Margareta Pagano: If Jobs is a genius, why isn't he talking about Apple's succession?

The group's shares are too vulnerable to fears for the founder's health
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The Independent Online

With Barack Obama in Europe, the really big story gripping the US is the health of Steve Jobs, the genius head of Apple.

The company's shares went into freefall last week on reports that Jobs was unwell again. Peter Oppenheimer, Apple's finance director, tried to dampen fears by saying his boss's health was a "private matter" when he was asked about it during the second-quarter results update.

But Oppenheimer's comments had the reverse effect. Instead of pacifying Apple's small army of fans and bloggers, who watch Jobs's every move in minute detail, it set them screaming. They accused the company of secrecy, arguing that the chief executive's health is so critical to Apple's success that they should be told the truth.

At the end of the week, the mystery was partly clarified with an odd tale in The New York Times which suggested that Jobs, who suffered from pancreatic cancer a few years ago, had undergone surgery to help his digestive system, damaged by earlier operations.

To those who follow Apple, this looked like a deliberate plant to soothe the worries that Jobs is so unwell that he may be forced to retire. Investors certainly felt more confident and the shares recovered to $159, at which point the group is worth $140bn (£70bn).

But the skirmish showed again just how dependent Apple is on Jobs. It also raises an interesting question about whether Apple is obliged to tell its investors about the future management. Jobs has always been secretive about his products, preferring to wait until they are ready to launch rather than building up a lot of hype. Maybe he's sticking to style by not disclosing his thoughts on who should succeed him. But it does seem unlikely that someone of his calibre has not addressed the issue.

Until recently, the frontrunners for an internal replacement were Phil Schiller, a senior vice-president of worldwide marketing, and Oppenheimer. But the new favourite is Scott Forstall, the head of iPhone software who reports directly to Jobs. Forstall is young, but does that matter? The iPhone is, after all, a great success story and has huge growth still to come from launching in the rest of the world.

But so long as Jobs's fans, and investors, don't have a feel for the future, Apple's shares will continue to fluctuate according to his health. This is a pity as it is perhaps one of the world's most brilliant companies. Its ability to sell a dream rather than just a product is rare. Nor has it run out of steam as a number of launches are coming: the new MacBooks with glass screens; the Mac mini; new iPods; and the next really innovative product – believed to be the multi-touch tablet. And some areas it dominates; iTunes already has 80 per cent of the legal online music downloading market in the UK and even Sky's decision last week to launch an online MP3 subscription service is unlikely to be much of a threat.

Jobs is the brains behind Apple but he has created such a rich heritage of design and culture that it is inconceivable that his genius would disappear after his retirement. He should perhaps reconsider his secrecy and tell investors his thoughts. After all, they have backed him and he should repay the loyalty. As the Chinese say, when the best leader's work is done, he leaves letting others think they have done it themselves.

With Centrica involved in new nuclear, we'll do more than pour concrete

Centrica's involvement with EDF's bid for British Energy – when it finally goes through this week – should be excellent news for the UK on two fronts. First, it should help Centrica hedge its own power prices and therefore hold down electricity costs for its customers.

Second, it will give the British company much-needed exposure to the nuclear industry, which is going to account for a huge chunk of the UK's energy supplies in the next few decades.

EDF's chief executive, Vincent de Rivas, is expected to sign off on the deal to buy BE for £12bn at Thursday's board meeting, ahead of Friday's results. Once the deal has gone through, Centrica will pay about £3bn to become a minority shareholder with 25 per cent of a new company.

Centrica, although the biggest provider of residential electricity in the UK, only supplies 40 per cent of its own power, which means it is susceptible to rising gas prices. Compare this to its rivals, E.ON and RWE, which generate nearly all of their own.

But Centrica will now have access to cheaper, low-carbon energy from BE's nuclear plants, which include Sizewell B. That should allow the British Gas group to offset recent volatile gas prices. One of the reasons the talks, which have been going on for months, were kicked into touch again was the recent fall in oil and gas prices

EDF's bid for BE completes the French takeover of the UK's nuclear industry – coming as it does after Areva became the preferred bidder for Sellafield. This is why Centrica's involvement, albeit small, is critical. Unfortunately, it has neither the money nor the management for a full takeover. But hopefully Centrica's role in nuclear's regeneration will have spin-off benefits for other related industries. Universities such as Imperial and Manchester are already gearing up their nuclear departments and this should be an added catalyst as EDF is going to rebuild most of BE's plants. As one industrialist said: "At least we will be doing more than pouring the concrete for the new plants."

Publishers will struggle to take a leaf out of Pearson's book

Dame Marjorie Scardino, chief executive of Pearson, kicks off a busy week for publishers as she reports half-year results tomorrow. She is likely to prove the most resilient.

Most of the action comes in the second half as Pearson is now almost entirely educational and its schools business digs in from September. But pre-tax profit is expected to be around £53m, putting Pearson on course for £590m for the year. Watch out for results from Penguin, which launches its ebook service soon. This looks as if it could be a winner.

Reed, Informa, United Business Media and Trinity Mirror will be gloomier when they report falls in revenue and advertising. As Friday's forecasts showed, the economy is slowing. Second-quarter growth is just 0.2 per cent above the first three months – the worst in seven years. After 64 quarters of growth, pundits reckon it won't be long before we hit official recession territory.

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