His trademark black turtleneck hung a little too loose. His blue jeans sagged; his face seemed hollow. When Apple founder Steve Jobs appeared at a conference in June, his purpose was to hype his company's new $199 iPhone. But after he exited the stage, he left the crowd chattering as much about the state of his health as about the new phone. The speculation that Jobs may be ill is hardly out of the blue. Four years ago this week, Apple disclosed that he'd been diagnosed with pancreatic cancer, ordinarily a fatal illness. At the time, Jobs said he had a treatable form of the disease and that surgery had "cured" him. After the June conference, with observers describing the boss as "frail" and "gaunt," an Apple spokesperson attributed his weight loss to a "common bug." By last week, that explanation was strangely absent when an analyst asked Apple's chief financial officer about Jobs's health. The CFO's answer: "Steve loves Apple … He has no plans to leave Apple. Steve's health is a private matter." Soon its stock was falling.

Investors obsessing over the health of CEOs are nothing new—particularly when the bosses are, like Jobs, considered irreplaceable. While attending a Berkshire Hathaway annual meeting a decade ago, I encountered shareholders who'd consulted actuarial tables to estimate how much longer Warren Buffett (who's a director of The Washington Post Company, NEWSWEEK's parent) might remain at his desk. Governance experts say that while a sick CEO is obligated to keep his board in the loop, legally the company needn't share the news as long as the CEO remains on the job. But the SEC hasn't offered guidance on the issue, and some observers say Jobs is so important to Apple that shareholders deserve to know if he's ill. "He is the company; he personifies the company; every success they've had has been under him," former General Electric chairman Jack Welch, a huge Jobs admirer, told me last week. "This is absolutely a public matter."

Let's be clear: NEWSWEEK claims zero ability to make medical diagnoses based on photographs or hearsay—and like everyone, we wish Jobs, who's 53, years of good health. Indeed, it's possible this media-driven health scare may prove to be a false positive. The New York Times reported last week that Jobs has told friends his weight loss is due to surgery to correct digestive problems, not a cancer recurrence. Another encouraging data point: Apple has smart lawyers who probably wouldn't let its press team suggest the CEO has the flu if he's really facing a serious illness—an "affirmative misrepresentation" that could open them to a class-action lawsuit if it turns out to be false, says Columbia Law professor John Coffee.

Still, big investors and veteran Apple watchers remain worried. Apple is viewed as a particularly secretive company; when Jobs was diagnosed with cancer in 2003, it waited nine months before going public. The Wall Street Journal has reported that hedge funds have hired private investigators to tail Jobs in an attempt to see how frequently he's visiting doctors. Tech writer Daniel Lyons, who's written the popular Fake Steve Jobs parody blog since 2006 (and who will begin writing this column in September), shuttered the blog in early July to avoid poking fun at a subject who appears sick. Other tea-leaf readers see a troubling sign in Apple's public flip-flop from "it's just a bug" to "no comment." "They already commented on his health, so now their silence is a statement in itself," says Jeff Sonnenfeld, associate dean of the Yale School of Management. (Apple declined to comment.)

The market might not be so jittery if Jobs weren't viewed as so central to Apple's success. He's known as a micromanager who's given (or takes) credit for every Apple innovation, and Apple has been criticized in the past for not having a clear succession plan. "Jobs has built [Apple] around who he is and what he contributes," says recruiter Steve Mader, vice chairman of the executive-search firm Korn/Ferry International, who believes directors would likely look to an outsider if a successor were needed. At the same time, there's widespread respect for Apple's current chief operating officer, Tim Cook, who's seen by some as a qualified Apple CEO if Jobs were to leave his post. "They have good executives, and contrary to popular belief, one guy isn't inventing the entire product port-folio," says Charles Geoly, managing director of the search firm Russell Reynolds Associates. Indeed, despite its mystique as a hip, innovative hothouse, today Apple is a 32-year-old, $24 billion company with seasoned directors—which leads Geoly to believe it has a succession plan that's as detailed as those at IBM, Dell or HP.

In Boston's Apple store last week, 27 people stood in line for an iPhone at lunchtime—as they likely would no matter who's leading Apple. While hedge-funders have an obvious interest in news that might move Apple's stock minute to minute, longer-term investors should be hoping that Jobs has already taken steps to help the company succeed long after he's gone, whenever that is. Bill Gates's retirement from Microsoft in June was a visible reminder that the baby boomers who put computers into America's homes and offices are already in the twilight of their careers. In sickness or in health, Jobs will be best serving Apple loyalists if he's spending a little less time on gadgets—and a little more time preparing his charges to carry on when his twilight fades to black.

© 2008