***TO ALL***
News Alert from Investors Business Daily via Quote.com
Topic: Apple Computer Inc
Quote.com News Item #3718196
Headline: Computers & Technology Can A New Board Refresh Rotting Apple Computer?
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It wasn't the perceived surrender of Apple Computer Inc. to
archrival Microsoft Corp.
Forget about the cross-licensing agreement between the two
companies or the inclusion of Redmond, Wash.-based Microsoft's
Internet Explorer browser on Apple machines.
And the $150 million investment in Apple? Pocket change for
Microsoft Chairman Bill Gates.
No, the real news coming out of Apple's headquarters in Cupertino,
Calif., last week was the appointment of a new board of directors,
analysts say. That's what may save the troubled computer maker from
doom.
"It's a whole lot better than the other board," said Daniel
Kunstler, an analyst with J.P. Morgan Securities Inc. in San
Francisco. "It looks like a benevolent conspiracy to make sure the
company survives."
The shakeup in Apple's top branches was one of the more unusual
corporate restructurings in that a majority of the board left. In
the process, Apple went from having a passive board to getting a
highly charged activist group of directors.
The action helped trigger a run-up in Apple stock and prompted
some analysts to review their estimates for the company. Pieter
Hartsook, industry analyst and publisher of the Hartsook Newsletter,
originally thought shipments would drop 15% this year. Now he says
they may rise 20%.
The departures included one-time Apple chairman and early investor
A.C. "Mike" Markkula, W.H. Brady Co. Chief Executive Katherine
Hudson, and Bernard Goldstein, managing director of investment firm
Broadview Associates.
They followed the departure of Delano Lewis, president of National
Public Radio, and Apple's last chairman and chief executive, Gilbert
Amelio. He resigned under pressure in July.
The two members that remained were Edgar Woolard, chairman of E.I.
DuPont de Nemours and Co., and Gareth Chang, president of Hughes
Electronics Corp.'s international business.
New board members for Apple are co-founder and current adviser
Steve Jobs, Oracle Corp. Chairman Larry Ellison, former International
Business Machines Corp. and Chrysler Corp. Chief Financial Officer
Jerome York, and Intuit Inc. President Bill Campbell.
Exactly how the board shakeup occurred is unclear. No current or
past board members returned calls. But it is believed that Jobs, who
has taken on an increasing role at Apple, engineered the shakeup.
"Jobs probably got them all in one room and said, 'You will
resign,' " Hartsook speculated. "Based on his past performance, I
assume he was not particularly diplomatic about it."
Besides, the perception of Apple as a sinking ship might cause
board members to leave. A string of losing quarters and revolving-
door management ends up putting blame - and liability - in directors'
hands.
"Who would want to stay on the board in that situation?" Hartsook
said.
Wall Street and industry officials are applauding the addition of
the four new board members. They say the board has the right mix of
strength to revive the company's fortunes.
Vincent Tai, president of Taiwan-based Umax Data Systems Inc.'s
computer business, is concerned the new board may hurt his company,
which makes Macintosh clones. Apple is considering dropping its
licensing agreements.
Yet Tai still praises the new board members.
"I think there's a general consensus that it's a very, very strong
board," Tai said.
Jobs, who has assumed a sort of super-consultant role of late,
returned last year after an 11-year exodus when his Next Software
Inc. was purchased by Apple. His role grew as the company's outlook
worsened.
Apple was without a chief executive during the Macworld conference
earlier this month in Boston, so Jobs assumed the lead role and
delivered the keynote address. Many thought he would take the
chairman and chief executive role.
Oracle's Ellison is viewed as another force who undoubtedly will
push the company toward network-computer-type devices. Umax's Tai
says it will be interesting to see how Ellison -who is staunchly
antiGates - will warm up to the Apple-Microsoft deal.
Jerome York, now vice chairman of Tracinda Corp., and Intuit's
Bill Campbell are expected to bring a dose of financial acumen to the
board. York, in particular, is getting notice due to his help in
turning around both IBM and Chrysler.
"I think (York) might add a sense of urgency the company sorely
lacked," said one analyst who asked not to be identified.
But at the same time, there are concerns that the personalities of
the four may be so strong that it might cause problems.
And the board must face some tough decisions. Indications are
that Apple would like to discontinue licensing its products to clone
makers because they may be cutting into its market share.
While Wall Street applauds the new board, analysts feel the body's
first crucial decision may be errant if it decides to kill its
licensing deals. Not only is Apple under a legal obligation to clone
makers, analysts say, but the licensees are helping to expand the
Macintosh market.
Apple has yet to license its recently released Mac OS8 operating
system to clone makers and is meeting this week with Umax. It was
unknown whether the company would consult with clone maker Power
Computing Inc. of Round Rock, Texas.
"We feel like it's best to sit down and discuss it calmly instead
of getting emotional," said Umax's Tai.
Also, searching for - and keeping - a new chief executive could be
hampered by board egos, particularly if Jobs takes an active role in
running the company. Some were encouraged by Jobs' decision not to
take the chairman role, but wonder if he can keep his hands off.
"I think he's got to," said Bob Tasker, an analyst for The Yankee
Group in Boston. "If you were offered that job, would you take it
any way other than that?" |
