Jobs health odyssey shows how hard it is to sell

AKA Keep an eye on Apple’s Steve Jobs part 5

At 7:11am on Tuesday, June 10, 2008, we posted a comment (see “Keep an eye on Apple’s Steve Jobs“) about Mr. Jobs. I’d seen the video the day before, but the vacuous blog writing gets underway in the early, early am around these parts (the only time that work and family are both sleeping):

Watch the video of yesterday’s keynote address at the WWDC 2008 meeting. Apple (AAPL:NASDAQ) CEO Steve Jobs doesn’t look well. You have to say it. Gaunt. Tired. Unfortunately thin. Sickly. If we were friends I’d be concerned.

Can any of this be good for the stock?

At 8:42am, Henry Bloget comes out with a similar storyline. As I came to find out later, gossip site Gawker and Matthew Ingram were first out of the gate on the 9th.

Lots of ink has been spilled since then, both electronic or otherwise. At the time of the conference, though, it is interesting that the Mac devotees didn’t breathe a word of it. CNET’s live blogging coverage of the WWDC event didn’t find Mr. Jobs’ appearance to be worthy of note. Drudge posted a photo of Mr. Jobs the following day, with no commentary, and that’s when the DTM got on board.

When the WSJ first wrote about the health concerns of the blogging world at 2:36p.m. on June 10th, the loyalists snapped:

I thought he looked good, weight is proper, wish mine was.

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Perpetuating this FUD by referencing sources like Drudge, shows even the WSJ is nothing but a business version of the national enquire. The sensation over truth headlines and such is the reason this will be the last year I subscribe. The Blogs are just the tip of the iceberg for these gossip rags.

Thanks for makeing it that much easier to remember why I am cancelling.

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Wow, to see the depths that a once-respected news outfit as fallen. It’s truly sad. It’s pathetic.

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Look at the picture WSJ chose to use… This is yet another example of the media trying to manufacture the news. All I ask is that they stop trying to spin or sell the news. I was at the keynote and he looks the same to me — just older.

More than six months have passed, and Apple’s corporate reaction to this noise has jumped around. On June 10, 2008, Apple’s PR team says that Mr. Jobs is recovering from a common “bug”. On July 21, 2008, the spokesperson on the quarterly conference call referred to his health as a “private matter” (see prior post “Keep an eye on Apple’s Steve Jobs part 4” July 21-08).

On January 5, 2009, it in no longer a private matter for some reason. Perhaps because the news about his heath (hormone imbalance) is so reassuring. Or because they actually now think they know what is up. Jobs writes a letter to the Apple community. The endnote is interesting: “So now I’ve said more than I wanted to say, and all that I am going to say, about this.”

A few days later, some grave new information from his doctors kicks off a six month medical leave. The stock is down 7.7% in the overnight market. At $78.75, it is well off the $180/share of last June. In fact, while the NASDAQ is down 40% since June 9th, Apple shares are off 54%, and that’s before the overnight selloff. (RIM is down 66% during the same period).

The message of the past seven months is clear. If everyone agrees that Mr. Jobs is integral to the success of Apple (and its stock), at least in a headline fashion, why didn’t the brokerage industry send investors to the sidelines last June? Things were certainly fuzzy on the Jobs health front. The NASDAQ selloff might not have been forseen, but Apple hasn’t even kept up with that poor performance.

Compared to Research In Motion, Apple shares have held in better, maintaining a 16x P/E multiple versus RIM’s 14.6x, again before the overnight selloff. But, still, the importance of Jobs’ health to the company was clear, and the answers were never helpful, even when Apple came clean last week and broke their own code by finally disclosing what was up. Some investors sold last summer I suppose, and fewer went short, but there never appeared to be a unique rush for the exits. Why is it soooo hard for all of us to sell stocks, even when we know in our gut that something isn’t just right?

That’s the takeaway for investors, and it is unfortunate that Mr. Jobs’ health has to be our lesson. We could see the recession about to crest, and the Dow dropping from 10,000 to 8,000 (see prior post “Globe & Mail coverage on stock market turmoil” October 6-08), but few of us made any changes to our own portfolios.

The experience for Apple investors over the past six months is a bit of a petri dish. Nortel’s balance sheet told the brutal story, but the market cap was still $200 million prior to yesterday. The information we need is often all around us, we just need to admit it.

MRM
(disclosure – I own RIM)