Buffett: Apple Withheld "Material Fact" On Steve Jobs Health(cnbc.com)
cnbc.com
Buffett: Apple Withheld "Material Fact" On Steve Jobs Health
http://www.cnbc.com/id/31526814/
10 comments
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.
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.
There is a large gap between learning from someone and just copying them. The problem with simply copying successful people is they would probably have acted differently in your situation because you're faced with different problems.
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.
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.
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.
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.
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.
That's like a pilot saying there's slight turbulence and forgetting to mention that the turbulence is a result of a dying motor, severe fuel leak, and rapid decrease in cabin pressure.
That's a poor metaphor, because turbulence is an environmental condition. Of course saying there's turbulence when the plane is no longer stable is a lie.
Or he didn't know how bad it was yet when he said that. In any case, it's not a lie in any strict legal sense.
An omission of fact is a lie in a "strict legal sense" or any sense for that matter. Explaining the perfume smell on your clothes to your wife while leaving out the part about fucking someone else is an omission of fact... aka a lie. Try doing it under oath in a court of law and see what happens if caught.
So you think in a span of 6 months, they conducted more tests, waited for the results, analyzed them, concluded Steve needed a new liver, put in the papers for the liver, received it, and finally gave him the transplant?
So you think in a span of 6 months, they conducted more tests, waited for the results, analyzed them, concluded Steve needed a new liver, put in the papers for the liver, received it, and finally gave him the transplant?
Yeah, that is how it usually works...
Yeah, that is how it usually works...
No. No thats not how it works. Not when you already had a form of slow-metastasizing pancreatic cancer that usually shows up in other organs... like the liver, within your lifetime.
They knew he had cancer. They knew he needed a liver. They lied. So be it.
To be honest, when he started talking about 'nutritional imbalance' and sounding alternative mediciney... I assumed he was terminal. Thats how people get when medical science gives them VERY bad news.
I've thought he was dead, or nearly dead, for six months. I am very pleased to be wrong.
They knew he had cancer. They knew he needed a liver. They lied. So be it.
To be honest, when he started talking about 'nutritional imbalance' and sounding alternative mediciney... I assumed he was terminal. Thats how people get when medical science gives them VERY bad news.
I've thought he was dead, or nearly dead, for six months. I am very pleased to be wrong.
What? What part of what I wrote is wrong? That's exactly how it works.
I have liver problems. It's not liver transplant liver problems but it's a problem nonetheless. Here is how I found out about it: I felt vaguely crappy for 6 months but just thought I was fatigued because I stay up late and don't have a very good diet. I finally went to the doctor for something else, they did some tests which initially signaled some problems that could be related to my liver or could be from something else. Then they do some more tests and I waited 3 weeks and they say "yeah it's your liver."
So Jobs loses weight through 2008, he goes to the doctor in January and they say "whoa initial tests show you are messed up, you need more tests." They make that announcement to the press. Then he gets more test results, he announces a week later that the problem is way worse than he thought, he needs a transplant, time for a leave of absence.
Of course if you're the kind of ghoul who plays death pool games it's more fun to imagine corporate conspiracy theories hiding his problem for months or years to keep the short sellers at bay. However, Occam's Razor would suggest that a typical male relationship pattern with the doctor's office is a more likely explanation.
I have liver problems. It's not liver transplant liver problems but it's a problem nonetheless. Here is how I found out about it: I felt vaguely crappy for 6 months but just thought I was fatigued because I stay up late and don't have a very good diet. I finally went to the doctor for something else, they did some tests which initially signaled some problems that could be related to my liver or could be from something else. Then they do some more tests and I waited 3 weeks and they say "yeah it's your liver."
So Jobs loses weight through 2008, he goes to the doctor in January and they say "whoa initial tests show you are messed up, you need more tests." They make that announcement to the press. Then he gets more test results, he announces a week later that the problem is way worse than he thought, he needs a transplant, time for a leave of absence.
Of course if you're the kind of ghoul who plays death pool games it's more fun to imagine corporate conspiracy theories hiding his problem for months or years to keep the short sellers at bay. However, Occam's Razor would suggest that a typical male relationship pattern with the doctor's office is a more likely explanation.
I think you underestimate the effect of his previous cancer on his diagnosis. That type is a ticking time bomb that usually spreads. I think if you had that form of cancer, they would have immediately been all over your symptoms. At no time do I think any doctor would have said anything about nutrition being the problem. That was a lie.
I don't think your experience is the same as his. For your symptoms, as a healthy guy... sure, six months is reasonable. For him? Not at all.
I just don't buy it. I don't think it makes him a bad person or anything, but I don't think I'm stating some kind of conspiracy theory either. He knew he was sick and lied about it. I still like the guy. :)
I don't think your experience is the same as his. For your symptoms, as a healthy guy... sure, six months is reasonable. For him? Not at all.
I just don't buy it. I don't think it makes him a bad person or anything, but I don't think I'm stating some kind of conspiracy theory either. He knew he was sick and lied about it. I still like the guy. :)
I said that could have happened. I have no idea if it did or not. It sounds possible to a lay person like me. Six months is a long time! Is the medical profession really so slow that that stuff can't happen within 180 days even for rich people who spare no expense? If you know the industry and say it's too slow to do that stuff in 6 months I'll believe you, but don't be too surprised that lay people don't already know it's like that. How long does an average medical test take if a team works on it as a top priority?
Uh, yeah, all that happening within six months is fucking rare, no matter how much money you have.
Because of transplant waiting lists. You don't get higher on them just because you're rich, thankfully.
Because of transplant waiting lists. You don't get higher on them just because you're rich, thankfully.
Jobs had the transplant in Tennessee, which has shorter wait lists for livers:
"According to data provided by UNOS, in 2006, the median number of days from joining the liver waiting list to transplant was 306 nationally. In Tennessee, it was 48 days."
48 is significantly lower than 180. http://daringfireball.net/2009/06/wsj_steve_jobs_liver_trans...
"According to data provided by UNOS, in 2006, the median number of days from joining the liver waiting list to transplant was 306 nationally. In Tennessee, it was 48 days."
48 is significantly lower than 180. http://daringfireball.net/2009/06/wsj_steve_jobs_liver_trans...
I wondered how long he was on the waiting list ever since the news broke. From my own naive lack of understanding, I wouldn't have guessed you could get a diagnosis, get on the waiting list, get a transplant, and be back to work in 6 months. It's hard to google up what the average wait time for a liver transplant, but it does sound that the worse you are, the higher you get moved on the list.
You may not get moved up the list by being rich, but it does help your increase your odds. With access to the best doctors to help make a good diagnosis quickly, knowledge of the transplant list criteria and the latest medical advances, and the ability to refer you to the best of the best surgeons and specialists, I'm sure he has a leg up over people like me with a crappy PPO insurance policy, let alone someone on Medicare.
You may not get moved up the list by being rich, but it does help your increase your odds. With access to the best doctors to help make a good diagnosis quickly, knowledge of the transplant list criteria and the latest medical advances, and the ability to refer you to the best of the best surgeons and specialists, I'm sure he has a leg up over people like me with a crappy PPO insurance policy, let alone someone on Medicare.
OK. Could all the steps other than waiting for a liver be done within, say, a month?
What is the wait time for a liver transplant? I googled and it says it varies a lot by chance and also how sick the patient is. Would Steve have gotten a liver transplant quickly due to the severity of his illness, or are lots of people worse?
What is the wait time for a liver transplant? I googled and it says it varies a lot by chance and also how sick the patient is. Would Steve have gotten a liver transplant quickly due to the severity of his illness, or are lots of people worse?
This article (1) from Macworld says:
"According to the hospital release, Jobs had the highest MELD score—Model for End-Stage Liver Disease—among patients of his blood type at the time of the procedure".
1) http://www.macworld.com/article/141336/jobs_transplant_confi...
1) http://www.macworld.com/article/141336/jobs_transplant_confi...
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.
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.
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.
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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.
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.
"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).
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).
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".
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".
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?
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...
He knows. In his annual report he wrote that the Berkshire board knows who on the shortlist to appoint should something happen to him.
That's different from knowing who will succeed him should the trial period end uneventfully and he pick his successor normally...
Though one could argue that just who his successor is in the event of death is still a "material fact"...
Though one could argue that just who his successor is in the event of death is still a "material fact"...
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 :)
He has announced the existence of successors.
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?
I think Buffett is spot on.
This fuss over the Great Leaders Health is a tacit admission that Apple is a cult.
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.
Steve Jobs' boss is his stockholders.
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.
The shareholders can appoint new board members if they feel so inclined.
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It's certainly not a legal obligation. It may be a contractual obligation, depending on what you've signed.
Legal obligations are only a small fraction of the real obligations of men.
Well, that's true and yet completely general -- therefore not particularly useful when considering specific cases.
I do not believe that an employee is obliged, in all cases, to do as you say.
Once you're beyond legal and contractual (read uniform) requirements, the rest depends on the specific context. It's silly to make an absolute statement.
Your literary / dogmatic phrasing raises interesting questions. Is this a special topic for you?
I do not believe that an employee is obliged, in all cases, to do as you say.
Once you're beyond legal and contractual (read uniform) requirements, the rest depends on the specific context. It's silly to make an absolute statement.
Your literary / dogmatic phrasing raises interesting questions. Is this a special topic for you?
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...
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...
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/)
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.
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.
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.
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.
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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).
Wow, so people really think it more likely that Buffett is implying a future legal challenge than Buffett is stirring a bit of publicity?
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.