Does Steve Jobs’ Departure Make Apple (AAPL) Too Risky To Own?

A recent email from Steve Jobs to Apple (ticker: AAPL) employees announcing his medical leave of absence has left some investors in a bit of a tizzy. While the email promises a summer return, some have been hesitant to immediately accept the pledge. The concern and even distrust over Jobs’s departure most likely stems from the company’s handling of his 2004 bout with pancreatic cancer. The public was alerted only after Jobs had the successful surgery to remove the tumor from his pancreas.

For everyone’s sake, a speedy recovery and return would be ideal. But what if Jobs doesn’t come back? The possibility of a very pre-mature retirement has no doubt crossed the minds of most investors. So far, Jobs has been reluctant to give up the reins to Apple and will still remain in charge during his recovery period; Tim Cook will just oversee the day-to-day operations.

But Apple can, and will, survive without Steve Jobs. That isn’t to discount any of the incredible things that he has done for the company, and any transition will be naturally bumpy. But now that Apple’s innovative products have given it such a strong position in its markets, it will only be a matter of time before people once again recognize this company’s potential. Consider its recent history of topping expectations for earnings growth, as well as the relative strength with which profitability is expected to hold up in 2009.

As a rule, a product will go through a general life cycle; it is up to the creative minds at the company to rejuvenate the environment. Traditionally, Apple has had a pre-emptive response for so many problems that consumers may not have even known that they had. Music moving from a clumsy collection of CDs to purely digital? Fine, introduce the iPod, build one of the strongest product brands around, and revolutionize the mp3 player. Laptops are too heavy? That’s ok, develop the MacBook Air and bill it as the thinnest notebook computer ever.

Apple has developed such a strong and consistent brand for itself- young, hip, cutting-edge, that any new CEO would be foolish to deviate from Jobs’s current model. And any replacement would be well-aware of that. For right now at least, in spite of a dire economy, Apple has the opportunity to pause for a moment with the success of its iPhone. However, there is a good chance that, even post-Jobs, there will be no pausing at Apple. Apple is the innovator, and everyone else is a “suit,” just a sheep in a large flock. Steve Jobs has placed an enormous emphasis on creative advertising in marketing the technology. He has created brand positioning for the company that is unmatched throughout the industry. While many things have changed at Apple since the “1984” computer ads that aired during the Super Bowl that year, the link to the recent advertising campaign pitting a young, laid-back, creative-type with long hair against a stuffy, balding, four-eyed “suit” is still quite clear. Apple is always looking towards the next thing, always fighting against the bane of conformity. If Steve Jobs were to leave Apple, whether tomorrow or in twenty years (eventually, the day will come), investors needn’t seriously worry. The CEO left such a deep handprint on the brand that his values are intrinsically woven throughout the company. A successor would be Jobs’s closest ally, and would be smart enough to carry on his legacy.

Now, there is a bear argument to be made that between the uncertainty from Jobs’ health, stagnant growth from core products like the iPod, and competitive pricing pressures exacerbated by falling consumer spending, Apple is set up for a dramatic fall. But despite a generally rough market this week and the news about Jobs, AAPL stock has more or less recovered from the initial reaction sell-off and is only down slightly overall. While the shorts may or may not be correct, one thing is certain: Apple will have difficulty replicating its returns to investors in the last five years, with or without Steve Jobs.