

Buffett: Apple Withheld "Material Fact" On Steve Jobs Health - jakarta
http://www.cnbc.com/id/31526814/

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jakarta
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
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.

~~~
jakarta
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.

~~~
Retric
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.

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padmanabhan01
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.

~~~
russell
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
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._

~~~
kyro
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.

~~~
xenophanes
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.

~~~
kyro
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?

~~~
menloparkbum
_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...

~~~
rjurney
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.

~~~
menloparkbum
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.

~~~
rjurney
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. :)

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bonsaitree
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
"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).

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ErrantX
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".

~~~
padmanabhan01
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?

~~~
nostrademons
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...

~~~
wayne
He knows. In his annual report he wrote that the Berkshire board knows who on
the shortlist to appoint should something happen to him.

~~~
nostrademons
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"...

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jhancock
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?

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goodkarma
I think Buffett is spot on.

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

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thras
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
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.

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andreyf
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
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.

~~~
andreyf
_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.

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nopassrecover
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).

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

