The Steve Jobs Conundrum

Over the past 10 years, Apple (Nasdaq: AAPL  ) has returned more than 580% for shareholders. Its founder and CEO, Steve Jobs, was just named CEO of the decade by Fortune. The company went from irrelevant to unstoppable under Jobs' return to leadership.

Upon his return, Jobs didn't just inject new life into the struggling Macintosh line of computers. He also led the company in launching redefining products such as the iPod and iPhone, into fields that were highly fragmented and full of fierce competition from the likes of SanDisk (Nasdaq: SNDK  ) , Microsoft (Nasdaq: MSFT  ) , and Nokia (NYSE: NOK  ) . Google (Nasdaq: GOOG  ) founders Sergey Brin and Larry Page called Jobs their "hero."

But Jobs also has shown signs of shareholder-unfriendly behavior over the years, including being mixed up in an options backdating scandal (for which he was never formally charged), hoarding cash, and disclosing the bare minimum about his health while battling life-threatening illnesses.

Put another way: Would you want your son to play hoops for Bob Knight?
In recent weeks, there's been a Steve Jobs debate on Fool.com and our community discussion boards.

Fool analyst Rich Greifner claimed that "Steve Jobs Couldn't Care Less About You":

Over the years, Steve Jobs has repeatedly demonstrated indifference for his shareholders' well-being. While his poor stewardship hasn't hurt shareholders too badly yet, I believe it's only a matter of time.

On the flip side, Fool community member Jeff Milton said, "who cares?"

My bottom line is this: Results matter. Ignoring past results to focus on perceived past shortcomings is like rewriting a history book. Apple under Steve Jobs has continued to reward shareholders with market-crushing returns by focusing on the long term, not what Wall Street wants next quarter.

As I see it, the debate comes down to this: Can a shareholder-unfriendly manager be "bad" if he makes shareholders buckets of money? And on the flip side, can a shareholder-friendly manager really be "good" if his or her stock is flat or negative?

In truth, not every CEO possesses the combination of "good steward" and "great long-term stock price results." Dan Amos from Aflac (NYSE: AFL  ) and Jim Sinegal from Costco (Nasdaq: COST  ) are two of the rare examples.

I'm interested to hear your opinion. Are stock returns the panacea for shareholder concerns about leadership? Do they wipe away all the blemishes, or simply mask future problems?

What say you, Fools? Let me hear your thoughts in the comments section below.

Google is a Motley Fool Rule Breakers pick. Apple, AFLAC, and Costco are Motley Fool Stock Advisor recommendations. Costco, Microsoft, and Nokia are Motley Fool Inside Value selections. The Fool owns shares of Costco. Microsoft is a Motley Fool Options selection. Try any of our Foolish newsletter services free for 30 days.

Brian Richards owns shares of Microsoft. He also owns an Apple computer and a Costco membership, but no other stocks mentioned above. The Fool's disclosure policy refuses to acknowledge that Tony Soprano met his demise on the series finale. A guy in a Members Only jacket taking him out? Fuggedaboutit!


Read/Post Comments (12) | Recommend This Article (17)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 08, 2009, at 4:40 PM, Rocket09 wrote:

    Taking care of the business first, is looking after shareholders. A growing, successful business is the best way to take care of the investors.

    There have been way too many CEOs who take care of the shareholders while running the company into the ground.

  • Report this Comment On December 08, 2009, at 5:03 PM, sp84 wrote:

    I'm siding with Jeff M on this one. A CEO who can consistently have his company beat Wall Street expectations cannot be considered a "poor steward". I'm an Apple shareholder, and I'm perfectly content to have the company keep a bunch of cash in their coffers. It gives them the ability to move quickly to acquire companies, and keep its best talent during a recession. Apple will probably suffer a bigger hit when he leaves the helm.

  • Report this Comment On December 08, 2009, at 5:42 PM, demodave wrote:

    I'm with Rocket. Apple has done very well for me, even with it's little dippy-do during this recession. I think that if you lead a company that produces products as outstanding as Apple does, you are taking care of both your customers and your shareholders. I'm both, and I couldn't be happier. Well, OK, I wish I had bought all the way back at $2, but $9 is working out pretty well for me as a cost basis.

    Yes, I'm long Apple, I own their "toys", and I am a total fanboi.

  • Report this Comment On December 08, 2009, at 5:51 PM, Turfscape wrote:

    Apple is in aggressive growth mode, right now. The moves Steve Jobs has been making are indicative of that, and in PROTECTION of that (such as holding a large cash reserve).

    Jobs needs to consider short term flexibility for aggressive growth. After an increase in market share, I may re-evaluate my position on this (looking for dividends, or long-term investment positions for the cash reserve, etc.). But for now, I am happy with Jobs' decisions and direction.

  • Report this Comment On December 08, 2009, at 5:51 PM, Turfscape wrote:

    Apple is in aggressive growth mode, right now. The moves Steve Jobs has been making are indicative of that, and in PROTECTION of that (such as holding a large cash reserve).

    Jobs needs to consider short term flexibility for aggressive growth. After an increase in market share, I may re-evaluate my position on this (looking for dividends, or long-term investment positions for the cash reserve, etc.). But for now, I am happy with Jobs' decisions and direction.

  • Report this Comment On December 08, 2009, at 9:52 PM, FoolishSeattle wrote:

    Past history is not a promise of future results. Jobs has done well, but with that attitude aapl might find itself having a tough time if they hit a rough patch.

  • Report this Comment On December 08, 2009, at 9:54 PM, NorseWarrior wrote:

    We have a huge ethical crisis in our business leadership, and Jobs is the poster child. The 'blind eye' approach that some would choose to take is irresponsible as it encourages risky behaviors. And, having seen the justice system at work, I can honestly say that those with the best lawyers win; I don't believe for a second that Steve Jobs wasn't up to his elbows in the backdating of options.

  • Report this Comment On December 09, 2009, at 12:59 AM, ikkyu2 wrote:

    If you don't want to be associated with the most repeatedly groundbreaking, user-friendly, best-selling, top-rated, highest margin hardware and software company ever to exist, don't buy AAPL stock.

    If you don't like Steve Jobs, don't buy AAPL stock.

    Jobs runs a company his way. He has repeatedly proven to the satisfaction of all that his way is better than the way of others with less vision. If you can't stomach that, buy a company that produces widgets and sells them for an operating margin of 3%. I recommend Crown Cork and Seal.

  • Report this Comment On December 09, 2009, at 5:15 AM, Fool wrote:

    I cant understand how anyone can fault Jobs in the context of shareholders - he is amazing and anyone holding Apple stock should be happy. My only concern is that Apple failed without him - and the question is - will it sustain the success Jobs has led with out him? I dont think so....

  • Report this Comment On December 09, 2009, at 7:25 AM, HerbalEd wrote:

    I couldn't care less how "shareholder-unfriendly" Jobs might be. As long as my AAPL stock keeps making me lots of money I'm very, very happy with his performance as CEO.

  • Report this Comment On December 09, 2009, at 10:11 AM, JJMSpartan wrote:

    I think my opinion on AAPL was pretty well documented in the post. ;-) I get it that people don't like Steve - heck, I think he likely is a bit of a jerk (or maybe that's just the impression I get from reading Fake Steve Jobs so much).

    Apple has a corporate slogan of "Think Different", and in that sense, the definitely do think differently than a lot of other companies. They seem to be laser-focused on building the best, most innovative, most profitable devices they can, and on setting up the company for long term success. They regularly ignore pleadings from Wall Street and pundits to run their business differently. And they have crushed the market in returns.

    I think that maybe they know what they are doing...

  • Report this Comment On December 14, 2009, at 11:24 AM, Fool wrote:

    Dan Amos FTW!

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