Apple still has a credibility problem

by Mathew on January 5, 2009 · 33 comments

For some time now, there has been speculation that Steve Jobs was sicker than either he or Apple wanted to admit. At first, the company said that he simply had “a bug,” and then when the company announced that he would not be doing his usual keynote speech at Macworld — a speech so associated with him that it has come to be known as a “Stevenote” — the company denied it had anything to do with his health. Now, we know that this was untrue. Steve himself has confirmed that he is unwell as a result of a “hormone imbalance,” and that he is working on getting better (although as Wired notes, the letter is somewhat opaque when it comes to the specifics of this problem).

Before anyone flames me for not caring about the man or his family, or for prying into what should be personal affairs, or for being “ghoulish” — as someone accused me of being the last time I wrote about the Apple founder’s health — let me just say that I have nothing but respect and admiration for Steve Jobs and what he has done for Apple, and I hope that he gets over his recent health problems and lives a long and happy life. But that doesn’t mean his health, or lack thereof, isn’t of public interest.

I’ve said this before, and I’ll say it again. Kara Swisher and others can argue that his health is no one’s business, and that’s a very sweet sentiment, but it’s just plain wrong. As John Byrne of Business Week noted on Twitter today, there is a premium of anywhere from 15 to 25 per cent built into Apple’s share price because Steve Jobs is the CEO. If he were to disappear, it would remove billions of dollars in market value overnight. If that doesn’t qualify as a “material fact,” then I don’t know what does.

If it’s material, then Apple has to disclose it. And the statement from Jobs is effectively an admission of that. By extension, when the company said he wasn’t sick — and got CNBC to repeat this assertion — it was putting itself at risk of breaching SEC disclosure rules. But now that Steve has come clean everything is settled, right? Hardly. If anything, Apple’s wishy-washy approach to this whole issue over the past few months raises more questions about the company’s credibility than it answers.

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  • http://www.facebook.com/profile.php?id=2602778 Zach Landes

    Mathew, I agree completely that Apple has been sketchy about the whole thing. But now that they've revealed what Jobs illness was, I think it's water under the bridge. Now that all is revealed, no one is harmed anymore by Apple's behavior. Investors know what they needed to know, consumers generally don't give a damn, and the company will keep on truckin'.

  • Chris Ferneyhough

    It sounds like Mr. Jobs himself, nor his high priced physicians, knew what the illness was until recently. I'm not sure that Apple – or Jobs – could have come out and said: “Yeah, something's wrong, but we don't know what – but we'll get back to you as soon as we know more”.

  • http://www.mathewingram.com/work mathewi

    Thanks for the comment, Zach. I don't think it should be water under the bridge, but maybe I just hold a grudge longer than most people :-)

  • http://www.mathewingram.com/work mathewi

    It may be true that they didn't know specifically what was wrong with him, Chris — but to come out and deny that he was sick at all doesn't seem right either.

  • Charles Wilson

    They didn't deny that he was sick. They stated that his health was not an issue with performing his duties. That is still Apple's BOD statement.

    If you check back over the last several months, Steve has even personally contacted a limited set of reporters and claimed that he was indeed having health related issues but that they were *not* life threatening and in no way kept him from doing his job.

    A little more research by you is warranted before you start declaring that Jobs' and Apple's credibility are in question.

  • http://www.mathewingram.com/work mathewi

    You're right, Charles — the board didn't specifically deny that he was sick. But they did everything in their power to suggest that his health had nothing to do with him not giving his regular keynote, when clearly it did. And contacting individual reporters for off-the-record conversations hardly qualifies as disclosure.

  • http://brianfrank.ca BFrank

    Agreed. I can't help admire Jobs for thumbing his nose and saying 'mind your own business' — we all wish we could stand up for ourselves like that — he has to show more respect for the public. Even if he's right it's the wrong way to say it, and right or wrong in principle, it wouldn't necessarily take much to set off a negative cascade in this environment.

  • chuqui

    I can argue both sides of this (so what else is new?); I think the questions surrounding Job's health were significant enough to impact the stock price and people's perception of the company. Because of that, the information is material and I think Apple needed to be more pro-active about disclosing it.

    On the other hand, Apple is right; this isn't life- or company-threatening stuff, so it really isn't pertinent or relevant in terms of the company and its operations. And they're right.

    The way I reconcile those two is to note that while the illness wasn't pertinent, the continuing rumors were, and I felt they really should have dealt with them before now. The only way to do that is what they finally did, which was disclose enough data to show it's no big deal. Which basically, it isn't. By not doing so, they took a molehill and allowed everyone to turn it into a mountain.

  • http://www.mathewingram.com/work mathewi

    Thanks for the comment, Brian. Well said.

  • http://friendfeed.com/ontarioemperor ontarioemperor

    I got here via Steven Hodson's post on The Inquisitr, and I agree that this was material information that should have been disclosed back in 2008. Even if the doctors didn't know the cause of Jobs' weight loss at the time the Macworld keynote decision was made, it would have been better for Apple and Jobs to say something rather than nothing.

  • http://friendfeed.com/ontarioemperor ontarioemperor

    Zach, there is a pattern of past stretching of the truth or whatever you call it. Previously Apple said that Jobs was fine, but that's not the case. Now Apple says that Jobs should be fine by the spring; once burned, twice shy?

  • http://friendfeed.com/ontarioemperor ontarioemperor

    Charles, for me the key point in this whole thing was the decision for someone other than Steve Jobs to deliver the keynote at the Macworld Expo. I just re-read Apple's press release at the time, and it simply stated “Philip Schiller, Apple’s senior vice president of Worldwide Product Marketing, will deliver the opening keynote for this year’s Macworld Conference & Expo.” That's it. In my view, there was a clear omission of information there.

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  • TrevorCampbell

    It’s not surprising that Apple has been slow to reveal the exact details of Steve Jobs’ health. These types of material announcements need to be carefully managed by the communications team which includes the oftentimes slow navigation through the C-suite, legal department and Board. But as you accurately point out, the slow unveiling of bad corporate news impacts credibility.

    Big, publicly traded companies, and government, for better or for worse, tend to slowly release bad news. This drawn out method of releasing important news certainly gets in the way of credibility, authenticity and transparency. However, I don’t think the objective is always to obfuscate the truth. Few people hurry to share bad news, including the leaders at big companies and government. This is a fact of life. That said, whether the internal foot dragging is meant to hide the facts or is the result of human nature and denial, taking too long to share bad news impacts credibility.

  • Gilliebee

    I totally agree with your premise (and also have admiration and respect for Jobs and the company, and hope the health issues are resolved as simply as Mr. Jobs suggests they will be).

    It is not just the share price that is at stake here (although it's a compelling argument that Apple should consider being honest about the health of its CEO). Many of us learned in rudimentary economics that goodwill is often reflected in the share price of a company, and by the premium consumers are willing to pay to get the brand.

    There is also another type of goodwill at stake here: the communications “goodwill” of the company. It can be easily eroded by companies that change the story from week to week, and by spokespeople that are not empowered or who clearly are not trusted enough to be given the truth.

    Having a charismatic, proven leader (like Steve Jobs) may help companies who ignore the tenets of good communication to weather certain storms, but if and when that leader steps aside, for any reason, there is a danger that there is no communications “goodwill” left in the kitty, which can make it very hard for companies to generate the kind of “press” and feedback required to hire the best people, generate excitement among buyers, win the trust of bankers, etc etc .

  • http://www.mathewingram.com/work mathewi

    That's an excellent point, Gillie — thanks for the comment.

  • http://www.mathewingram.com/work mathewi

    Thanks, er… Emperor :-)

  • http://www.mathewingram.com/work mathewi

    Thanks for the comment, Trevor. I think you are right about the pressures a company faces, and the red tape that is often involved before something is said — but I think people are somewhat less forgiving about that kind of thing than they used to be, now that virtually instant communication is possible. Even a simple statement could have saved the company a lot of pain.

  • svrc

    I think you're a disgusting blood sucker, looking for drama to drive clicks to your site.

    The illusion of Apple's credibility problem is invented by the media, and by relationship, you. There would be a credibility problem if Apple had blatantly lied. I don't think they have. A hormone imbalance isn't deathly sick, it's something *millions* of people suffer – sometimes making them TOO FAT, not just too skinny. I suppose millions of executives with Thyroid conditions should be making SEC declarations now?

  • http://www.mathewingram.com/work mathewi

    Thanks — not surprisingly, I disagree on the “disgusting blood-sucker” part of your comment. I'm just interested in the issue itself, not the traffic.

  • TrevorCampbell

    It’s not surprising that Apple has been slow to reveal the exact details of Steve Jobs’ health. These types of material announcements need to be carefully managed by the communications team which includes the oftentimes slow navigation through the C-suite, legal department and Board. But as you accurately point out, the slow unveiling of bad corporate news impacts credibility.

    Big, publicly traded companies, and government, for better or for worse, tend to slowly release bad news. This drawn out method of releasing important news certainly gets in the way of credibility, authenticity and transparency. However, I don’t think the objective is always to obfuscate the truth. Few people hurry to share bad news, including the leaders at big companies and government. This is a fact of life. That said, whether the internal foot dragging is meant to hide the facts or is the result of human nature and denial, taking too long to share bad news impacts credibility.

  • Gilliebee

    I totally agree with your premise (and also have admiration and respect for Jobs and the company, and hope the health issues are resolved as simply as Mr. Jobs suggests they will be).

    It is not just the share price that is at stake here (although it's a compelling argument that Apple should consider being honest about the health of its CEO). Many of us learned in rudimentary economics that goodwill is often reflected in the share price of a company, and by the premium consumers are willing to pay to get the brand.

    There is also another type of goodwill at stake here: the communications “goodwill” of the company. It can be easily eroded by companies that change the story from week to week, and by spokespeople that are not empowered or who clearly are not trusted enough to be given the truth.

    Having a charismatic, proven leader (like Steve Jobs) may help companies who ignore the tenets of good communication to weather certain storms, but if and when that leader steps aside, for any reason, there is a danger that there is no communications “goodwill” left in the kitty, which can make it very hard for companies to generate the kind of “press” and feedback required to hire the best people, generate excitement among buyers, win the trust of bankers, etc etc .

  • http://www.mathewingram.com/work mathewi

    That's an excellent point, Gillie — thanks for the comment.

  • http://www.mathewingram.com/work mathewi

    Thanks, er… Emperor :-)

  • http://www.mathewingram.com/work mathewi

    Thanks for the comment, Trevor. I think you are right about the pressures a company faces, and the red tape that is often involved before something is said — but I think people are somewhat less forgiving about that kind of thing than they used to be, now that virtually instant communication is possible. Even a simple statement could have saved the company a lot of pain.

  • svrc

    I think you're a disgusting blood sucker, looking for drama to drive clicks to your site.

    The illusion of Apple's credibility problem is invented by the media, and by relationship, you. There would be a credibility problem if Apple had blatantly lied. I don't think they have. A hormone imbalance isn't deathly sick, it's something *millions* of people suffer – sometimes making them TOO FAT, not just too skinny. I suppose millions of executives with Thyroid conditions should be making SEC declarations now?

  • http://www.mathewingram.com/work mathewi

    Thanks — not surprisingly, I disagree on the “disgusting blood-sucker” part of your comment. I'm just interested in the issue itself, not the traffic.

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