Dr. James Eason. Video clip: Bloomberg

Dr. James Eason, the surgeon who performed Steve Jobs' liver transplant earlier this year, came close to — but did not actually confirm — that Jobs' cancer had spread to his liver.

It was Dr. Eason who, with his patient's permission, issued a four-paragraph statement in June confirming reports that Apple's (AAPL) CEO had received a new liver. Eason, the head of transplantation at Methodist University Hospital in Memphis, also revealed that Jobs was suffering from end stage liver disease and was, in fact, the "sickest patient on the waiting list."

This week, as part of a long profile published Friday by Bloomberg News, Eason spoke to Bloomberg's John Lauerman about his career, his medical practice and his most famous patient.

Jobs is “a special person,” he told Lauerman. “He’s really a genuinely nice person.”

The closest thing the doctor came to saying anything about Jobs' particular form of pancreatic cancer was in these two passages:

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Friday's Wall Street Journal carries a report on the state of Steve Jobs' health that makes his condition last January — before he went on a six month medical leave — sound more desperate than Apple (AAPL) let on at the time.

"He was one real sick guy," an unnamed source told the Journal. "Fundamentally he was starving to death over a nine-month period. He couldn't digest protein. [But] he took corrective action."

According to this source — who is said to have seen Apple's CEO in recent weeks — Jobs' recovery "is coming along" and he should be able to return to work before the end of June, as scheduled.

The same source says that some Apple directors have been getting weekly updates on Jobs' health from his physician.

Jobs has come to Apple headquarters occasionally since his medical leave began, according to the Journal. Independently, the Italian website setteB.IT reported last week that several people spotted Jobs entering the main gate of the Apple Campus on May 27 to attend a meeting.

A few days earlier, Apple co-founder Steve Wozniak told another Journal reporter that Jobs sounded "healthy, energetic" when he spoke to him by telephone.

The Journal's latest report comes four days before Apple's annual World Wide Developers Conference. The keynote at last year's WWDC — the last delivered by Jobs — was the first time he appeared in public looking dangerously thin. He skipped MacWorld this year, and his marketing vice president Phil Schiller is scheduled to deliver the keynote next week.

The Journal also reported on speculation that Jobs might make a surprise appearance during the presentation next Monday, but didn't reach any conclusion.

Apple has not returned a request for comment.

It takes him nine paragraphs to get to it, but there's a nugget of Apple (AAPL) news in Robert X. Cringely's latest column, "Where's Steve?," published Saturday.

Cringely, the pen name of former InfoWorld and PBS columnist Mark Stephens, sets it up with a quote from Oscar Wilde ("The only thing worse than being talked about is not being talked about.") and a leisurely discourse on how Steve Jobs, after his bout with pancreatic cancer (link), shifted from skillfully managing the press to skillfully avoiding it.

Then Cringely drops his little bombshell:

"A friend of mine has for years been one of Steve Jobs’ Internet chat buddies. And as such his chat client has – again for years – shown as Steve came online each day and remained there for hours and hours as you’d expect a Silicon Valley mogul to do. And it’s a trend that continued well past Jobs’ announcement that he was taking a six-month leave of absence to get well. But then Steve started logging-on less and less. And several weeks ago he stopped logging-on at all." (link)

But Cringely goes one further and asserts, without further evidence, that Steve Jobs has completely stopped using his computer.

Of course, not logging on to chat doesn't necessarily mean any such thing, as several readers were quick to point out in the I, Cringely comment stream. It could mean that Jobs is concentrating on getting better, as he said he would. He might also, as another reader suggests, have changed his chat name or de-listed his friend's ID.

And perhaps, as several commenters assert with some heat, Steve Jobs' health issues are none of Cringely's — or any of our — business. "Who the [unprintable] cares?"

To which Cringely replies:

"I knew that this would be a polarizing column but that, in itself, is not a valid reason to avoid it. And if the commenters are Apple shareholders, then I’m really surprised. If they aren’t Apple shareholders, then I’m not at all surprised they don’t care. But no major company in the computer industry is guided more personally than is Apple by Steve Jobs. Not even Microsoft under Bill Gates and it was Bill Gates who told me that, admiringly. So his condition IS material and he can change that by resigning and nothing else. I’m not calling for that, by the way. But if he wants to take his name off my map that’s what it will require.

"And yes, he might have changed his chat name after many years, he might have disowned my source, might have done any of a number of other things mentioned BUT HE DIDN’T. You think I don’t check these things out? I’ve had this for 10 days and wouldn’t have published on a Saturday except it took that long to confirm." (link)

A source known to have Steve Jobs on his Internet chat client declined to confirm — or deny — that Jobs has gone offline. Apple has yet to return a request for comment.

On Christmas Eve, at the height of a holiday season that Steve Jobs claimed was the first in a decade he got to spend with his family, Apple's (AAPL) ailing CEO was on the phone screaming at the chairman of Sony Music (SNE).

That's the picture Tim Arango paints in Monday's New York Times in an article that describes the "tense and antagonistic" relations behind the seemingly harmonious music pricing agreement unveiled at Macworld less than two weeks later.

On Jan. 6, Apple announced that the major record labels had agreed to drop their demands for copy protection in return for the right to charge more than 99 cents for new and popular songs on Apple's iTunes store.

But according to Arango, the negotiations were anything but cordial.

"Disagreements over the timing of the changes … resulted in a particularly tense conversation on Christmas Eve between Steven P. Jobs, the chairman and chief executive of Apple, and Rolf Schmidt-Holtz, the chairman of Sony Music. …

"According to a person briefed on the telephone call, Mr. Schmidt-Holtz and Mr. Jobs had a heated exchange by phone on Christmas Eve. Eventually, Sony gave in and agreed to a longer waiting period …

"A spokesman for Apple declined to comment, as did a representative for Sony Music. But chatter about Mr. Jobs’s combative tone on the call ricocheted around the music industry, and it was regarded as another display of his tough bargaining tactics, made possible by Apple’s position as the dominant seller of music …

'I think Steve has been smart, and he knows he has the upper hand,' said Dave Goldberg, the former general manager of Yahoo Music." (link)

Although Jobs has since taken a leave of absence to deal with medical problems, the music industry does not expect Apple's bargaining manners to become any more pleasant.

"The entire Apple staff,"  writes Arango, "including Eddie Cue, the vice president in charge of iTunes who handles the relationships with the record labels, do their best to follow Mr. Jobs’s style in their own negotiating." (link)

See also:

• The cost of removing Apple's copy protection
• What's going on with Steve Jobs' hormones?
• Why does Steve Jobs look so thin?

The report Wednesday that the Securities and Exchange Commission is looking closely at Apple's disclosures about the state of Steve Jobs' health (link) follows speculation last week that stockholders are also likely to file lawsuits against the company.

The issue, of course, is whether Apple (AAPL) and Jobs misled investors by issuing first good news ("hormone imbalance") that drove the stock up, followed by bad news ("medical leave") that drove it down.

But even if Jobs has been less than forthcoming about his health problems — as many doctors suspect — legal experts say that neither the SEC probe nor any investor lawsuit is likely to get very far.

Even the sources quoted by Bloomberg News, which reported the SEC rumor, say that the commission would have a tough time bringing a case against Apple. According to Peter Henning, a former SEC prosecuter, it would have to prove that the company tried to benefit by withholding information about an unambiguous diagnosis.

Former SEC commisioner Joseph Grundfest takes an even dimmer view of suits filed on behalf of investors or speculators who lost money in the see-sawing stock price.

"I never underestimate the cleverness of plaintiffs attorneys," he told Reuters. "But I personally am aware of no theory that would support a filing of a case."

Although Jobs is not expected to participate in Apple's Q1 earnings call with reporters and analysts this afternoon at 5 p.m. EST (2 p.m. PST), questions about the state of his health are sure to come up. Tune in here for our live blog.

See also:

• Steve Jobs, chained to a rock

He was a Titan who stole fire from the gods and gave to mankind the tool that allowed mortals to rise above the beasts. For his sins, Jupiter had him chained to a rock on Mount Caucasus. Every day a vulture feasted on his liver, which grew back overnight.

Steve Jobs, who announced on Wednesday that he is taking a medical leave to focus on his health, must feel something like poor Prometheus, chained to his rock in the hills above Palo Alto. The vultures this week are an ever-expanding team of reporters from Bloomberg News — and whoever is feeding them medical updates.

On Thursday, Bloomberg reporters Connie Guglielmo, Rochelle Garner and Jason Gale wrote that Jobs could be facing surgery to remove what's left of his pancreas, quoting a doctor in Australia who hasn’t treated Jobs and doesn’t know details of his condition. (link)

On Friday, Guglielmo, joined this time by John Lauerman and Dina Bass, reported that Jobs is considering a liver transplant. This time they cite "people who are monitoring his illness" and quote a doctor in Savannah, Georgia, who hasn’t treated Jobs and doesn’t know details of his condition. (link)

Not content to feed on his liver, team Bloomberg called Apple's (AAPL) CEO and somehow managed to get through. They wrote:

"In a telephone interview today, Jobs said he won’t comment further on his health.

'Why don’t you guys leave me alone — why is this important?' Jobs said." (link)

Asked to explain how she could say what medical procedures Jobs was or wasn't considering, Guglielmo referred us to a publicist, who would say only that Bloomberg News stands by its story.

[Image defaced with apologies to Elsie Russell and Encyclopedia Mythica]

Getting the kind of information about Steve Jobs' health that Apple's (AAPL) investors and customers deserve is tricky, as tech reporters discovered to their peril this week.

The sources in the best position to talk about Jobs' medical condition — which forced him to announce Wednesday that he taking a six-month medical leave — are his physicians, and they're prevented by doctor-patient confidentiality from disclosing what they know.

Everybody else is either speculating, spinning or being spun.

Even Jobs' own statements are suspect. He has issued two e-mail medical dispatches in the past two weeks that are not only vague and lacking in hard medical information, but contradictory — moving in the space of 10 days from a confirmed "simple and straightforward" remedy to health issues that are "more complex" than originally thought.

The best piece of reporting on the Jobs' health problems is still Peter Elkind's March 2008 cover story in Fortune "The Trouble with Steve Jobs." It was Elkind who first reported that Jobs delayed treatment for his pancreatic cancer for nine months while he pursued alternative medicine approaches. And it was Elkind who identified the type of surgery Jobs underwent in August 2004 — a particularly brutal and complex operation called the Whipple procedure — opening the door for other reporters to fill in the blanks. (See here.)

It's been downhill from there. One low point was the interview Jobs gave Joe Nocera of the New York Times last July in which he called the Times columnist (and former Fortune editor) a "slime bucket" before going off the record to reveal that his health problems went well beyond the "common bug" an Apple spokeswoman had offered as the reason for Jobs' sudden weight loss last June. (See here.)

Nocera kept Jobs' remarks out of his piece, but he did report what he and his colleague, John Markoff, had learned independently — that Jobs had told associates that he had a second operation earlier in the year to correct ongoing digestive problems, but that his cancer had not returned. (UPDATE: Nocera posted a new piece today on the Times blog, calling for Apple to come clean.)

This would not be the first time that the mainstream press reported — secondhand, from unnamed sources — that Jobs is cancer-free. Both the New York Times and the Wall Street Journal did it Thursday, the Times citing two sources "familiar with his medical condition," the Journal just one.

Note that no one at Apple has ever directly addressed the issue of recurrence. The closest anyone came was the e-mail Jobs sent to his staff in Aug. 2004 informing them that his operation was successful and that he was "cured." None of Jobs' subsequent statements have said anything about cancer, one way or the other.

Jobs' most recent e-mail set off the usual flood of journalistic second guessing (see Techmeme here). The most painful was CNBC correspondent Jim Goldman's TechCheck column Wednesday.

Goldman had gone out on a limb three weeks earlier, citing "sources inside the company" who assured him that Jobs' surprise decision to skip Macworld had nothing to do with his health. On Wednesday, he took it all back, calling the latest twist in Jobs' story "tantamount to fiduciary, ethical and financial whiplash."

Goldman went on to say that he has known since late last week that there was something wrong with Jobs — based on interviews with two "well known [but unnamed] tech industry executives … very close to Jobs."

"One said, based on his contact with Jobs personally, that he was in 'serious denial' about just how bad the circumstances had become. The other explained to me that he was 'deeply concerned' about Jobs, and the sudden lack of communication, the non-return of emails, ignoring chat requests, unreturned phone calls was a strong indication to him that Jobs was in 'dire' shape." (link)

This was quite a turnaround, and it led to perhaps the most embarrassing moment in the whole affair: a live segment on CNBC Wednesday afternoon in which Newsweek's Dan Lyons (a.k.a Fake Steve Jobs) confronted Goldman and accused him of "sucking up" to Apple to get access to the company and, as a result, getting "played and punked." The five-minute segment is the equivalent of a journalistic car wreck — you can't stop watching it — and has reportedly resulted in Lyons getting banned from CNBC for life (a report that a CNBC spokesman has since denied, although nobody has called Lyons to clear things up).

We've pasted the clip — in its entirety — below the fold.

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Apple (AAPL) shares dropped 7.56% to $78.88 in after-hours trading in New York on news Wednesday that COO Tim Cook was taking over day-to-day operations — a $6.7 billion hit on Apple's market capitalization.

This is not the first time Cook has stepped in while Steve Jobs dealt with a serious medical condition.

Cook ran the shop for a month in 2004 while Jobs recovered from surgery that removed a malignant tumor from his pancreas (see here). The stock fell then too — down 2.3% on Aug. 2, 2004, the day after Apple announced the news — a loss that widened to nearly 8% by week's end.

But by Sept. 1, 2004 the stock had not only recovered, but gained 10.9% on its July 30 price — closing at what now seems an impossibly low $35.86.

Some of that bump may be attributed to investor relief that Jobs was due back at the helm. But whether or not Jobs returns from his latest medical leave, the fact is that Tim Cook has been running day-to-day operations at Apple for some time, as Adam Lashinsky's long profile in Fortune makes clear. (See The genius behind Steve.)

In July 2004, two weeks before Jobs' operation, Apple reported earnings of $61 million on sales of $2.014 billion and was holding just under $5 billion in cash.

In its last quarterly statement, Apple reported earnings of $1.14 billion on sales of $7.9 billion, with nearly $25 billion in cash.

In other words, it's the same company, only four or five times bigger.

Steve Jobs in June

In his second public health update in as many weeks, Apple CEO Steve Jobs acknowledged Wednesday that his health problems are "more complex" than he thought and that he would be stepping down until the end of June to deal with them.

The news came in an e-mail sent to employees — and released by Apple after the close of trading.

In the interim, chief operating officer Tim Cook will run the company, as he did four years ago when Jobs underwent surgery to remove a malignant tumor from his pancreas.

After-hours trading in Apple (AAPL) shares was halted in advance of the news. The stock closed Wednesday at 85.33, down 2.71% for the day, dropped another 8% when trading resumed at 5 p.m., and then recovered slightly to end the day at just under $80 a share.

Wall Street was still recovering from the surprise announcement — made three weeks before the big Macworld trade show — that Jobs would not be giving his traditional keynote address. That announcement revived speculation that his cancer had returned. The day before the keynote, Jobs issued an open e-mail in which he described his condition as an easily treated nutritional deficiency caused by a "hormone imbalance"  — an explanation that many medical experts found unconvincing. See What's going on with Steve Jobs' hormones?

Wednesday's e-mail, while consistent with the six-month recovery timetable that Jobs offered last week, suggests that his health problems are, indeed, more complex than a nutritional deficiency.

Below: Jobs' latest e-mail.

Team,

I am sure all of you saw my letter last week sharing something very personal with the Apple community. Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well. In addition, during the past week I have learned that my health-related issues are more complex than I originally thought.

In order to take myself out of the limelight and focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence until the end of June.

I have asked Tim Cook to be responsible for Apple's day to day operations, and I know he and the rest of the executive management team will do a great job. As CEO, I plan to remain involved in major strategic decisions while I am out. Our board of directors fully supports this plan.

I look forward to seeing all of you this summer.

Steve

For further reading, see:

• Behind Steve Jobs' Macworld Exit
• Why does Steve Jobs look so thin?
• After Steve Jobs, who runs Apple?

Oppenheimer & Co.'s Yair Reiner turned heads on Wall Street three weeks ago — in the wake of Apple's surprise announcement that Steve Jobs would be skipping Macworld 2009 — when the analyst downgraded the company and refused to set a price target for its shares until he got some answers. (See Analyst sounds warning.)

On Tuesday, Reiner reinstated Apple (AAPL), upgrading the stock to "outperform" and setting a 12 – 18 month price target of $135 a share. (The stock closed Monday at $94.58, up 4.22% for the day.)

But in a long note to clients, Reiner made it clear that while Jobs' open letter Monday offered some reassurance, he remains skeptical.

"We don't know what ails Apple's CEO, and we're not ready to assume that a problem with a 'relatively simple and straightforward' remedy is a problem that is itself 'simple and straightforward.' Still, it seems unlikely that Jobs, the board, and its counsel would disclose the prognosis of a six-month recovery if it were at odds with doctors' expectations."

Reiner describes Jobs' note — and the board's accompanying statement — as an "attempt to balance the protection of Jobs' privacy with the board's fiduciary responsibility to disclose significant risk factors to the company."

Apple's lawyers must have vetted the letters with care, he says, so it's incumbent on investors "to parse the missives with equal care."

In Reiner's parsing, the letters say that the board considers the risk to Jobs' health to be "grave" — or in SEC parlance, "material" — although Jobs leaves the strong impression that the most likely outcome is a return to relatively normal health.

At the least, Reiner writes, the prognosis of a six-month recovery buys Apple some time. "'The Apple community' is now due an update in late spring, but until then the recovery will be allowed to run its course without undue prying."

Meanwhile, however, Reiner has a long list of things we still don't know, among them:

• Whether Jobs is currently engaging in his normal CEO duties
• What suddenly prompted him to seek out the root cause of his condition a few weeks ago
• What the long-term prognosis of his condition is.

In short, Reiner concludes, the leadership risk has not gone away, but it has become less acute, allowing investors to refocus on what he calls the heart of the Apple story:

• The Mac share gains
• The iPhone revolution
• The cash in the bank
• And the cash that's still flowing.

For more on Jobs' medical condition, see What's going on with Steve Jobs' hormones