Buffett: Apple Withheld "Material Fact" On Steve Jobs Health

http://www.cnbc.com/id/31526814/

by jakarta • 17 years ago

47 47 17 years ago

jakarta2• 17 years ago

What I think is particularly interesting here is the fact that Buffett and Jobs are probably the two most prominent CEOs in America (with cultish followings) and employ styles that are almost directly opposite of each other.

Buffett cultivates an image that portrays him as being very open and easy to communicate with. He meets with students, his annual meeting prominently features himself interacting with the public (Q&As, so forth).

Jobs has always seemed like the opposite of that to me. Much more guarded and private. I don't think that either style is better than the other, but it's definitely interesting to see how they do their jobs.

vaksel• 17 years ago

the important thing is to do your own thing. Trying to adapt to how others do things won't help that much, because no matter how successful a person is, there are a ton of examples of people being just as successful doing completely opposite things.

jakarta2• 17 years ago

I agree, but it also helps to study others and learn from their decisions and mistakes. Buffett for instance, spent a good deal of his youth reading books about famous executives: Rockefeller, Carnegie, Vanderbilt, and so on.

padmanabhan012• 17 years ago

As of today, the FASB (Financial Accounting Standards Board) has not made 'CEO's health' to be something that should be legally disclosed. Should they or shouldn't they is beyond the point. But till then, I think its stupid to blame Apple.

halo• 17 years ago

So you're saying that because Apple was given the choice as to whether or not to reveal that information, it's 'stupid' to blame Apple for deliberately making the choice to hide it.

russell• 17 years ago

Apple lied. A hormone imbalance is not the same as a liver transplant. It's the kind of information that can materially affect the price of a stock. The SEC will probably take an interest.

EDIT: It was certainly a lie by omission. Apple is a large corporation with a significant number of employees and stockholders. It is a requirement to keep them informed. The secrecy and cult of personality is fine as a marketing ploy, but not as a fiduciary responsibility.

dchest• 17 years ago

Lied?

Steve Jobs, January 5, 2009 (http://www.apple.com/pr/library/2009/01/05sjletter.html):

As many of you know, I have been losing weight throughout 2008. The reason has been a mystery to me and my doctors. A few weeks ago, I decided that getting to the root cause of this and reversing it needed to become my #1 priority.

Fortunately, after further testing, my doctors think they have found the cause—a hormone imbalance that has been “robbing” me of the proteins my body needs to be healthy. Sophisticated blood tests have confirmed this diagnosis.

Some random article on hormone imbalance (http://www.thefamilyhomestead.com/hormoneimbalance.html):

A second factor that leads to hormonal imbalance is liver health.

bbuffone• 17 years ago

I don't think that the health of the CEO is the important issue for disclosure. The main issue is the fact or prospective that Apple will fail/falter if Steve Jobs is no longer capable of being CEO.

This is a multi-billion dollar organization. It is the responsibility of the organization to ensure they are not single threaded.

What if he was hit by a car crossing the road while texting on his iPhone? What about a plane crash? Sudden heart attach? or any other horrible accident?

Steve Jobs is obviously a one in a billion (6 people on the planet like him) type of person, but still. If there is one thing that Steve Jobs should do in this chapter of his career is to take that Steve Jobs magic and find, mold, develop his replacement and market the hell out of them.

thras2• 17 years ago

Is it an obligation to tell your boss about a health problem that could keep you from finishing an important task? Of course.

Steve Jobs' boss is his stockholders.

xal• 17 years ago

No, his boss is his board. The board knew what was going on.

The shareholders can appoint new board members if they feel so inclined.

JabavuAdams2• 17 years ago

It's certainly not a legal obligation. It may be a contractual obligation, depending on what you've signed.

thras2• 17 years ago

Legal obligations are only a small fraction of the real obligations of men.

andreyf3• 17 years ago

Steve Jobs' boss is his stockholders

His obligations to the board and his stockholders are so different from what most people consider by the word "boss", I think that's more misleading than informative...

andreyf3• 17 years ago

Somehow, I doubt Buffet understands the applicable laws better than Apple's lawyers. I guess it's not just the Hacker News Effect, Matt ;) (http://mattmaroon.com/2009/05/01/hacker-news-disease/)

jerf• 17 years ago

Warren Buffett is not up on the legal disclosures required involved when the health of a CEO of a large public company is imperiled? Boy, he'd better bone up fast then! He's coming up on 80 pretty quickly.

He might just have a clue what he's talking about here. People don't fit in pigeonholes; a guy with a math degree may, in fact, know how to fix a running toilet. I know! It's amazing! And a CEO of a very large public holding and insurance company might just have more than a passing familiarity with SEC disclosure laws. I know I'm going out on a limb there, but I think it's a reasonable bet.

Me? What I know is that I don't know anywhere near enough to referee this discussion.

andreyf3• 17 years ago

Warren Buffett is not up on the legal disclosures required involved when the health of a CEO of a large public company is imperiled?

That's not what I said. What I said is that I'm sure Apple's lawyers went through the legal implications of non-disclosure, and OK'd it, whereas Warren is not a lawyer. I have a math degree and know how to fix a running toilet, but I probably shouldn't give tips to a highly competent team of plumbers on their plumbing decisions.

ErrantX2• 17 years ago

Lets be clear here Buffet is not saying Apple DID do something illegal - just that he thinks Jobs' health might be a material fact (I think that is a distinction.. isn't it?).

What I got was that Buffet finds it a bit underhand/secretive (not that there is necessarily wrong with that so long as it was legal etc.) in a way that doesnt sit well with his "way of doing it".

padmanabhan012• 17 years ago

Buffett is around 80. He hasn't announced his successor yet. and he finds it a bit underhand/secretive about Jobs not disclosing his health?

ErrantX2• 17 years ago

Is 80 too old now? He seems perfectly able for another several more years at the very least. I'm sure if an illness strikes him down he would tell people :)

nostrademons2• 17 years ago

It's possible that Buffett doesn't know who his successor is - last I heard, he had a shortlist of 4 candidates and was evaluating them all. That's different from knowing if you're about to have a liver transplant...

byrneseyeview• 17 years ago

He has announced the existence of successors.

goodkarma• 17 years ago

I think Buffett is spot on.

bonsaitree• 17 years ago

As a public company in the U.S., Apple shares are traded in markets regulated by the S.E.C. Amongst other things, any fact which could "materially alter" the performance of those shares in those markets must be disclosed.

The board need not disclose the specifics of Steve's medical condition, but it MUST disclose if, at any point, his health prevents him from performing his duties as demarcated by his employment contract.

In all likelihood, this was not done within the typical timelines, channels, and detail as proscribed by S.E.C. charters, but the S.E.C has extremely broad discretionary powers in these matters and could simply decide to do nothing.

Given the extreme congeniality of the Apple board and Steve's celebrity status, it's likely that they voted to offer no disclosure after Steve, himself, announced his condition following a pseudo off-the-record disclosure to the NYT.

The key thing is that Steve personally made the more detailed announcement--not Apple. The board only disclosed the 6 month medical leave and it's highly likley that no official board minutes will offer written record of these health discussions beyond the press release. This gives the board legally plausible, but weak, deniability regarding the details of Steve's health.

Buffett is correct, but given the various vestments of the parties involved (including the S.E.C.) it's likely that nothing will come of the matter barring a disgruntled board member or demands for an audit by a bloc of institutional investors.

ubernostrum• 17 years ago

"The board need not disclose the specifics of Steve's medical condition, but it MUST disclose if, at any point, his health prevents him from performing his duties as demarcated by his employment contract."

I think the fact that he took a much-publicized medical leave of absence covers that. What more, precisely, were you expecting?

"The key thing is that Steve personally made the more detailed announcement--not Apple. The board only disclosed the 6 month medical leave and it's highly likley that no official board minutes will offer written record of these health discussions beyond the press release. This gives the board legally plausible, but weak, deniability regarding the details of Steve's health."

Flip side: the board likely is legally forbidden from disclosing details, due to medical privacy laws (only the patient can decide when, how, for what purposes and to whom private medical information is disclosed).

nopassrecover2• 17 years ago

People are taking this too seriously. Buffett probably sees Jobs as a rival (perhaps not a direct one) and it is instinctive to highlight the flaws in your competitors. Furthermore, I don't know if Buffett stands to gain or lose depending on Apple's share price but he is probably more concerned with the general principle of disclosure. The use of "material fact" was probably used by Buffett to make it clear that there is an obligation (at least ethically and potentially legally) to disclose this sort of information (i.e. that Jobs was putting himself at a much greater risk (transplant) than implied and disclosed).

nopassrecover2• 17 years ago

Wow, so people really think it more likely that Buffett is implying a future legal challenge than Buffett is stirring a bit of publicity?

jhancock• 17 years ago

Who did not know Jobs had cancer? Who did not know he could have died from that or related complications? The precise details are unimportant. A workaholic like Jobs doesn't take 6 months medical leave unless its serious. Apple clearly setup a line of succession. What else does an investor really need to know?

torpor• 17 years ago

This fuss over the Great Leaders Health is a tacit admission that Apple is a cult.

Buffett: Apple Withheld "Material Fact" On Steve Jobs Health

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