Apple's Credibility Problem

For some time now, there has been speculation that Steve Jobs was sicker than either he or Apple (AAPL) wanted to admit. At first, the company said that he simply had “a bug,” and then when the company announced that he would not be doing his usual keynote speech at Macworld — a speech so associated with him that it has come to be known as a “Stevenote” — the company denied it had anything to do with his health. Now, we know that this was untrue. Steve himself has confirmed that he is unwell as a result of a “hormone imbalance,” and that he is working on getting better.

Before anyone flames me for not caring about the man or his family, or for prying into what should be personal affairs, or for being “ghoulish” — as someone accused me of being the last time I wrote about the Apple founder’s health — let me just say that I have nothing but respect and admiration for Steve Jobs and what he has done for Apple, and I hope that he gets over his recent health problems and lives a long and happy life. But that doesn’t mean his health, or lack thereof, isn’t of public interest.

I’ve said this before, and I’ll say it again. Kara Swisher and others can argue that his health is no one’s business, and that’s a very sweet sentiment, but it’s just plain wrong. As John Byrne of Business Week noted on Twitter yesterday, there is a premium of anywhere from 15 to 25 per cent built into Apple’s share price because Steve Jobs is the CEO. If he were to disappear, it would remove billions of dollars in market value overnight. If that doesn’t qualify as a “material fact,” then I don’t know what does.

If it’s material, then Apple has to disclose it. And the statement from Jobs is effectively an admission of that. By extension, when the company said he wasn’t sick — and got CNBC to repeat this assertion — it was putting itself at risk of breaching SEC disclosure rules. But now that Steve has come clean everything is settled, right? Hardly. If anything, Apple’s wishy-washy approach to this whole issue over the past few months raises more questions about the company’s credibility than it answers.

Comments

[kbear2:]

Trying to knock the stock down, again?

Jan 06 04:56 AM

[costello:]

"Now, we know that this was untrue" or you think that you know. I mean you are so incredibly creditable. I`m so gonna lose fait in APPLE and their product line cause you tell me to.

Jan 06 05:00 AM

[rd4sndk:]

Are you kidding me? The very opposite is true from what you're saying. What's there to be suspicious about Apple? We have independent reports that the iphone is the #1 handset, imacs are growing above market trends, cash reserves are $25billion and counting, ipods are still growing dispite major market saturation, earings are still growing above the street guidance, there's no debt etc etc etc... What's there to be suspicious of?

I tell what though, I'm suspicious of your post and you. Why would you post a lie when the world was informed of the truth from Jobs himself? Should we believe you or Jobs? Should we not believe our own eyes, hearing and independent confirmation of Apples financial health and operations efficientcy? Or should we believe only your report that Steve Jobs was material ill to perform his duties?

I've worked as an engineering manager for some time and there were times I was too sick to perform a task but I wasn't too sick to continue in my position and the work went on until I got better (few days). I think Steve diserves that much given the earnings and performance of Apple during the worst recession since 1929. You should re-read the earnings reports for CY2008 before you write another post.

Jan 06 05:54 AM

[Julian Ivan...:]

"As John Byrne of Business Week noted on Twitter yesterday, there is a premium of anywhere from 15 to 25 per cent built into Apple’s share price because Steve Jobs is the CEO. If he were to disappear, it would remove billions of dollars in market value overnight. If that doesn’t qualify as a “material fact,” then I don’t know what does."

AAPL has fallen 60% already, chiefly on concerns over Jobs' health.. just how much more does it have to before morons writing this garbage actually get it into their thick skulls that the "Jobs Premium" - such as it is - is already well and truly sucked out of this stock like a drunken sailor on the docks with a two-bit hooker?

Jan 06 09:22 AM

[Jon T:]

What nonsense.

Jobs takes Christmas off and it's the end of the world.

Sorry, you Shorts have had your day.

Jan 06 09:25 AM

[Uncle Miltie:]

I would suggest that you read Steve Jobs statement instead of just the headlines before you write this uninformed post. In his statement, Steve indicated that he had been losing weight over the last year, and that his doctors could not find anything wrong with him to explain the weight loss. It was only after significant additional tests that the hormonal imbalance was discovered, and it is now being treated. No time frame was given as to when it was discovered.

That being said, Apple was likely completely correct when they stated that there was nothing wrong with Steve - that's what his doctors were telling him at the time.

And by the way, it is against federal law to release any personal medical records without consent of the individual. If Steve didn't want his records released, Apple could not release them. Period.

There is a credibility problem related to the reporting of Steve's health, but it's not from Steve or Apple...

Jan 06 09:39 AM

[2bitRick:]

Mathew I have to give you credit for one thing, you are consistent.

Consistently pathetic in your outlook, your cup is always half empty.

The good thing about your consistent FUD is that it provides fertile ground for thoughtful responses from those who take the time to read what you have said.

Jan 06 12:41 PM

[MacGuy:]

Let's see... Apple says Steve has a bug. Doctors don't know what's wrong for months and believe he has a bug. Months later, they do a specialized test, something not normally tested for and low and behold, he has something albeit rare, very treatable.

But Apple is still lying to you?

I think it's time to suck it up and apologize for stretching this past what it should have been. People like this author need to be sued into non-existence for creating havoc with stock prices.

Jan 06 02:06 PM

[ironpants:]

Hate to make an Ad Hominem argument, but you stink and must be in the wrong field or on the wrong side of the trade.
Can always count on you for a nauseating bit of drivel.

Jan 06 05:27 PM

[Evan Grey Owl:]

Matthew Ingram writes, ".....when the company said he wasn’t sick — and got CNBC to repeat this assertion — it was putting itself at risk of breaching SEC disclosure rules."

A violation of SEC rules would be using a blog to manipulate a stock price downward when the author has proxies shorting it, or has a conflict of interest in options contracts. Someone should initiate an investigation of this author, Matthew Ingram. Too bad the SEC is toothless.

Jan 06 05:55 PM

[ironpants:]

What's your position in AAPL?

Jan 07 07:00 AM

[JW.PhD:]

The only credibility problem is with financial bloggers like this idiot "reporting" stories that are more suited for the National Enquirer and conjuring up FUD to try and manipulate stock prices to match their fiction.

Jan 23 09:32 PM