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Jobs' Health Raises Business Issues For Apple

The health of Apple CEO Steve Jobs is once again raising business issues for the company, including questions about a succession plan.

Apple's Steve Jobs and other technology executives dine with President Barack Obama on Feb. 17, 2011

Apple CEO Steve Jobs' health is once again raising business issues, including the question of a succession plan, for the $65 billion company.

The National Enquirer this week caused a media frenzy with what it is calling "shocking photos" of a weak "cancer stricken" Jobs leaving Stanford Cancer Center - the same place where actor Patrick Swayze was treated before passing away in 2009. The report cited a medical expert -- who had not treated or seen Jobs -- who speculated that based on the photos, Jobs may have only six weeks to live.

Despite the National Enquirer's report, Jobs was one of a number of high tech CEOs, including Oracle CEO Larry Ellison, Google CEO Eric Schmidt and Facebook founder Mark Zuckerberg, who attended a dinner Thursday night with President Barack Obama. The White House even released a photo of the dinner that shows Jobs, with his back to the camera, sitting to the left of President Obama.

Still, concerns linger regarding the future of Apple. The questions surrounding the health of Jobs, who was treated for pancreatic cancer in 2004 and had a liver transplant in 2009, come only one month after the technology icon, who was the driving force behind the iPhone, the iPad and the iPod, took another medical leave of absence from Apple effective January 17.

Jeff Matthews, general partner Ram Partners LP, a Greenwich, Conn based hedge fund that holds a meaningful amount of Apple shares, says Jobs' health is an issue that investors need to pay attention to. "There is nothing good about this," says Matthews, whose fund has done signficant research on pancreatic cancer since Jobs was afflicted by the disease. "It is not fun to talk about, but as an investor in the real world you have to look at everything. Jobs is the reason that Apple is where it is. This is something you need to pay attention to and understand."

Jobs' latest medical leave is not surprising given the Apple CEO's medical history and the scientific data available regarding the form of pancreatic cancer that Jobs is battling, said Matthews.

What's more, Matthews said, if Jobs has lost a lot of weight it could be the result of medical treatments to battle a reoccurance of cancer. Jobs could be reacting to treatments aimed at destroying cancer cells, Matthews said. He said research data shows the eight-year survival rate may be as low as 22 percent for someone battling the type of pancreatic cancer for which Jobs was treated.

Jobs was first diagnosed with the disease in 2003. Fortune Magazine reported that Jobs learned he had a malignant tumor in his pancreas. The articles states that "The most common type of pancreatic cancer - adenocarcinoma - carries a life expectancy of about a year. Jobs was lucky; he had an extremely rare form called an islet cell neuroendocrine tumor that can be treated surgically, without radiation or chemotherapy."

Fortune also reported that Jobs "tried various alternative therapies for nine months before the tumor was taken out on July 31, 2004, at the Stanford University Medical Clinic in Palo Alto, near his home."

Matthews said he gives credit to Apple for being proactive on issuing a statement on Jobs most recent medical leave of absence effective January 17. "I think they have learned a lot," said Matthews regarding Apple's silence on Jobs' health when the Apple CEO first began battling pancreatic cancer in 2003.

NEXT: Apple's Succession Plan?

’I'm sure they have a succession plan that is battle-tested," said Matthews, "and while it won't be fun for them to wake up in a world without Steve, they have had the chance, unpleasant as it may be, to be prepared for that day for a much longer time than most companies. So I would expect they won't miss a beat for some time to come.’

Apple itself, in effect, recognizes the "risk" associated with Jobs' health issues in its 10K filing with the Securities and Exchange Commission. "Much of the Company’s future success depends on the continued availability and service of key personnel, including its CEO, its executive team and highly skilled employees in technical, marketing and staff positions," the company writes under "risk" factors in its 10K filing signed by Jobs on Oct. 17, 2010.

Jobs, for his part, said in a January 17 email to Apple employees: "At my request, the board of directors has granted me a medical leave of absence so I can focus on my health. I will continue as CEO and be involved in major strategic decisions for the company. I love Apple so much and hope to be back as soon as I can. In the meantime, my family and I would deeply appreciate respect for our privacy."

Apple Chief Operating Officer Tim Cook has taken over day to day operations at Apple in the wake of Jobs' medical leave.

Cook, who has deep channel roots as the former chief operating officer of the Reseller Division at Intelligent Electronics, a one time multi-billion dollar technology product reseller powerhouse, has received high-marks for his leadership of Apple during Jobs' medical leaves.

Martin Wolf, president of Martin Wolf Securities LLC, the San Ramon, Calif.-based merger and acquisition power that has completed over 100 channel transactions, said he believes Cook will be the next Apple CEO. Wolf is familiar with Cook's track record, having served as former executive vice president of Merisel, another channel power during Cook's days at Intelligent Electronics during the mid-1990s.

"If it ain't broke don't fix it," He said. "He'll do a terrific job as CEO."

Cook's biggest challenge, Wolf said, like that of any successor, is of course that he is not Steve Jobs. "Tim is a smart guy who has relationships across the spectrum," said Wolf. "He is the perfect guy to run the company."

Wolf said he views Cook as the interim coach who takes his team to the Super Bowl and wins it all."There is only one place to find that next coach," he says. "It's the guy who took you to the Super Bowl!"

Cook has been particularly adept at teaming with Jobs, said Wolf. "He is very effective working around a rock star CEO," said Wolf. "You have the visionary (Jobs) and the promise keeper (Cook) who makes sure all of Steve's promises and commitments are achieved."

Frank Vitagliano, senior vice president, Americas Partners for Juniper Networks, a Sunnyvale, Calif. networking vendor who worked with Cook at IBM, said Cook's channel roots have provided him with a solid foundation to be a CEO. "At IBM he was responsible for (PC) manufacturing and our go to market strategy, the bulk of which was indirect," he said. "His channel experience helps because he understands the entire process for going to market."

"All vendors have a go to market strategy that includes both direct and indirect access to customers," said Vitagliano. "Tim obviously understands that mix and how it manage it."

By all accounts, Vitagliano said, Cook has done an outstanding job leading Apple during Jobs' medical leaves.

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