Tuesday, August 3, 2004

Apple faces leaderless month

Jobs recovers from surgery

By May Wong
The Associated Press

SAN JOSE, Calif. - Steve Jobs says he expects a full recovery from his cancer surgery, but news of his illness raised the question about how his companies, Apple Computer Inc. and Pixar Animation Studios, would fare without the executive - whom some consider the companies' soul - at the helm.

"What makes him very hard to replace is his charisma," said industry analyst Rob Enderle. Jobs "can sell refrigerators to Eskimos."

Jobs sent an e-mail from his hospital bed Sunday to Apple and Pixar employees announcing he underwent successful surgery to treat a form of pancreatic cancer - an islet cell neuroendocrine tumor.

The cancer is extremely rare and easily cured if diagnosed early, as Jobs says it was in his case.

Jobs said he does not have a more common form of pancreatic cancer, called adenocarcinoma.

Apple shares declined Monday, slipping 2.35 percent, or 76 cents, to close at $31.58 on the Nasdaq Stock Market. Pixar shares fell 42 cents, or less than 1 percent, to close at $67.82.

Jobs, 49, assured employees and investors he expects a full recovery and plans to return to work next month.

Timothy Cook, Apple's executive vice president of worldwide sales and operations, will lead Apple. Pixar president Ed Catmull will lead Pixar. Catmull and creative head John Lasseter already handle most Pixar operations.

Should Jobs leave his posts, Apple and Pixar both have succession plans, according to Apple spokeswoman Katie Cotton. While the details are not public, Catmull would be the obvious choice at Pixar.

Analysts are less certain who would - or could - lead Apple.

"He's iconic. He's very much tied to the Apple name and the driving force behind Apple's re-emergence," said analyst Michelle Gutierrez of Schwab Soundview Capital Markets. "If anything happens to him, it'll be a big blow to the company."

Analysts said they were confident Apple's management team could run the company in Jobs' absence.

Gutierrez noted how many of Apple's recent successes were led by Jobs alongside his lieutenants, including Cook; Jon Rubinstein, senior vice president of the iPod division; Avadis "Avie" Tevanian, Jr., chief software technology officer; and Ron Johnson, senior vice president of retail.

Jobs and friend Steve Wozniak founded Apple Computer in 1976, five years before IBM Corp. jumped into the personal computer market.

In 1984, the company released the Macintosh, the first commercially successful computer to have a graphical user interface that mimicked a physical desktop. It was eventually copied by IBM-clone computers, which became more dominant.

Jobs left Apple in 1985 following a struggle with the board, but made a triumphant return in 1997 when Cupertino-based Apple was struggling. He is widely credited for Apple's renaissance with a string of innovative products - the iMac, PowerMac and PowerBook computers and the popular iPod portable music player.

Apple helped jump-start the market for legal music downloads last year when it launched the iTunes Music Store.

Emeryville-based Pixar, which Jobs founded in 1986 after buying a computer graphics business from filmmaker George Lucas, has had a successful string of animated movies, including "Toy Story," "Monsters, Inc." and "Finding Nemo."

Pixar's distribution deal with The Walt Disney Co. will expire in 2005 and analysts say negotiations with other potential partners might be the only business affected by Jobs' absence.

Jobs is known for being a tough negotiator who convinced record labels his technology was secure enough for a new way of digital music distribution; a hands-on executive who goes as far as choosing the color of the seat cushions at Apple's retail stores; and a visionary whom component suppliers will often see first in hopes Apple will showcase their technology in a new product.

It's as hard to imagine Apple without Jobs as it would be to imagine Microsoft Corp. or Oracle Corp. without their founders in charge, said Richard Doherty, an industry analyst at The Envisioneering Group.

"People don't talk about this with Larry Ellison, Bill Gates, or Steve Jobs," he said. "But sometimes it takes a scare like this to remind us of the virtues of what a corporate or public leader are."

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