I suppose this week represented a huge test for Apple and the stock market. Knowing that Steve Jobs was going to be absent from Apple for five months, how would Wall Street react, particularly in light of the possibility that he might never return as CEO?

Well, some analysts suggest that the financial community has already allowed for that happenstance, particularly after reports that Jobs might be seriously ill first surfaced last summer. Yes, a fair part of the hit to Apple’s stock price might be due to the ongoing economic crisis. But questions about the health and stability not only of its CEO but of the company as a result are probably factored into those figures. As a result, the actual dip wasn’t quite as severe as some might have feared.

But if you’ve been depending on Apple to fund your retirement, you may have to put off the day when you can give up that day job — or night job. On the other hand, this doesn’t mean Apple is going to return to the bad days of the mid-1990s when everything seemed to be poised to fall apart and take the company down.

Story continued in this week’s Tech Night Owl Newsletter.

When you look at everything in retrospect, you can see a possible  gradual revelation in the news that Steve Jobs has more serious health problems than he previously admitted. Let’s examine the how it all came to be.

Last year, when it was clear he’d lost a lot of weight, Apple said he had suffered from a “bug,” implying some sort of flu or similar infection, although such ailments don’t generally cause such serious symptoms. As the talk about his health delivered more and more dire hints, Jobs called a reporter at The New York Times, and after chewing him out in no uncertain terms, talked of a more serious illness on background.

You wonder why he couldn’t just let himself be quoted, but Steve marches to the beat of the different drummer.

In a later appearance, he mentioned his blood pressure reading, which was essentially normal.

The news at the end of the year came thick and fast. In the same terse release, Apple announced it was going to stop attending the Macworld Expo after the 2009 conference, and besides, Steve Jobs wouldn’t be delivering the final keynote. That task fell to Senior VP Philip Schiller.

I suppose the former was sufficiently unexpected as to, for a short time, quell concerns over whether there was some other reason for Jobs not to show up. It’s also true that he hasn’t been seen in public since the media briefing where new Apple note-books were released, and even then his continued gaunt appearance clearly demonstrated that his condition hadn’t improved.

Within the spate of a few days, Jobs first said that his condition has been traced to a “hormonal imbalance,” and that he anticipated a full recovery by spring. The bombshell arrived this week, when Jobs said his treatment would be more complicated than previously expected and take longer, so he would take a leave of absence until June.

If this was any other CEO on the planet, I suppose most of you wouldn’t care. While I don’t harbor any negative thoughts about Michael Dell, if he took a six-month break from his post as CEO of Dell, how many would notice? In fact, would the employees of Dell even notice? And I don’t mean that as an insult. It does appear that he is doing reasonably well in restoring the company’s growth and profitability.

Steve Jobs, and I’m certain he doesn’t like it, has become a rock star. His ongoing illness merited a front page story in the Wall Street Journal and other major newspapers. The cable TV news channels had plenty of coverage as well, complete with the usual celebrity physicians who had no compunctions about delivering on-the-spot diagnoses of Steve Jobs alleged medical condition. Sure, they will often phrase their instant evaluations with appropriate qualifications, but is that sufficient?

While I understand that celebrities, politicians and, of course, prominent members of the business community, are all subject to similar treatment at the hands of the media, a little dose of reality is in store. If Jobs’ own doctors had trouble figuring out what was wrong with him, just how are those instant experts on TV going to fare any better?

Regardless, the expected dumping of Apple’s stock hasn’t happened yet. Some speculate that the gradual reduction in the price over the past few months has already been, in part, due to concerns about Jobs’ illness. So it may not go much lower, and Apple’s investors will no doubt be pleased.

On the long haul, just what does this mean as far as Apple’s future possibilities are concerned? Indeed, how much time has Jobs actually spent performing his CEO chores in recent months, particularly in light of his condition? Could it be that the present state of affairs merely recognizes a reality that has existed for a while?

That means that COO Tim Cook has been piloting the ship for months, while Jobs may only have been present to make critical business decisions about new products, marketing plans and other matters. Indeed, there’s nothing to prevent him from telecommuting, working out all the details with iChat video conferences. Or perhaps some key Apple executives make regular pilgrimages to Jobs’ home to allow him to do the appropriate hands-on testing of certain products.

In the long run, the real question is, I suppose, whether Steve Jobs really intends to return to Apple even if he is, in fact, mostly cured of his illness by summer. Between now and then, Apple will no doubt introduce a number of new products that will be sufficiently compelling for you not to concern yourself over the fact that Jobs won’t be headlining any media presentations.

When the WWDC is held, Jobs may return. Then again, maybe he won’t. He will be missed, but if he has done his job, he will have embedded his business DNA into the very fabric of Apple, so they will be able to live long and prosper and expand the vision with more insanely great products.

You know if a tech pundit or financial analyst was fully capable of running a multinational corporation with over 30,000 employees and sales of tens of billions of dollars a year, they wouldn’t be working for peanuts at their present jobs. They’d be raking in hundreds of millions of dollars with some company demonstrating their incredible management skills.

That, however, doesn’t stop us from criticizing a company when we feel they can do something better. Of course, when it comes to Apple, they listen to customer complaints, at least sometimes, and media demands tend to roll off their backs.

Recently, for example, I’ve read rumors suggesting Apple is about to release a 4GB version if the iPhone, primarily for overseas markets where paying the present retail price is difficult.

Should such a product appear, it would be the same iPhone 3G that we all know and love, except for a memory chip with less capacity. Period. Supposedly that would allow Apple to arrange for carriers to offer it for $99 or even less. Now in case you’ve forgotten, the original iPhone did come in a 4GB version, one that didn’t sell very well, so Apple phased it out quickly.

This isn’t to say that 4GB is insufficient when it comes to storage space. In other words, the product would be identical to its larger cousins. The other alternative would be for the mobile carriers to offer the 8GB version for half the price and “eat” the profits, or make some sort of revised subsidy deal with Apple to share the loss.

I just don’t see it. However, a “nano” version might fit as far as a tinier, cheaper alternative is concerned. My main concern, however, is just how small the screen can be made before it becomes unusable. As it is now, some of you no doubt feel that today’s iPhone and iPod nano provide insufficient display size. So unless this tinier iPhone is meant to offer reduced screen functionality — which is, frankly, one of its main attractions — it fails my logic test.

But again what do I know? I’m not capable of running a multinational corporation or even a national one!

The other silly proposition, voiced again recently, is that Apple should be loosening the licensing of Mac OS X and sell boxed copies that will run on any PC meeting some basic hardware requirements. Before I respond to this in any detail, I suggest the scribes who are touting this misbegotten scheme ought to take out their calculators.

If you look over Apple’s balance sheets, you’ll see they make a heavy proportion of their income from the sale of hardware. Sure, they provide vertically integrated solutions, meaning that the hardware and software is designed to work almost flawlessly together. But hardware sales drive the company.

If Apple allows you to officially use Mac OS X on a regular PC, they will gut their income, big time. Consider what happened in the mid-1990s, when Apple did have an official Mac OS licensing program. Third party companies put Apple approved motherboards into cheaply-made PC cases, and sold them at rock-bottom prices.

Now Apple hoped that cloning would help them reach markets that had previously rejected Macs. Instead, gutsy startups such as Power Computing aggressively went after Apple’s core customers with a vengeance. Content creators loaded up on PowerTower Pros and other Power Computing models, and this sort of thing, plus other missteps, nearly killed Apple.

Even if Apple could somehow limit its licensing to product segments they don’t presently address, they’d have to increase their Q&A budget big time to make sure Mac OS X worked properly on tens of thousands of PC hardware variations. Microsoft, with much greater resources, is barely able to cope with that state of affairs with Windows.

So I don’t think it’s going to happen. I also believe Apple will be victorious in its lawsuit against that would-be cloner, Psystar, and that will put other companies on notice that they can’t get away with violating Apple’s user licenses. By the way, I would not doubt that Psystar is actually a stalking horse for a larger PC maker, who is financing their operations and legal bills in order to see if they can somehow induce the courts to allow this sort of behavior. If they were to win, the floodgates for cloners would be opened, and Apple would be in a heap of trouble.

You will also read ongoing demands that Apple cut the prices, to move more hardware in the middle of the great recession, or whatever label you care to place on the current financial crisis.

Lest they forget, Apple has over $25 billion earning interest in the bank. They can well afford to weather the storm, and suffer a short-term sales slowdown. Sure, maybe they will do a little price cutting here and there, or just add more value to their products. But Apple doesn’t march to the beat of the media and financial community.

What’s more, what they have done in recent years is to confound the skeptics and succeed beyond most anyone’s wildest dreams.

This is one of those stories I haven’t wanted to write, so I’ll simply quote a media advisory sent over the wire services on Wednesday afternoon from Steve Jobs, which pretty much confirms the serious nature of his ongoing illness:

“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.”

Everyone at The Night Owl sends Steve Jobs best wishes for a speedy recovery, with the hope that this is a schedule he’ll beat.