quite as severe.

    So let’s look at the obvious conspiracy theory as we move into 2009.

    Apple’s decision to part ways with the Macworld Expo was not because they just didn’t care about doing trade shows anymore. It was meant to cover up the fact that Steve was unable to participate. So putting marketing VP Philip Schiller in his stead to deliver the keynote may strike people as a natural reaction to the lessened importance of trade shows to the company. Maybe they really didn’t have any trend-setting products to introduce, just the widely-expected updates to the iMac, Mac mini and a few other products.

    That keynote would serve as an introduction to a long-range campaign to demonstrate that Apple is really all about its products, not its CEO. Subsequent product introductions, in fact, could come in the form of online video presentations and press releases, the better to drive this point home.

    After all, unlike some companies, such as Sprint, Apple has never placed its CEO in one of its TV ads. The image you see is that of the Mac and PC comedy duo; the Mac, portrayed by actor Justin Long is, I suppose, the true face of Apple since his is a recurring presence.

    If this sort of scheme is truly playing itself out, no doubt Apple will continue to refuse to comment about Steve’s health. Of course, Wall Street analysts will ask the same questions during the next briefing about Apple’s quarterly financials, but the response would be similar to what you’ve heard so far, that this is a private matter.

    Assuming Steve is capable of participating, perhaps he’ll make a brief appearance to calm everyone’s fears. So long as his voice and demeanor seem robust, there would be few concerns about whether they actually propped him up sufficiently to keep it together for an hour, and then it was back to his hospital bed for the duration. It’s not as if you’d really see him in action.

    Somewhere in the spring, Apple would officially announce that Steve is stepping down, at which time his successor would be officially named. The reasons given might have nothing to do with health problems, but with his desire to spend more time with his family and get out of the rat race.

    Sure, Apple’s stock would take a beating, but buttressed by continued stellar earnings, even in a down economy, the negative impact might not be as severe.

    Now to be perfectly frank, I do hope Steve Jobs is healthy and happy and that all these rumors about his health are completely false. To be sure, Apple can easily quell the ongoing concerns, but they’ve not chosen to do so, at least so far. So the rumors will simply persist until they come clean, one way or the other.



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