In choosing to go public with CEO Steve Jobs' ailments to deflect damaging rumors, Apple may be forced to give regular updates on the health of its founder.
By finally deciding to talk about Steve Jobs' health, Apple may have opened a Pandora's Box.
After insisting for months that Jobs' health was a private matter, Apple changed its tack in the face of widespread speculation regarding its CEO's weight loss. On Monday, the company issued a statement that Jobs was suffering from a hormone imbalance that was "robbing" proteins from his body. That news cheered Apple investors, who dreaded far worse news regarding Jobs' health after a report last week that his health was "declining rapidly."
The disclosure was clearly painful for Jobs, who wrote in an open letter, "So now I've said more than I wanted to say, and all that I am going to say, about this." That might not be so simple.
Now that it has cleared the air and addressed the state of Jobs' health, Apple may be forced to give regular updates, according to corporate governance experts. And, they add, the company will need to be very careful, as it was on Monday, about how it words those statements.
We've written this many times as we've covered the issues surrounding Jobs' health and Apple's handling of the situation, but it bears repeating: there are no legal guidelines for companies to follow in making decisions about how and what to disclose involving the health matters of their executives.
Amid all the speculation involving Jobs' health this year, Apple may have decided that enough was enough following reports predicting its CEO's imminent demise, according to Patrick McGurn, special counsel at RiskMetrics Group's ISS Governance Services.
"It's sort of unhealthy for the company to go through these repeated news cycles," McGurn said, believing that Apple likely should have said something earlier in the year when concerns over Jobs' health first surfaced.
The intense interest in anything related to Apple in the tech industry makes it ripe for disinformation, which seems to have cropped up time and time again with the rumors that Jobs was dying. The most likely sources of that kind of information are hedge funds or speculators looking to make a quick buck by short-selling Apple's stock, or finding ways to drive the stock down as to profit from its fall.
Rumors involving Jobs' health are an easy weapon for those types of speculators, given his importance to Apple and clear evidence of weight loss this year. Apple has chosen different strategies over the course of the past six months in handling those rumors.
The company first told The Wall Street Journal in June on the day of Jobs' appearance at Apple's Worldwide Developers Conference that he was suffering from a "common bug," but after the speculation increased Apple modified its stance to declare that Jobs' health "is a private matter."
Jobs himself then reached out to The New York Times' Joe Nocera to confirm (off-the-record) a story written by Nocera's colleague John Markoff that Jobs had undergone a surgical procedure to treat an unspecified issue that was causing weight loss. That prompted some heated discussion of whether a surgical procedure really counts as a common bug, but the speculation largely died down as Jobs made public appearances later in the year in which he didn't appear any worse off, if not better.
That is, until Apple announced in mid-December that Jobs would not be giving the Macworld keynote. Apple refused to answer any questions about Jobs' health at that time, pointing instead to Apple's decision to end its association with Macworld as the reason for Jobs' absence.
We now know, through Monday's announcement, that Jobs decided "a few weeks ago" that determining why he was continuing to lose weight was his highest priority. Apple has not said that particular decision was linked to the decision to have Phil Schiller deliver the keynote, but it's not hard to imagine the two decisions were at least somewhat related.
So, now what? Investors seemed satisfied on Monday, sending the company's shares up more than 4 percent on a day in which the broader market was down. But how long will that keep them satisfied?
"I think this is a situation where this issue is so public now, there's going to be a regular need to provide disclosures and updates to the public," McGurn said. "Fair or not, fairness doesn't come into play in this instance, it's what the market demands."
Apple will no longer be able to say that it has decided Jobs' health is a private matter by choosing to comment on it in such a fashion Monday. "Having said it once, they've created a situation where if they don't say it again, people are going to think the worst," said Jay Lorsch, a professor of human relations at Harvard Business School.
Jobs said he expected to regain much of the weight he lost by late spring: will Apple have to issue an update to that effect to quell speculation that he's suffering from something worse? Will they have to make another update late in 2009 after predictable rumors grow that Jobs is once again losing weight?
One way Apple could avoid having to go down that road is by making its succession plan clearer, Lorsch said. Apple hasn't shared any details, but has hinted that it has a plan in place to deal with Jobs' eventual decision to leave the company.
Now may be the time to make that plan known, Lorsch said. This is a tricky decision, because announcing such a plan has the potential to create internal competition for the role or tension among those who were not chosen. Still, if anything happens to Jobs and Apple seems seems ill-prepared, questions will be raised regarding whether the board is doing its job.
Dealing with the issues surrounding Jobs' health during the last six months has presented quite a minefield for Apple. It has had to walk a fine line between the privacy concerns of its indomitable founder and the damage caused by those trafficking in The Steve Jobs Deathwatch.
But in twice declining to directly address concerns over Jobs' health--first in June, and then in December--and then going public in such a fashion Monday, Apple has set itself up for ongoing discussions regarding Jobs' health. In the future, it will be hard pressed to claim Jobs' right to privacy when new questions arise.
And clearly, this famously reticent company must now tread carefully. Jobs had more than a "common bug" plaguing him in 2008, and while Apple deftly avoided linking his absence from Macworld with his hormone imbalance in Monday's open letter, it seems hard to believe his health played no role in that decision.
Click here for more Macworld Expo coverage from CNET News.