Apple's CEO Conundrum

Tim Cook has run Apple well in Steve Jobs' absence, keeping alive the question of whether and how soon he might be named CEO

By Arik Hesseldahl

Apple (AAPL) appears poised to make good on repeated assurances that CEO Steve Jobs would be back at the helm by the end of June.

As the date approaches and Apple begins its World Wide Developers Conference on June 8, attention is focused intently on Jobs and what his return means for Apple's investors, customers, and employees. One of the executives most affected by Jobs' return is Chief Operating Officer Tim Cook, who has managed Apple's day-to-day operations during the CEO's medical leave of absence. Jobs, a survivor of pancreatic cancer, said in January that he would be out through June.

Cook has run the company ably in the past half-year, keeping alive debate over whether and how soon he might succeed Jobs as CEO. Why not appoint Cook CEO, the argument runs, and have Jobs stay on as chairman and perhaps take on a secondary title, such as Chief Innovation Officer?

Promoting Cook would make official the de facto roles he and Jobs have already been playing. Jobs is Apple's primary creative visionary, known for his near-obsessive attention to the minutest design details. Cook, on the other hand, is renowned for his powerful command of sprawling operations that generated $32 billion in sales last year and employ some 35,000 people around the world. Jobs would remain the company's public face, a role he's excelled at since his return to the helm in 1997. As CEO, Cook would continue to oversee operations.

a lot of progress in six months

Judging by Apple's stock performance, the six-month Tim Cook era has been positive for shareholders. On the day Jobs announced his leave, Apple shares fell by more than $2, closing at $85.33. And while they proceeded to fall an additional $7 and change over the next few days, they have rallied a healthy 85% since then, closing at $144.67 on June 5, the recession notwithstanding.

In the months since Jobs stepped away, the company has settled a lawsuit with IBM (IBM) over the hiring of Mark Papermaster to run Apple's iPhone and iPod engineering teams, launched a new version of the iPod Shuffle, updated its professional- and consumer-grade desktop computers, and logged the billionth download of an iPhone application from the iTunes store only nine months after the store was launched.

With the possible exception of a decline in Mac unit sales in the fiscal second quarter that can be attributed to unusually high sales a year earlier, it would be hard to identify hiccups during Jobs' absence. Despite the recession, Apple reported its best sales ever for a non-holiday quarter—$8.2 billion—in March.

Cook's successful tenure aside, the company has given no indication that Jobs will return as anything but CEO. That shouldn't be seen as a knock on Cook, says Tim Bajarin, head of consulting firm Creative Strategies and a longtime Apple watcher. "The titles CEO and COO, even inside Apple, are fairly loosely defined," Bajarin says. "Apple has evolved in such a way over the last three years to a point where there's an executive team that is in charge of its operations. Steve just tends to be the one who really leads everything."

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