Thad McIlroy - The Future of Publishing

  By Thad McIlroy

Written October 18, 2008

Update: An interesting analysis of this topic appears in the June, 2009 issue of The Atlantic (http://www.theatlantic.com/doc/200906/steve-jobs).

And the latest update, first revealed on June 22, 2009 by the Wall Street Journal on Jobs' liver transplant.

It's now widely-accepted that few if any publicly-traded companies are as inextricably linked to the fate and fortune of their commander-in-chief as is Apple Computer and its CEO Steve Jobs. Microsoft had Bill Gates, General Electric had Jack Welch and Berkshire Hathaway still has the aging Warren Buffet. So we've got precedents. But I think Steve is at the head of the pack in this league.

In big-time corporate America things are not supposed to be this way, particularly with publicly-traded stock. As of October 16th, Apple had a market capitalization of roughly $90 billion dollars. Last fall the cap was more than double that, and it nearly was again earlier this summer. This is a company that in its last fiscal year had about $3.5 billion in earnings after taxes. Its price-to-earnings revenue of roughly 20 times is roughly two times that of its arguably closest competitor, Hewlett-Packard, which has only a slightly lower market cap, but has four times Apple's sales, twice its profit, and yet enjoys only a 15 times price-to-earnings ratio. Could Steve Jobs be the reason between this disparity of figures? (Quick question: who's the CEO of HP....pause while you ponder...Mark Hurd.)

It's been a fairy-tale story: the early growth of the Apple (yes, from a garage), Steve's adoption of and then ousting by that soft drink man (John Scully - where is he now?). Then Steve's next start-up, appropriately called NeXT Computer, which never got very far but was followed by his triumphal return to Apple, with a forced purchase of NeXT, and then product and financial results which have been nothing short of miraculous.

Say what you will about Steve Jobs, the man (and plenty has been said); the results speak loud and clear. Apple Computer would certainly not be where it is today without him.

But there's the issue of Jobs' health...and there is much concern. Try googling September's modest announcement about the newest iPod, and almost all of the coverage makes reference to concern about Steve's health. Why is that?

Well, if you missed searching on the subject earlier this year, the word emerged that in 2003 Steve had been stricken with pancreatic cancer. He was lucky. It was a treatable form. Not that he chose to have it treated in a conventional way. According to last March's issue of Fortune magazine, Steve, being a Buddhist and a vegetarian, decided for nine months to "employ alternative methods to treat his pancreatic cancer, hoping to avoid the operation through a special diet."

What many will find shocking from the Fortune article is that Apple's bigwigs (i.e. the Board of Directors) "secretly agonized over the situation - and whether the company needed to disclose anything about its CEO's health to investors. Jobs, after all, was widely viewed as Apple's irreplaceable leader, personally responsible for everything from the creation of the iPod to the selection of the chef in the company cafeteria. News of his illness, especially with an uncertain outcome, would surely send the company's stock reeling. The board decided to say nothing, after seeking advice on its obligations from two outside lawyers, who agreed it could remain silent."

As the article later notes in very clear language: "In the end, Jobs had the surgery, on Saturday, July 31, 2004, at Stanford University Medical Center in Palo Alto, near his home. The revelation of his brush with death remained - like everything involving Jobs and Apple - a tightly controlled affair. In fact, nary a word got out until Jobs' tumor had been removed. The next day, in an upbeat e-mail to employees later released to the press, he announced that he had faced a life-threatening illness and was "cured." Jobs assured everyone that he'd be back on the job in September. When trading resumed a day after the announcement, Apple shares fell just 2.4%.

"Apple entertained no further questions about Jobs' health, citing the CEO's need for privacy. No one learned just how long Jobs had been sick - or that he had contemplated not having the surgery at all."

The Fortune article also notes that "the SEC requires that any public company disclose material information to investors so that they can include it in their calculation of whether to buy or sell a stock. But there are no specific guidelines governing health issues, and the SEC has never taken action against a company in this area."

The proof is in the pudding. As reported October 4th on Bloomberg.com:

"CNN's plunge into online citizen- journalism backfired yesterday when the cable-news outlet posted what turned out to be a bogus report claiming that Apple Inc. Chief Executive Officer Steve Jobs had suffered a heart attack.

"Apple shares fell as much as 5.4 percent (emphasis mine) after the post on CNN's iReport.com and rebounded after the Cupertino, California-based company said the story was false..."

I am not a lawyer, but this strikes me as very clear proof that Steve Jobs' health is absolutely material information that shareholders have every right to know about at the earliest possible moment. Clearly it's time for the SEC to revise its rules. And as concerns remain about Jobs' health, the issue is not going away.

Jobs' more recent appearance on October 14th to announce the latest in Apple notebooks prompted commentary from ZDNet that his decision to have other senior executives appear with him at the event "means that the company is trying to showcase those executives ahead of an eventual departure by Jobs, whose health has been the subject of much bottom-feeding speculation this year."

My point in writing this article is that the future of publishing is not always just the story of major issues and influences, but sometimes the story of one man. Looking at Apple Computer, the future of publishing is going to be strongly influenced by whether or not the CEO who made the company what it is can remain at the helm. And in these small tales, there are much larger stories to be told.

A slightly different version of this article originally appeared in the December issue of PrintAction (www.printaction.com).

© 2008 by Thad McIlroy