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Apple Shares Drop After Steve Jobs Resigns
Apple Inc. (AAPL) shares declined after the resignation of Chief Executive Officer Steve Jobs, who transformed the company he started at age 21 from a personal- computer also-ran into the world’s largest technology company.
The shares fell as much as 7 percent in extended trading in the U.S. yesterday after the announcement. Jobs, who will become chairman, was on medical leave since Jan. 17, following a 2003 cancer diagnosis and a liver transplant in 2009. He is succeeded by Chief Operating Officer Tim Cook, 50, who has been running day-to-day operations.
“I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know,” Jobs, 56, said in a statement yesterday. “Unfortunately, that day has come.”
Under Jobs, Apple became the second-most valuable company in the world, after Exxon Mobil Corp. (XOM), by introducing devices that revolutionized the computer, music and mobile phone industries. Jobs left Cook at the helm when he was on leave in the first half of 2009, and Cook built confidence with investors during that stint, when the shares gained about 70 percent.
“You can expect that it’s going to take a hit,” said Kenneth Polcari, a managing director at ICAP Corporates, in an interview with Bloomberg Television. “After it all settles down, people are going to realize that Apple is not a company that didn’t have a plan in place, that didn’t realize at some point this was going to happen.”
Apple dropped as low as $350 following the announcement, after rising $2.58 to $376.18 at 4 p.m. New York time on the Nasdaq Stock Market.
As CEO, Jobs’s attention to detail and emphasis on sleek, easy-to-use products helped Apple repel competition from rivals as varied as Google Inc. and International Business Machines Corp. (IBM)
“He’s always going to be remembered, maybe for the next 100 years, as the greatest technology business leader of our time,” Steve Wozniak, who co-founded Apple with Jobs, said in an interview on “Bloomberg West.” “Company culture doesn’t change overnight. He’s got tens of thousands of employees. The quality of the products reflects how good they are, too.”
The day of the announcement, Jobs was in Apple’s Cupertino, California, office for the entire work day, and he attended a regularly scheduled board meeting, according to a person close to Jobs, who was not authorized to speak about the executive’s health. While Jobs has been housebound for the past few weeks and his condition is weak, the resignation was not indicative of a sudden worsening, this person said.
Jobs told the board he intends to be an active chairman, and he held an emotional meeting with his executive team afterward, according to another person familiar with the matter.
“Steve’s extraordinary vision and leadership saved Apple and guided it to its position as the world’s most innovative and valuable technology company,” Art Levinson, an Apple director, said in a statement on behalf of the board. “Steve has made countless contributions to Apple’s success, and he has attracted and inspired Apple’s immensely creative employees and world class executive team.”
Jobs was ousted by the board in 1985 amid differences over strategy. In his time away, Jobs ran movie animation studio Pixar, which he later sold to Walt Disney Co., as well as NeXT Software Inc., a company Apple acquired to return him to the company. Jobs is Disney’s largest shareholder, with a 7.4 percent stake. He will remain on the entertainment company’s board, a person with knowledge of the matter said.
When Jobs returned in 1997, Apple had run up $1.86 billion in losses over two years. It was 90 days away from bankruptcy, Jobs would later say.
Apple stock surged 9,020 percent since July 29, 1997, the day before the San Francisco Chronicle broke news that Jobs would be interim CEO. Over that period, the market value rose to $348.7 billion from $2.06 billion.
Any slump in the shares may be short lived, said Daniel Genter, who oversees about $3.7 billion as president of Los Angeles-based RNC Genter Capital Management.
“Jobs has been a strong figure in the company historically, but he hasn’t been a driving force for the past two years,” said Genter. “It brings clarity. It shouldn’t have an effect on the overall market, but this market is so skittish so it may have a short-term negative impact.”
Since his return, Jobs has led Apple’s transformation into a seller of everything from smartphones to music. He engineered the company’s comeback by honing Apple’s industrial design, tightly integrating software and hardware, and pushing into new markets.
The iPhone, introduced in 2007, has become Apple’s best- selling product and turned the company into the world’s biggest smartphone maker. After winning customers away from Research In Motion Ltd. and Nokia Oyj, Apple is now sparring with Google for leadership in the market for mobile-phone software.
“Under Steve’s leadership Apple has not only revolutionized the computer industry but also transformed how the world communicates, plays, shops and works,” said Frank Quattrone, CEO of Qatalyst Partners LLP, a Silicon Valley investment bank. “In the entrepreneur hall of fame, he is the charter member. He is, and will remain, an inspiration to the world.”
Cook joined Apple in 1998. As operating chief, his oversight included sales, manufacturing and distribution.
“The world will see in the next several years that Tim is a very uniquely gifted guy and Apple will be wildly successful under his leadership,” said John Connors, a venture capitalist at Ignition Partners, who serves on the Nike Inc. board with Cook.
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