The End of an Era: Steve Jobs Resigns as Apple CEO

The news crossed the business wires at 6:34 p.m. today: Steve Jobs is resigning from Apple (Nasdaq: AAPL  ) . The resignation letter was brief and offered little additional explanation:

To the Apple Board of Directors and the Apple Community:

I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple's CEO, I would be the first to let you know. Unfortunately, that day has come.

I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director and Apple employee.

As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.

I believe Apple's brightest and most innovative days are ahead of it. And I look forward to watching and contributing to its success in a new role.

I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you.

Steve

While a specific reason for his resignation wasn't given, the most likely culprit is his continuing health battles. In January of this year, Jobs took another leave of absence to focus on his health. It wasn't the first time Jobs had medical problems; an earlier medical leave in 2009 was later revealed to be related to a liver transplant. Since that time, rumors have swirled as to the severity of his medical situation, but the resignation today confirms Jobs' health is bad enough that he no longer feels capable of serving as CEO.

Of course, the question from investors now turns to who will run Apple. Apple's rise to becoming the world's largest company has been breathtaking. The chart below shows the speed with which Apple caught up to not only technology king Microsoft (Nasdaq: MSFT  ) , but later even ExxonMobil (NYSE: XOM  ) to become the world's largest company.

Source: Capital IQ, a division of Standard & Poor's.

Apple will be left in capable hands. Steve Jobs' request that Tim Cook lead the company isn't unexpected. Cook has served as COO since 2007 and has long been lauded for his ability to manage Apple's booming supply chain. Cook's organizational expertise is well-enough regarded that AMD (NYSE: AMD  ) tried tapping him to lead the company recently. Not surprisingly, he turned this position down.

However, Cook has long been thought of as only a piece of a triumvirate that worked behind the scenes to ensure Steve Jobs' visions made it to market and were commercial blockbusters. The other two members of the triumvirate are Jonthan Ive and Phil Schiller. Ive is the principal designer at Apple, and has been responsible for the design of every hit product since Apple began its meteoric rise at the start of the last decade. Schiller is the company's marketing leader and is credited with helping establish the unique brand identity of Apple products.

When Cook becomes the new leader, he'll lean heavily on these other figures. Also, while Jobs will no longer be CEO, as chairman of the board, his influence still will be widely felt within the walls of Apple's Cupertino headquarters.

Still, it can't be stressed enough that while other executives at the company are rare talents, replacing the vision of Steve Jobs will be a challenge. The existing management should be well-suited to shepherding already-successful product lines like the iPhone and iPad to continued growth. Ive can continue designing great next-generation products while Cook worries about the operational side and plots how Apple attacks new market opportunities for those products (such as additional distribution in China).

Apple also faces enormous challenges and opportunities in the coming years. Android has aggressively stolen market share in the mobile market and Apple will need to continue defending its turf. Apple still commands nearly two-thirds of total mobile profits -- i.e., the important thing -- but mobile challenges will continue to evolve and grow. For example, Google (Nasdaq: GOOG  ) recently announced its intention to acquire Motorola Mobility (NYSE: MMI  ) and aims to get more aggressive in marketing its own hardware. There are also reports that Amazon.com (Nasdaq: AMZN  ) plans on releasing a tablet at a very competitive price point.

On the opportunities side, Apple not only has massive growth in front of it in emerging markets -- sales to China grew sixfold last quarter -- but can also look to expanding its offerings to new areas. An obvious idea would be a new Apple TV box -- or even an Apple-branded TV itself -- that would bring apps and Apple's media ecosystem further into the living room.

While it'll never be easy seeing a visionary leader like Jobs go, Apple has strong momentum in its existing categories and its biggest trial in the years ahead looks to be how best to leverage and expand iOS into new markets and new categories. Steve Jobs' day-to-day presence at Apple will be missed, but the company has become much more than the Great Turtlenecked One.

To keep tabs on how the post-Steve-Jobs Apple moves into the future, make sure to add the company to our free My Watchlist feature. It'll deliver up-to-date news and analysis as the company navigates these critical times.

  • Add Apple to My Watchlist.

Eric Bleeker owns shares of no companies listed above. The Motley Fool owns shares of Google, Apple, and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft, Google, Apple, and Amazon.com. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (30) | Recommend This Article (51)

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 August 24, 2011, at 8:05 PM, calimary wrote:

    dear steve, i <3 apple. thank you for gracing my life with your genius. i wish you all the best.

  • Report this Comment On August 24, 2011, at 8:25 PM, TMFTomGardner wrote:

    The greatest creative commercial leader of our time has stepped down. While everyone will naturally debate what this means for the company, its employees, customers, and shareholders...I hope -- as this article has done -- a lot of the coverage is given over to who he is and what he has achieved.

  • Report this Comment On August 24, 2011, at 8:27 PM, sjledet1 wrote:

    So far, after hours AAPL is down almost $20. It's not like this news was unexpected.

  • Report this Comment On August 24, 2011, at 8:28 PM, FoolSolo wrote:

    Mr. Jobs will be remembered as a great visionary, great leader, and for his brilliant maneuvering at the helm of Apple, despite his health issues. I'm glad he'll still have a part in Apple.

  • Report this Comment On August 24, 2011, at 8:52 PM, TMFTypeoh wrote:

    So sad.....what an incredible guy. Knowing how driven he is, his health must be quite poor for him to need to step down. What a huge loss.

  • Report this Comment On August 24, 2011, at 9:15 PM, firemachine69 wrote:

    Sunnava... This is gunna hurt like hell in the morning!!! :'(

  • Report this Comment On August 24, 2011, at 9:17 PM, baldheadeddork wrote:

    Guys, he's leaving one job. He's still Chairman of Apple and he isn't dead yet. Save the obits for when they're needed.

    But that said, the concerns about his health are obvious, and I wish nothing but the best for him and his family.

    Apple is in a great place for this transition to happen. Their position couldn't be stronger. However, there are a couple of potentially large potholes. Apple has to continue crushing expectations. If Jobs retires from day-to-day management and they don't outperform as they have for the last few years, all of the talk about infinite double-digit growth at Apple is going to evaporate. The next couple of quarters are hugely important to Apple's future for the next two or three years.

    The other pothole is will Jobs health allow him to remain an active presence in the company until the new team makes its name. It will help Apple greatly if Jobs remains in the background of the picture for the next year or two. If he's gone six months from now, that is going to create a lot of turmoil.

    Also remember that companies rarely continue to be so brilliant when iconic CEO's leave. The examples are everywhere - GE after Welch, Microsoft after Gates, Citigroup after Weill, Chrysler after Iacocca, ad infinitum. Even McDonalds hit a major slumped badly for more than a decade after the death of Ray Croc. I could come up with these examples just off the top of my head, but I can't think of one case where a superstar CEO leaves and the company gets better. Can you?

    Right now we're going to look at Jobs departure, and the freight train of success he created and rationally say that nothing changes. But two years from now it's very likely we'll remember right now as the moment when everything changed. We just don't know how - yet.

  • Report this Comment On August 24, 2011, at 9:44 PM, mikecart1 wrote:

    Apple is going down. It is like Jordan leaving the Bulls for a couple of years to dominate in baseball. The Bulls were still great and even made the playoffs. But with Pippen (Cook) as the new leader, Apple will no longer be unstoppable. They will lose in the playoffs as people like Sandisk continue to create cheaper and better performing mp3 players and other companies like Samsung create cheaper and better performing tablets. Apple's computers aren't going to sell much better with their current prices. Apple is slowly losing the lead and soon will be just another Microsoft treading water near the top as other companies offer better stock potential.

  • Report this Comment On August 24, 2011, at 10:19 PM, DoctorLewis4 wrote:

    I'm a buyer of Apple tomorrow. Go ahead and buy Sandisk and Samsung. In five years I'll take the Apple side of that bet any day any time.

  • Report this Comment On August 24, 2011, at 10:50 PM, nycinnkeeper wrote:

    Am tired of losing all my massive gains -- just lost almost a $100 a share on Neflix in a month after being so tempted to pull out when it was trading around $300 prior to the budget fiasco. I know most fools don't suggest a lot of buying and selling but why shouldn't a fella like me want to protect his gains when anyone in their right mind could see this big pullback coming?

    Can I trade this ahead of start of tomorrow when I'm certain that in this shaky market Apple has to take a major hit. Protect my profits now? Have never tried to execute a trade in time of market opening? How does one do this...effectively? The last thing I want is to have the trade executed after the big drop. Already down 20% in advance trading according to one fool (above).

    I am of course hoping to buy back into Apple. I last bought big at 236 a share...

  • Report this Comment On August 24, 2011, at 11:23 PM, MNLegacy wrote:

    It's not down 20%, it's down about $20 which at Apple's share price is roughly 5%.

  • Report this Comment On August 24, 2011, at 11:29 PM, daillengineer wrote:

    he said it was down $20 after hours, not 20%.

  • Report this Comment On August 25, 2011, at 12:37 AM, awallejr wrote:

    I never liked Jobs as a person. I guess the protrayal of him in the movie "The Pirates of Silicon Valley" effected my feelings. I wanted to punch him after seeing the scene where he humiliated someone who was applying for a job. I suspect the reason for his resignation is because he is probably dying from his pancreatic cancer. The writing was pretty much on the wall in light of his obvisous weight loss.

  • Report this Comment On August 25, 2011, at 1:04 AM, ayaghsizian wrote:

    I believe Tim Cook has been doing a fine job for years now. Starting today he will be getting more of the credit. I may buy more in the morning.

    They still sell great stuff, more cash than most countries, and people like my sister who have no idea who runs apple but want their iProducts.

  • Report this Comment On August 25, 2011, at 1:10 AM, dschleicher wrote:

    Steve,

    We'll miss you! Stay healthy! Thanks for all the product and booming stock memories!

    In the next few days, I'm going to liquidate more non-AAPL stock holdings and buy more AAPL.

    dschleicher (long AAPL)

  • Report this Comment On August 25, 2011, at 1:44 AM, MichaelDSimms wrote:

    Good company, very innovative. But no dividend, they probably have some growth left, but doubt it will be substantial.

  • Report this Comment On August 25, 2011, at 2:06 AM, nycinnkeeper wrote:

    ah, sorry all - I meant $20 not 20%. Phew...

  • Report this Comment On August 25, 2011, at 9:03 AM, TMFBane wrote:

    Here's a link to the famous commencement address at Stanford by Jobs:

    http://professional.wsj.com/article/SB1000142405311190359690...

    It's just incredibly inspirational. Below is a great quote from it:

    "Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary."

  • Report this Comment On August 25, 2011, at 9:04 AM, cayoung wrote:

    Here's one person's personal impression of Tim Cook: http://www.tuaw.com/2011/08/25/tim-cook-my-first-person-impr...

  • Report this Comment On August 25, 2011, at 9:14 AM, rav55 wrote:

    Looks like AMD will get Lenovo's COO Rory Reed for new CEO!

    All sorts of stuff going on today!

  • Report this Comment On August 25, 2011, at 9:34 AM, tandrako wrote:

    Everyone is missing the point they keep stressing, Jobs is a visionary. Do not think for a minute that they do not have a product roadmap for the next few years and probably decade(s).

    Steve may be responsible for the fanatical attention to product and design detail, but it was Cook that secured the supply chain and locked in production commitments while limiting or locking out production for the competition.

  • Report this Comment On August 25, 2011, at 9:39 AM, hiddenflem wrote:

    They used to pay a dividend ages ago...I still have some uncashed dividend checks from them lying around somewhere.

  • Report this Comment On August 25, 2011, at 9:58 AM, LakeDaisy wrote:

    I don't personally like Steve Jobs and refused to buy any Apple product for years because of it. My adult children (both web designers) finally converted me to Apple. Ha. Now I only buy Apple devices.

    I am sorry for Steve's health conditions and wish him the best one could possibly hope for in his situation.

    Although Steve lead Apple, I do not believe that every single product which Apple produces can only be attributable to him. I personally believe there are others within the Apple company who might have been the spark behind some Apple products. Time will tell.

  • Report this Comment On August 25, 2011, at 10:00 AM, bivio wrote:

    Our thoughts about a way to honor Steve Jobs.

    https://www.bivio.com/club_cafe/mail-thread?p=87113000003#b_...

  • Report this Comment On August 25, 2011, at 10:24 AM, islandertrader07 wrote:

    AMZN too take over AAPL as top tech stock in the upcoming years??

    Besides Bezos, what other great tech innovators are there today?

    Just some food for thought

  • Report this Comment On August 25, 2011, at 10:38 AM, CluckChicken wrote:

    "Steve may be responsible for the fanatical attention to product and design detail, but it was Cook that secured the supply chain and locked in production commitments while limiting or locking out production for the competition."

    I do not doubt that Cook is a fine businessman and that many of the back office stuff will be in great shape but Cook has already proven that he can not sell a product like Jobs can. Apple events that had Cook as the keynote got less press (even product launch ones).

    There are two things that Apple will miss. Jobs has been one of the greatest salesman of the modern era, nobody over the last decade has been able to generate nearly the same level of hype (ex. anybody remember the hype around the MacWorld event with the big announcement that iPods would come in more than one color?). The other thing that will be missed is the cult devotion he was able to draw. Through this Jobs was able to say things that made issues fade away into nothing that would still be issues for other companies (ex. your 1998 art edit program doesn't work with Windows 7 = Mirocsoft is evil why would they do such a thing, your 2004 OSX Lion software doesn't with with Tiger = no big deal the software is 7 years old and maybe it is time for me to upgrade like Jobs says).

    I think Apple will lose value in the short run, which will be made up at next product launch. The real test will probably be in two years when we see products that are not part of the Jobs era.

  • Report this Comment On August 25, 2011, at 12:48 PM, 123spot wrote:

    Thank you Mr. Jobs for announcing on a Wed, instead of the over the weekend tendencies of others, the truth to us. Thank you for putting the company on such a firm financial footing and planning and telegraphing your succession plan to the benefit of all of us sh's. Thank you for working so hard to bring our world futuristic magic that confirms our faith in the future of our country which, with its diversity and freedom, made you possible. Thank you for passing on to our young the principles they can use to stand on your shoulders and reach even higher. You, sir, have done a good job. Spot

  • Report this Comment On August 25, 2011, at 3:51 PM, BxBruce007 wrote:

    "Can I trade this ahead of start of tomorrow when I'm certain that in this shaky market Apple has to take a major hit. Protect my profits now? Have never tried to execute a trade in time of market opening? How does one do this...effectively? "

    If you sold after hours yesterday (-$20), you'd have sold at $18 less than today as the stock recovered all of its losses except $2 at this moment. Lesson - don't panic.

    "I can't think of one case where a superstar CEO leaves and the company gets better"

    Maybe not but last I checked, Disney is doing pretty good 45 years after Walt died. FYI Adjusted close the month he died - $.15 Current adjusted price - $32.51

  • Report this Comment On August 25, 2011, at 6:59 PM, baldheadeddork wrote:

    ^ Disney doesn't work, either, on two counts.

    They had a very bad period between Walt's death in 1966 and when Michael Eisner turned them around after taking over in the mid 80's.

    Then Disney hit a slump after Eisner was forced out in 2005. When he left the stock was at $29, six years later it's at $32.

  • Report this Comment On August 26, 2011, at 4:50 PM, ayaghsizian wrote:

    I am so mad I didn't buy more when AAPL dropped to 355. Remember 2009 when there was issues with Jobs' health and aapl dropped to 70. I own a boatload and I'm wishing the stock drops again so I can buy more :)

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