What does Steve Jobs’ leave from Apple mean for Canada?

Usually when a high profile CEO of a large American-based organization leaves the company the ripple effect in Canada is small.

There are many examples of heavyweights leaving for whatever reason and the Canadian subsidiary not even skipping a beat. Take for example, the Mark Hurd situation last year. HP Canada was already in a transition year with its long time Canadian president Paul Tsaparis being promoted to the U.S., but it managed to have a blockbuster year.

But for Apple (Nasdaq: AAPL) in Canada it will be a little different because its subsidiary is not as large as IBM or HP.

With Steve Jobs taking another medical leave, Apple customers, investors, partners and employees are again left to wonder what implications this will have for the company’s stock, financial performance, product development and business operations.

Key questions linger after Apple’s announcement on Monday that Jobs will remain CEO and participate in major strategic decisions but hand over daily operations to COO Tim Cook while he tends to his health: What ails Jobs and how serious is it? How long is the leave expected to last? Will this issue prompt Jobs, who turns 56 in February, to permanently scale back his involvement with Apple?

The health of a public company’s CEO is always a material issue, but even more so in the case of Apple, because Jobs is a unique technology visionary and because he created and has molded Apple, and runs it in a very hands-on fashion, leading it to astounding success.

“Steve is more important to his company’s success than most other CEOs are to their company’s success,” said analyst Roger Kay, president of Endpoint Technologies Associates, in a phone interview.

Jobs, who survived a cancerous pancreatic tumor in 2004 and had a successful liver transplant in 2009, is key to Apple, said independent analyst Jeff Kagan via e-mail.

“Without him at the helm, we just don’t know whether the company can continue on its successful course,” Kagan said. “At this point we have so many questions and no one has any real answers. It’s all uncharted territory for now.”

Apple has been criticized in the past for being vague about the severity of Jobs’ health problems, in particular for not disclosing that he had a liver transplant in 2009 until he was well enough to return to work.

On the short term, Apple’s stock may hit turbulence, due to speculation, rumours and press leaks, especially if official details about Jobs’ health remain scarce, but the company’s operations shouldn’t be affected in any significant way for at least two years, Kay said.

Analyst Jack Gold, president of J. Gold Associates, holds a similar view, noting that Apple’s product pipeline is set for the foreseeable future, with refreshes of the iPhone and iPad lines coming, and that Cook did a fine job during Jobs’ previous medical absence.

Moreover, Jobs has built up a solid foundation for the company. “Apple is running pretty well,” Gold said in a phone interview.

However, a long-term absence would make things more challenging, because Jobs brings a vision to product strategy and technology development that would be hard or impossible to replicate, Kay said.

The effects of a prolonged absence would begin to be felt in about two years. “Once they’re through product pipleline and facing competitive threats they haven’t seen yet, that creates a new environment,” Kay said.

Apple’s stellar success is due in great part to Jobs’ ability to counterintuitively see opportunities where others don’t, as well as to the strength of his personality and reputation, which gives Apple significant heft when negotiating with partners, he said.

Jobs also commands a level of admiration and respect among Apple’s staff that allows the company to attract, retain and unify top talent that may choose to go elsewhere if he is no longer in charge, Kay said.

With Jobs at helm, Apple rocked the PC market in the late 1990s with the iMac, brought digital music to the mainstream with the iPod and iTunes, revolutionized the cell phone industry with the iPhone and most recently shook up the tablet market with the iPad.

During his Apple exile, between 1985 and 1997, Jobs founded NeXT, where the seeds for future Apple hardware and software were planted, and took on Hollywood with Pixar, which has become a titan of animated films.

On Friday, Apple’s stock hit a 52-week high of US$348.48. The financial markets in the U.S. are closed on Monday due to the Martin Luther King, Jr. holiday, so reaction to Jobs’ medical leave from U.S. investors won’t be clear until tomorrow.

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Jim Love, Chief Content Officer, IT World Canada

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