The question now is whether Apple itself will follow Amelio into oblivion. Last week the company reported its third-quarter financial results: yet another loss, this time $56 million. That wasn’t as bad as the $100 million or so Wall Street expected, and it was far better than the $708 million lost during the quarter ended in March. But for devotees of Apple and its famously easy-to-use Macintosh computer, the absence of really bad news doesn’t necessarily amount to good news. Across Silicon Valley, techies are debating whether Apple can be saved, and by whom. Even the most fervent loyalists concede that the odds are long. ““Apple doesn’t need a CEO,’’ says Jean-Louis Gassee, head of software maker Be. ““They need a messiah.''
Never mind those famous blunders of yore, such as failing to license the Mac operating system to other manufacturers early enough that Apples might today be as ubiquitous as Windows. Amelio and his predecessor, Michael Spindler, made equally serious errors. Not least was their failure to take up any of half a dozen buyout offers, according to former chief financial officer and board member Joseph Graziano. In late 1994 IBM offered $40 a share for the company, payable in shares of Big Blue. Apple demurred, Graziano says, because its board considered IBM to be ““going nowhere.’’ (IBM’s shares have since nearly quadrupled; Apple’s have fallen by more than half.) Apple turned down a second offer from IBM in the spring of 1995 and rebuffed overtures from Sun Microsystems, including one early last year for between $18 and $21 a share. These days, sources say, Sun chairman Scott McNealy heaves a sigh of relief that Apple turned him down.
Another blooper was licensing Mac to a slew of new cloners last year - too late, say several recently departed senior executives, to do anything but cannibalize Apple’s own sales (helping drag down its U.S. market share from 11 percent two years ago to 4 percent today). Yet another may have been Amelio’s decision to spend $400 million earlier this year to acquire NeXT Software from Steve Jobs, Apple’s original cofounder. The buzz around the Valley is that Amelio, seduced by Jobs’s legendary salesmanship, hugely overpaid for a technology that Apple may never be able to put to good use. It’s also widely rumored that Jobs himself had lost faith in NeXT’s innovative software and wanted desperately to find a buyer. He recently registered to sell all but one of the 1.5 million Apple shares he received for NeXT - not a sign of confidence.
Perhaps Apple’s biggest mistake, many in the industry suggest, was hiring Amelio, who declined to be interviewed for this article. He got off to a good start, cutting costs and simplifying the company’s product lines. But then he seemed to lose direction. He promised to map out his vision of Apple’s future in a grand Hundred Day plan - and never delivered. He promised Apple would soon return to profitability - yet losses kept mounting. Insiders began criticizing him as ““out of touch,’’ lacking ““energy’’ and ““imagination.’’ They challenged his credentials as a self-styled corporate ““transformation’’ expert. (Charles Sporck, the founder of National Semiconductor, tells anyone who will listen that he ““deeply regretted’’ hiring Amelio and would never have recommended him as CEO of Apple.) His penchant for pomp and perks also rankled, manifested in his concern over executive planes and offices and his insistence that he be addressed as ““Dr.’’ This in a company where there are almost as many Ph.D.s as parking spaces.
By the end of Amelio’s tenure, Apple seemed to be in utter disarray. One chief executive approached Apple with a plan to buy its $1.5 billion imaging division - a major and probably helpful acquisition. ““I couldn’t find anyone who could make the decision’’ and gave up, he says. Amelio’s fate was sealed when Jobs and other executives arrived from NeXT. They knew Apple, they knew the industry and they seemed focused, impassioned and full of vision. ““Gil couldn’t participate in the conversation,’’ says yet another former senior Apple executive. By April it was obvious to almost everyone but Amelio that he had to go.
What now? Even ““Macaddicts’’ are convinced that only draconian remedies can save Apple. Many think the company, desperate for a bailout, can be bought on the cheap. (Some often-mentioned buyers: Oracle Corp., whose chairman, Larry Ellison, talked this spring of waging a proxy war for the company, or Taiwan’s Umax Data Systems.) Jean-Louis Gassee suggests splitting Apple into separate hardware and software companies. (The former could gradually be phased out of business if the Mac languishes or merged with Power Computing, a successful cloner.) Former CEO John Sculley proposes to aggressively attack the education market, where Apple has long enjoyed a special advantage, and ““sell everything else.’’ A final recommendation from the man who fired Jobs in 1985? Bring him back.
If revenge is a dish best eaten cold, Jobs could feast. He says he is content to remain as an adviser to Apple while running Pixar, his digital-entertainment company, and has asked not to be considered for CEO. But friends and executives close to Jobs say the choice is not so clear-cut. ““It will be difficult for him, emotionally, to resist,’’ says one, rating the chance that Jobs will take over at Apple to be around 50-50. Others suggest that Jobs’s standoffishness may be a ruse by a master of public imagery. His goal: to be wooed, even begged, to take on the role of savior by the very board that deposed him.
A bit too melodramatic? Perhaps, but Apple’s saga has always been Hollywoodesque. And Jobs has already set the stage. His rousing speeches to developers at recent conferences, his forceful articulation of Apple’s problems and his proposed solutions have already impressed the board and infused the company’s battered troops with hope. Everyone agrees that Apple needs a charismatic, visionary leader, supremely confident in his ability to convince the computing world that Apple has a future. At that, no one would be better than Jobs.
It began as the hottest, coolest, most innovative company in computerdom–an icon of American high-tech culture. Now it seems, hardly anything is left.
John Sculley, PepsiCo marketing whiz, joins Apple as president and CEO
Apple introduces the Macintosh computer
Steve Jobs, cofounder of Apple, leaves to found NeXT after power struggle with Sculley
Apple inaugurates the desktop-publishing revolution with the LaserWriter Plus and the Mac Plus
Apple reorganizes into four operating divisions. Mny disgruntled long-time employees leave.
Apple launches the largest product introduction in its history, including the PowerBook
Spidler’s tenure. Michael Spindler takes over as CEO; Sculley is forced out as chairman. Apple introduces the Newton ‘bomb.’
Apple declines IBM buyout offer of $40 a share
Windows wins battle for desktop; Apple loses market share. Licensing companies to make clones doesn’t help.
Amelio’s tenure. Gilbert Amelio takes over after Spindler is ousted. He cuts costs, but critics say he lacks energy and vision.
FEB. 1997: Apple acquires NeXT. Steve Jobs returns. APRIL: Apple loses $708 million. JULY: Amelio resigns.
