Ailing Apple Inc. Chief Executive Steve Jobs said he is unable to continue at the helm of the technology giant and will step down, handing the reins of one of the world's most valuable companies to Chief Operating Officer Tim Cook.
Apple said Mr. Jobs submitted his resignation to the board of directors on Wednesday and "strongly recommended" that the board name Mr. Cook as his successor. Mr. Jobs, 56 years old, has been elected chairman of the board and Mr. Cook will join the board, effective immediately, the company said.
"I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple's CEO, I would be the first to let you know," Mr. Jobs said in his resignation letter. "Unfortunately, that day has come."
"The Board has complete confidence that Tim is the right person to be our next CEO," said Art Levinson, chairman of Genentech and Apple board member, in a statement.
He added that Mr. Jobs will "continue to serve Apple with his unique insights, creativity and inspiration."
After a brief halt, Apple's shares slid 5.13% to $355.70 in after-hours trading, after closing at $376.18, up $2.58, at 4 p.m. on the Nasdaq Stock Market.
Mr. Cook, 50, has been widely considered as the leading candidate to succeed Mr. Jobs, who has been on medical leave since January. The 13-year Apple veteran, who joined the company shortly after Mr. Jobs took over for the second time in 1997, has been running the day-to-day operations during this period as he has done during two prior medical leaves of absence by Mr. Jobs in the last seven years.
The timing of the announcement raised questions about the health of Mr. Jobs, who was diagnosed with a rare form of pancreatic cancer in 2004 and underwent a liver transplant two years ago.
Mr. Jobs hasn't commented on his health since he said in a letter in January that he was taking another leave of absence to "focus on my health." He made an appearance at the launch of the iPad 2 in March and Apple's annual developers' conference in June but appeared thin both times.
People familiar with the situation said that Mr. Jobs has continued to be active at Apple and closely involved in the company's product strategy. To the extent his health permits, some Apple watchers think that involvement is likely to continue even after Mr. Cook takes the CEO post.
Still, Mr. Cook faces a big challenge in stepping into Mr. Jobs's shoes because he must prove that Apple can succeed without Mr. Jobs. Mr. Jobs not only co-founded the company, but brought Apple back from near bankruptcy when he returned to the company in 1997. He is considered the visionary behind Apple and has played a key role in reviving the Macintosh computer business and developing new products like the iPod, iPhone and iPad.
"Great companies rarely go from strength to strength," said Charles O'Reilly, a management expert, at Stanford University's Graduate School of Business, adding that Apple faces a particular challenge in that Mr. Jobs has had an unusually strong influence in setting Apple's corporate culture and strategy.
Tributes to Mr. Jobs and his tenure began flowing in quickly after the announcement.
"I think his brilliance has been well-documented, but what gets forgotten is the bravery with which he's confronted his illness," said Howard Stringer, Sony Corp.'s chief executive. "For him to achieve this much success under these circumstances doubles his legacy."
Mr. Cook, an Alabama native who previously worked for International Business Machines Corp. and Compaq Computer Corp., is known as an operational genius and was instrumental in wringing out inefficiencies in Apple's manufacturing and setting up its supply chain in China. Since then, he has gradually increased his responsibilities, becoming chief operating officer in 2005.
He has also led the company during Mr. Jobs's absences in the past.
Unlike Mr. Jobs, who is a legendary showman, Mr. Cook has tended to stay outside of the spotlight apart from quarterly earnings calls with analysts.
"I believe Apple's brightest and most innovative days are ahead of it," Mr. Jobs wrote in his letter Wednesday. "And I look forward to watching and contributing to its success in a new role.
"I have made some of the best friends of my life at Apple, and I thank you all for the many years of being able to work alongside you," he added.
The announcement was met with little surprise on Wall Street. "This was a 'when' not 'if' moment," said Mike Binger, a fund manager for Thrivent Asset Management in Minneapolis, which owns Apple shares.
He added that he had no plans to change his holdings, saying that the stock is still "really cheap for the kind of operating fundamentals they've been putting up."
The value of the company, however, has been skyrocketing as the success of products like the iPhone, iPad and ultra-thin Macintosh computers keep setting records.
At close to $350 billion, Apple's market valuation is second only to Exxon Mobil's, and recently eclipsing the oil giant for a brief period.
Tim Ghriskey, chief investment officer for Solaris Asset Management in New York, which holds Apple shares, said he has confidence in Apple's executive team even without Mr. Jobs, but is hoping for more details on who will be Apple's "creative force" now that he is gone.