Intel's strong numbers suggest PC business

Intel Corp.'s second-quarter results bolster the company's position that the computer business is on the mend after its roughest patch in years.

Intel is the world's biggest maker of microprocessors, the electronic brains of PCs. More than three-quarters of the world's PCs use Intel chips. The company late Tuesday posted second-quarter sales substantially stronger than Wall Street expected, and its outlook suggests there's more good news to come. The stock jumped 7 percent in after-hours trading.




That's not to say that personal computers are flying off the shelves. PC makers are still hurting, which shows how brisk business for Intel might take months to translate into better numbers for its customers.

The No. 2 PC maker, Dell Inc., for example, warned this week that the U.S. computer market might have hit bottom, but its sales to businesses remain weak. CEO Michael Dell said penny-pinching computer buyers appear to be holding on to their existing machines for longer than is typical.

Intel's numbers show that PC makers bought more chips than expected in the quarter that ended June 27. Part of the reason is a pickup in end user demand, but another big reason is that customers have burned through massive amounts of inventory to save money, and now need to restock.

A $1.45 billion antitrust fine from the European Union, which Intel had to pay while it appeals the case, gave the Santa Clara, Calif.-based company its first quarterly loss since 1986. Including the fine, Intel lost $398 million, or 7 cents per share, compared with year-ago profit of $1.6 billion, or 28 cents per share.

But excluding the EU fine, Intel earned $1 billion, or 18 cents per share, in the second quarter — easily beating the 8 cents per share expected by analysts surveyed by Thomson Reuters.

Sales fell 15 percent to $8.02 billion in the most recent quarter but also topped Wall Street's $7.28 billion average forecast by a wide margin.

"I'm in shock — it's great news," said Kevin Cassidy, a semiconductor analyst with Thomas Weisel Partners. "It's just amazing the market can snap back this quickly. The question is, is it sustainable?"

Intel's numbers are closely watched because they reflect the health of the computer market and technology spending in general. Interest in the second-quarter numbers was particularly acute because CEO Paul Otellini predicted in April that PC sales had "bottomed out" after their worst holiday season in six years.

The trends that helped Intel should also help its smaller rival, Advanced Micro Devices Inc., which reports its numbers July 21. AMD has racked up billions of dollars in losses over the past few years under pressure from Intel, and is trying to bounce back by spinning off its chip-making factories.




Global PC shipments in 2009 are expected to fall for the first time since the dot-com meltdown in 2001, according to the iSuppli Corp. research firm. Yet analysts said Intel's numbers Tuesday indicated that the industry is not in as dire shape as it appeared just months ago.

"How can we not be happy? I think they did a tremendous job," said Leslie Fiering, a research vice president with Gartner Inc. "It has to inspire some confidence in the market. ... There is uncertainty in this market, but we're seeing improvement, and it beats the alternative."

Intel offered a third-quarter sales outlook of $8.5 billion, plus or minus $400 million, which is significantly better than the $7.8 billion average estimate of analysts polled by Thomson Reuters.

The numbers helped drive Intel shares up $1.27 to $18.10 in extended trading. Before the earnings report, the stock closed at $16.83, up 2.1 percent on the day.

Blockbuster to stream video rentals on Samsung TVs

Having been a step behind in the race to pipe entertainment from the Internet to television screens, struggling video rental-chain Blockbuster Inc. is counting on a new partnership with Samsung Electronics America Inc. to regain ground on rival Netflix Inc.

In an alliance announced Tuesday, Samsung's next generation of high-definition TVs will include a built-in feature that will enable people to rent the latest DVD releases from Blockbuster with the press of a button on the remote control.




The Blockbuster rentals, expected to be priced from $1.99 to $3.99 apiece for 24-hour viewing opportunity, will be piped over high-speed Internet connections. Samsung's HDTVs will begin offering Blockbuster's on-demand service this fall.

The relationship is a coup for Dallas-based Blockbuster because Samsung is the world's largest manufacturer of flat-screen TVs. Blockbuster's on-demand rental service also will be accessible through software installed on Samsung's Blu-ray DVD players and home theater systems — devices that already offer Netflix's own Internet streaming service.

With its stores losing favor among many tech-savvy consumers who want more instant gratification, Blockbuster has been diversifying its distribution options to reverse a long-running slump that has decimated its stock price and raised doubts about its future.

Besides stores and Internet streaming, Blockbuster also rents videos through the mail — just like Netflix — and in kiosks.




The multiple channels haven't impressed Wall Street yet. Blockbuster shares closed Monday at 58 cents, leaving it with a market value of just $112 million. Netflix's market value is approaching $2.5 billion, with some investors speculating the company could be acquired by Amazon.com Inc., which also rents video over the Internet.

Netflix got the jump on Blockbuster in video streaming by introducing its technology in early 2007 as a free supplement to its DVD-by-mail service, which charges $8.99 to $16.99 per month for its most popular subscription plans. The Los Gatos-based company then made the streaming option even more attractive last year by linking it to a variety of gadgets that connect to TVs.

Blockbuster responded with its own digital alternative late last year.

Besides Samsung, both TV maker Vizio and digital video recording TiVo Inc. are teaming up with Netflix and Samsung to offer video streaming.

North Korean suspected cyber attack

SEOUL, South Korea – A North Korean army lab of hackers was ordered to "destroy" South Korean communications networks — evidence the isolated regime was behind cyberattacks that paralyzed South Korean and American Web sites — news reports said Saturday, citing an intelligence briefing.

Members of the parliamentary intelligence committee have said in recent days that the National Intelligence Service has also pointed to a North Korean boast last month that it was "fully ready for any form of high-tech war."




The spy agency told lawmakers Friday that a research institute affiliated with the North's Ministry of People's Armed Forces received an order to "destroy the South Korean puppet communications networks in an instant," the mass-circulation JoongAng Ilbo newspaper reported.

The paper, citing unidentified members of parliament's intelligence committee, said the institute, known as Lab 110, specializes in hacking and spreading malicious programs.

The Ministry of People's Armed Forces is the secretive nation's defense ministry.

The NIS — South Korea's main spy agency — said it couldn't confirm the report. Calls to several key intelligence committee members went unanswered Saturday.

The agency, however, issued a statement late Saturday saying it has "various evidence" of North Korean involvement, though has yet to reach a conclusion.

South Korea's Yonhap news agency carried a similar report, saying the NIS obtained a North Korean document issuing the June 7 order. The report, quoting an unidentified senior ruling party official, said the North Korean institute is affiliated with the North Korean People's Army.

The state-run Korea Communications Commission said Friday that it had identified and blocked five Internet Protocol, or IP, addresses in five countries used to distribute computer viruses that caused the wave of Web site outages, which began in the U.S. on July 4.

The addresses point to the computers that distributed the virus that triggered so-called denial of service attacks in which floods of computers try to connect to a single site at the same time, overwhelming the server.

They were in Austria, Georgia, Germany, South Korea and the U.S., a commission official said. He spoke on condition of anonymity because he is not authorized to speak to the media on the record.

Speculation over who was responsible for the attacks that targeted high-profile Web sites, including those of the White House and South Korea's presidential Blue House, has centered on North Korea.

And though such finger-pointing has been trickling out since the attacks began, the identity of the IP addresses themselves provides little in the way of clarity.

That's because it is likely the hackers, whoever they are, used the addresses to disguise themselves — for instance, by accessing the computers from a remote location. IP addresses can also be faked or masked, hiding their true location.

South Korean media reported in May that North Korea was running an Internet warfare unit that tries to hack into American and South Korean military networks to gather confidential information and disrupt service. The Chosun Ilbo newspaper reported Friday that the North has between 500-1,000 hacking specialists.




The fact that some of the attacked sites — such as the ruling party and the office of President Lee Myung-bak — have links to the South Korean government's hard-line policies toward the North was cited as further reason why Pyongyang might attack them.

The North has drawn repeated international rebuke in recent months for threats and actions seen as provocative by the international community. Those include a nuclear test in May and short-range ballistic missile launches on July 4.

North Korea has not responded to the allegations of its involvement in the Web site outages.

The assaults appear to be on the wane. No new similar cyberattacks have been reported in South Korea since Friday evening, according to the state-run Korea Information Security Agency.

Online radio stations strike big deal on royalties

The future of Internet radio appears more secure after a handful of online stations reached an agreement Tuesday to head off a potentially crippling increase in copyright royalty rates.

The deal is the product of two years of negotiations between webcasters and copyright holders. In March 2007, a ruling by the federal Copyright Royalty Board dramatically raised the rates that Internet radio stations must pay artists and recording labels — leading many online radio stations to warn that the new rates would put them out of business by eating up as much as 70 percent of revenue.




At least one popular online radio service — Pandora Media of Oakland, Calif., which derives much of its revenue from advertising — said the new agreement will help ensure its survival.

"For us, it's hard to overstate how significant this is," said Pandora founder Tim Westergren. "It was either this or an ugly alternative."

The revenue-sharing deal announced Tuesday is between SoundExchange, a nonprofit that collects royalties for recording copyright owners from digital radio services, and three smaller webcasters: radioIO, Digitally Imported and AccuRadio.

Westergren said Pandora plans to sign on to the new royalty terms too. And Jonathan Potter, executive director of the Digital Media Association, which represents webcasters and other online media companies, predicted some of the association's other members will also join the deal.

Under the agreement, large commercial webcasters will pay copyright owners up to 25 percent of their revenue or a "per-performance" rate that is below the rates set by the Copyright Royalty Board. Smaller webcasters will pay either a percent of revenue or a percent of expenses.




In a statement, SoundExchange executive director John Simson said the deal will give webcasters a chance to "flesh out various business models" and give artists and other copyright holders the opportunity to "share in the success their recordings generate."

Lawmakers also praised the agreement. Congress has already passed legislation making any deal reached between webcasters and SoundExchange legally binding. Because Internet radio companies operate under a government license, these deals need congressional authorization.

Already this year, SoundExchange struck new online royalty agreements with the National Association of Broadcasters and the Corporation for Public Broadcasting.

Traditional AM and FM broadcasters are exempt from copyright royalty rates for over-the-air radio play, because that airplay is thought to provide free promotion for artists and labels. But the broadcasters are subject to the new rates for any songs streamed over radio station Web sites.

Companies that track consumer behavior online for advertising purposes are vowing to make their practices more transparent and to give people a way to

Companies that track consumer behavior online for advertising purposes are vowing to make their practices more transparent and to give people a way to decline being shadowed.

It's unclear how much of an effect the new policies will have. One consumer group said the changes don't go far enough, and that extensive profiles of people still will be collected without their complete consent.




The new guidelines, which were due to be unveiled Thursday, represent the industry's attempt at self-regulation as Congress and the Federal Trade Commission have been examining online behavioral advertising.

Companies can track consumers as they visit different Web sites, conduct searches and buy things. Over time, profiles of consumer interests can be sold to advertisers who want to pitch their products only to people most likely to be interested in them. The information collected can include a best guess at someone's ethnicity, income, educational level, age and hobbies.

The new guidelines recommend that companies tell consumers more clearly when they're being tracked, educate them on how Web tracking works and give them an easy way to opt out of being followed. According to the new policies, industry groups will monitor whether companies are breaking the guidelines and report violators to federal agencies, starting next year.

These guidelines are coming from trade associations that represent 5,000 companies. The consortium comprises the American Association of Advertising Agencies, Association of National Advertisers, Direct Marketing Association, the Interactive Advertising Bureau and the Better Business Bureau. Their members are some of the nation's largest companies, including Google Inc., General Electric Co., Microsoft Corp., Coca-Cola Co. and Procter & Gamble Co.

The groups say they are developing uniform links or a clickable icon that will take consumers from a Web site or an ad itself to a disclosure page.

The guidelines also call for companies to provide "reasonable" security for the data they collect and to limit how much data they retain. The companies are advised to get consumer approval before making material changes that would erode privacy protections. In particular, certain sensitive data such as children's personal information, financial data and medical records must have more protection.

"We think it's a very big leap forward," said Stu Ingis, a partner at Venable LLP, the law firm hired by the groups to undertake this effort.

Jeff Chester, executive director of the Center for Digital Democracy, said the online ad industry's promise to regulate itself through the new guidelines is designed to undercut the federal government's increased interest in overseeing online behavioral advertising.

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"The online ad industry is terrified that finally regulators and lawmakers have woken up from a deep slumber that people's data are being collected without them being aware and in control of it," he said.

Chester said the groups should not only protect children's private information, but also teens'. And he said all health and financial data should be covered, rather than just certain kinds.

"Congress needs to create fair rules (under which) online marketing can thrive but consumers have greater control on how the information collected is being used," Chester said.

Facebook, Twitter and peers for sale - privately

Scott Painter makes his living betting on startup companies, having played a role in launching 29 of them over the years. But with the bad economy choking initial public offerings and acquisitions, Painter is now backing an idea that makes it easier for insiders like him to sell shares in their companies even before they go public.




SharesPost, which was founded by Painter's business partner, Greg Brogger, launched publicly in June. Through SharesPost's Web site, Painter is trying to sell shares in several companies he helped found, including car pricing startup TrueCar.com. He also wants to buy shares in companies that are far from an IPO, like short-messaging site Twitter and business-networking site LinkedIn.

SharesPost is one of a few private stock exchanges that are emerging to fight what venture capitalists call a liquidity crisis. These exchanges give stakeholders an alternative way to trade their shares in hot startups like Facebook for cold, hard cash — without having to wait years for an IPO.

Employees at startup employees often put in long hours but get salaries that can be 20 percent less than their peers at public companies. In return, they get stock or options that they hope will be a path to sports cars and summer homes after their company goes public or is bought out.

Given this, services like SharesPost could help startup workers get some cash while awaiting a distant IPO that might never even get off the ground. Most people won't be in on the action, though, since these exchanges are only open to a small pool of buyers.

And it's not clear how much — or how little — stock has changed hands through them. In its short life, Santa Monica, Calif.-based SharesPost said it has executed one $25,000 transaction, while another service, New York-based SecondMarket, said it has completed about 40 transactions in the past year worth about $150 million.

Still, if they manage to thrive, these exchanges could help the economy. By selling shares on a private exchange, an investor can free up funds to put into other startups. And institutional investors could use these services to broaden their holdings to include fast-growing companies that have yet to go public.

The methods of these private exchanges vary. SharesPost uses an online bulletin board to introduce buyers and sellers. SecondMarket links the parties and lets companies set up their own mini-markets that they control, while Redwood City, Calif.-based XChange is rolling out an online system that will allow buyers and sellers to connect and directly trade shares for cash.

All are open just to institutional investors — organizations like venture capital firms or pension funds that manage at least $100 million in assets — and individual accredited investors. That category includes people with a net worth of at least $1 million, or salary of at least $200,000 for the last two years.

The concept is not entirely new. Nyppex, formed in 1998, facilitates private-company stock trades, and a few companies with similar offerings emerged during the last economic downturn but failed to gather much steam. Among the problems: Determining a fair price for a private company's stock is tough without much public information.

This time, however, employees and investors are more aggressively looking for a way to get a return on their dedication and funding. More than a dozen companies have priced IPOs in the U.S. this year, down from 35 in the first half of 2008, according to research firm Renaissance Capital. In the same period of dot-com-crazy 2000, there were 219 IPOs in the U.S.

Besides the economy, startup investors say the high costs and regulatory requirements associated with going public have also stymied many smaller, younger companies. According to the National Venture Capital Association, the median span from a company's founding to its IPO was 9.6 years in 2008. In 1998 it was 4.5 years.

One factor is compliance with the Sarbanes-Oxley anti-fraud law, which was enacted in 2002 after accounting scandals at companies like Enron Corp. and WorldCom Inc. A key part of this law requires public companies to file reports on the strength of internal financial controls and fix any problems — steps that can be costly for a startup.




Issues like this have "just made it more and more difficult for companies to make it to that next step," said Thomas Foley, chief executive of XChange, which he developed with venture capitalist Tim Draper.

SharesPost founder Greg Brogger believes his site has one solution to the slowdown in IPOs: Bulletin boards for more than 100 startups that allow buyers and sellers to post the price and number of shares they want to purchase or unload, and the ability to e-mail one another directly.

Parties wishing to make a deal can find the relevant contracts on the site to sign, and an escrow company completes the transaction, charging both sides $2,500. So far, a $25,000 deal — the site's minimum transaction size — has been completed for 2,500 shares of electric car startup Tesla Motors at $10 apiece.

That reflects a great deal of optimism for a company that has only sold roughly 500 cars and had to get additional funding from the U.S. Energy Department. A report from one of SharesPost's research providers, NeXt Up Research, valued Tesla at $1 billion, or $9 per share. The car company had no comment.

Anyone can sign up for free to see startups listed on SharesPost. Only qualified investors can buy shares, and SharesPost makes money by charging buyers and sellers $34 a month.

XChange, meanwhile, enables buyers and sellers to share confidential information necessary for making informed purchases, and it has a platform for users to trade shares. When it is fully launched later this year, XChange will be an automated online exchange, much like E-Trade, where users can instantly trade shares for cash.

But while these services may be able to speed up dealmaking, users must still grapple with another key issue: how to determine a fair price for stock in a company that isn't required to regularly disclose its financial information and doesn't have that many potential buyers or sellers.

At SharesPost, Brogger wants to solve the problem by offering as much information as possible about companies it lists, from analysts at Next Up Research and VC Experts. SecondMarket CEO and founder Barry Silbert said companies can decide to share some details with investors and potential bidders on his site.

SharesPost doesn't believe the research on its site will cause any problems should the company file for an IPO with the Securities and Exchange Commission, as these types of analyses are published by investment banks during the IPO process.

Still, the lack of public disclosure and limited number of traders on these services makes Kathy Smith bristle. A market with limited transparency, participation and disclosures "is not a solution to the markets we have now," said Smith, a principal at Greenwich, Conn.-based Renaissance Capital.

And trading is not always as simple as posting a sales opportunity and an asking price. Startups often restrict what their employees can do with their shares and stock options — commonly imposing the "right of first refusal." That generally means employees who find buyers for their shares have to let the company decide if it wants to buy the stock back instead, for the same price. Companies can use this stipulation to keep competitors from snagging a stake.

Even if these services help startup employees and investors, they're not likely to eliminate the need to someday go public.

For one thing, this kind of market can only get so big. Private companies with more than $10 million in assets are required to file annual reports with the SEC if they have more than 500 shareholders of record. This rule prodded Google Inc. into filing for its IPO in 2004, and it could happen to others as these exchanges distribute shares among more shareholders.

Several of the private exchanges say it's up to companies to keep track of their total shareholder count. Foley said XChange helps companies keep tabs by revealing who their shareholders are at any given time.

Another reason IPOs won't vanish: Companies usually go public first to raise cash for their operations, and then to set a price that will eventually let insiders turn their holdings into cash. While some of the private exchanges do let startups themselves — and not just their employees and investors — sell stock, it's not likely to be lucrative without a large base of potential buyers.

Still, some buyers, sellers and startups may see trading through these services as the way to go until the IPO market improves.

"At the very least, it's going to be spring training for companies before they go public," SecondMarket's Silbert said.

Apple fans are prepared for a part-time Jobs

Five and a half months ago, word that Steve Jobs would only work part-time as he recovered from a liver transplant would have sent investors into a selling frenzy, so closely linked was Apple's charismatic co-founder and CEO to the company's success.




But now, with Jobs' return to Apple just days away that prospect is a lot less daunting.

Wall Street has grappled with the implications of Jobs' illness since August 2004, when investors learned the CEO had kept a cancer diagnosis secret until after he underwent surgery. Investors feared a half-year absence would leave one of the oldest computer makers adrift, because Jobs had become the essence of the company he co-founded in 1976. But in the last few months, the company released must-have gadgets and software improvements with nary a public hiccup. Its shares have almost doubled, raising the question of how central Jobs is to Apple today?

The company's past silence on matters of Jobs' health made shareholders jittery when Jobs appeared increasingly, even alarmingly, thin last year. Easily spooked, investors sent the stock tumbling 5 percent to its lowest point in a year on a rumor last October that Jobs had suffered a heart attack.

Then shares slipped 2 percent in December when Apple said that Jobs would not speak as usual the next month at the annual Macworld conference, then bounced up 4 percent on Jan. 5 when Jobs explained his weight loss as a treatable hormone imbalance. They sank 7 percent a week later after Apple said he would be taking six months off because his medical problems were more complex than he initially thought.

Since then, Wall Street's whiplash has had time to heal, especially because Apple's stock has weathered the recession better than those of most of its competitors. Shares have improved 76 percent since the dark day in January when Jobs announced his leave, closing Friday at $139.48.

It is not yet clear how investors will take the latest word, that Jobs had a liver transplant two months ago in Tennessee, according to The Wall Street Journal, and that he will likely work part-time, at least at first.

Apple has not confirmed the report, and has said only that Jobs is looking forward to returning to Apple at the end of the month. Spokesman Steve Dowling had no further comment Sunday.

Cupertino, Calif.-based Apple put its chief operating officer at the helm during Jobs' absence. Tim Cook had been tested in the role during Jobs' first bout with cancer and shared the stage with the CEO during key product announcements last fall. He brimmed with confidence in the early days of Jobs' medical leave, assuring analysts that the show would go on even without its frontman.




"The values of our company are extremely well entrenched," Cook said in the company's fiscal first-quarter earnings call in January. "We believe that we're on the face of the Earth to make great products, and that's not changing."

Indeed, Apple has produced in the last six months: updated laptops with lower entry-level prices, updated Mac software and a faster iPhone with many requested features. Apple's cult-like followers remain avid, some camping overnight at Apple stores last week to be one of the first to snatch up the new iPhone 3G S, despite a pre-order option offered for the first time by Apple and wireless carriers.

Tim Bajarin, an analyst for Creative Strategies who has been following Apple for more than 25 years, said things ran smoothly in Jobs' absence because he had already relinquished much of his control over the company.

"Jobs hasn't been running day to day operations for almost two years, well before he got sick," Bajarin said. Cook was de facto in charge, and the people in charge of each of Apple's gadgets and programs were, for the most part, working without a net.

"They only went to Jobs on big issues and questions and making sure their programs where in line with Jobs' overall vision," he said, which the CEO scopes out in 10-year increments.

While Jobs has taken much of the credit for Apple's turnaround in the last decade, Cook has played an import role behind the scenes, says Roger Kay, an industry analyst and president of Endpoint Technologies Associates.

"If you want to look at Apple's history and see where they made execution errors and when those ceased, you can time it almost exactly to the arrival of Tim Cook," Kay said, pointing to several product launches around the late 1990s where Apple would create demand for a new product, and then have problems delivering enough of it. "He, as the operations guy, has really made the trains run on time."

While Jobs has reportedly recovered well from his transplant and Apple has said repeatedly that the CEO will be back at the end of June, the company will eventually have to confront the fact of its leader's mortality. And no matter how many accolades Cook and the Apple product teams garner, it will be near-impossible to find someone like Jobs to replace him.

Kay is skeptical Apple will be able to continue its success simply by asking itself, "What would Steve do?" After all, the message that Apple's bench is deep and capable is coming from Apple itself.

"You can always do product extensions, it doesn't take a genius," Kay said. "Who's going to come up with a new product category that's going to do what the iPhone and the iPod have done?"

Jobs' health problems could push him to groom a successor, a task Kay said the CEO has not likely undertaken.

"You don't have a little Steve somewhere waiting in the wings," Kay said. "An autocrat like Steve would not allow somebody like Steve anywhere near himself."

Apple CEO Steve Jobs had liver transplant

Apple Inc. co-founder and CEO Steve Jobs, whose recovery from pancreatic cancer appeared less certain when he had to take medical leave in January, received a liver transplant two months ago but is recovering well, The Wall Street Journal reported Saturday.




The newspaper didn't reveal a source for the report, which comes as Jobs, 54, is expected back in his day-to-day duties at the company shortly. CNBC said later that it had confirmed the Journal's account, which said Jobs had the transplant performed in Tennessee.

Apple spokesman Steve Dowling told The Associated Press he had no comment. Dowling reiterated what has become Apple's standard line about the CEO's health, that "Steve continues to look forward to returning to Apple at the end of June and there is nothing further to say."

Few CEOs are considered as instrumental to their companies as Jobs has been to Apple since he returned in 1997 after a 12-year hiatus. With Jobs serving as head showman and demanding elegance in product design, Apple has expanded from a niche computer maker to become the dominant producer of portable music players and a huge player in the cell phone business. News and rumors about his health send Apple stock soaring or plunging.

Jobs disclosed in August 2004 that he had been diagnosed with — and cured of — a rare form of pancreatic cancer called an islet cell neuroendocrine tumor.

According to the National Institutes of Health, treatment for that form of pancreatic cancer can include the removal of a portion of the liver if the cancer spreads. The cancer is curable if the tumors are removed before they spread to other organs.

It's likely that Jobs had part or all of his pancreas removed to "cure" his cancer in 2004, said Dr. Lewis Teperman, vice chair of surgery and director of transplantation at NYU Langone Medical Center in New York City.

Patients who have part or all of their pancreas removed usually get diabetes, which is treated with medication. Patients often lose weight as a result as well.

After the pancreas, the liver is the "next stop" for a tumor since blood drains from the one organ to the other, said Teperman, who did not treat Jobs.

Since the type of pancreatic cancer Jobs had is "slow growing," it's likely microscopic cells went undetected and traveled to the liver, Teperman said. Tumors often "stop" at the liver, he said, although it's possible they can spread beyond it.

The risk for liver cancer patients who get transplants is that the cancer will return in the new liver.

This can happen if undetected cancer cells are hiding out elsewhere in the body, Teperman said. He said there's no way to predict the likelihood of this occurring without knowing the extent of the initial cancer.




The five-year survival rate for organ transplants is around 75 percent, but falls among older recipients, according to the United Network for Organ Sharing, which manages transplants in the U.S.

Transplant patients must take medications for the rest of their lives to prevent rejection.

Since there is no residency requirement for transplants, Jobs might have traveled to Tennessee to shorten his wait for a liver. According to the organ network, there were 295 newly listed patients in Tennessee last year and 1,615 in California.

Wait times for transplants depend on the urgency of the patient's condition. Those in most critical need generally get transplanted within 10 days regardless of geography, said Joel Newman, a UNOS spokesman.

For less urgent cases, however, he said there's a greater variance in wait times, depending on a person's location.

Shorter waiting lists aren't the only reason to travel for a transplant, however.

"A lot of people who travel for a transplant will look at the center's survival rate or whether it specializes in certain conditions," Newman said.

Jobs' gaunt appearance last year fueled speculation that his health was worsening.

On Jan. 5 of this year, he said he had a treatable hormone imbalance and that he would continue to run the company. The following week, however, Jobs went on leave and said his medical problems were "more complex" than he had thought. Apple's chief operating officer, Tim Cook, took over daily duties.

Speculation about Jobs' health has been fueled by the Cupertino, Calif.-based company's practice of keeping such information under wraps.

Apple waited until after Jobs underwent his cancer surgery in 2004 before alerting investors. Last summer, the company insisted his thinner appearance was due to a common bug.

After Apple announced Jobs' medical leave in January, the company's shares slid 7 percent to $79.15, near a 52-week low. Since then, however, as Apple's business has remained sturdy even in the recession, and investors have become comfortable with Cook leading the daily operations, Apple shares have been among the best performers in the technology sector. The stock closed Friday at $139.48.

Jobs earned his status as a computing pioneer in 1976, when he and Steve Wozniak founded Apple in the Silicon Valley garage of Jobs' parents. Their first product, the Apple I, was a computer for hobbyists — it lacked a keyboard or monitor. But the next year they produced the Apple II for everyday consumers, and the personal-computer era was born.