August 6, 1997 6:05 PM PDT

Jobs names new Apple board

BOSTON--Apple Computer (AAPL) cofounder Steve Jobs announced new board members and an expanded partnership with Microsoft during an upbeat keynote here at this week's Macworld Expo Boston.

New board members include Oracle chairman As the Macworld turns and CEO Larry Ellison, Jerry York, former CFO of IBM and Chrysler, Bill Campbell, CEO of Intuit, and Jobs himself. They join two executives remaining from the previous regime: Edgar Woolard, chairman and former CEO of Dupont, and Gareth Chang, president of Hughes International.

Steve Jobs
Steve Jobs
The company has authorized a total of nine board seats; directors receive stock options, but no cash compensation for their service.

Investors who wondered whether Jobs recently dumped the 1.5 million shares earned from the sale of his Next Software company to Apple, will soon get an answer. Board members are required to disclose their stake in the companies they serve.

York's financial expertise is expected to give the company added weight on Wall Street, according to observers.

The new board members replace departing members Mike Markkula, Katherine Hudson, Bernard Goldstein, Delano Lewis, and former CEO Gilbert Amelio.

Markkula, who financed Apple in the early years and is a major investor, surprisingly stepped down after being a force on the board for years, one of the directors with the longest tenure. Markkula could not be reached for comment.

But another director had this to say about his own departure: "I served on the board a long time and it was time for some new people and some new approaches," Goldstein said.

Goldstein added that pressure from shareholder activist and Apple investor the California Public Employees' Retirement System (CalPERS) was not an issue in his decision to step down.

Apple executives are scheduled to meet with the nation's largest pension fund investor on September 3 to address their concerns about the way the company is managed. CalPERS placed the troubled computer maker on its top 10 target list of corporate underperformers. Apple's board members and their inexperience in the computer industry was one area they outlined as a concern.

"The announcement is a good step for the company," said Brad Pacheco, a CalPERS spokesman. "But the feeling here is that although they stacked their board with some heavy hitters, they aren't out of the woods until we talk to them about their process for choosing a CEO. This is the most critical element as far as CalPERS is concerned."

"We would like to bring someone onto the board

  Fred Anderson
Fred Anderson, Apple CFO, on the new board
 
that has a strong education background because of our focus on the education marketplace...if we add a ninth one, it would be nice to have someone from a strong marketing and maybe even a consumer products background," said Fred Anderson, Apple's chief financial officer.

Jobs shed no light on the currently vacant CEO and chairman of the board posts. He said a chairman would be announced after a CEO is found. Jobs, thought to be a leading candidate despite reports concerning his rejection of an offer to lead the company, is currently CEO of Pixar Animation Studios.

To scattered boos in the crowd, Jobs

 
Anderson on Apple loyalists' reaction to investment
also announced new agreements with Microsoft that include a $150 million investment. (See related story)

The troubled computer maker is the subject of intense scrutiny in the aftermath of former CEO Gil Amelio's ouster last month. And before Jobs's speech, the rumor mill was working overtime: It seemed the Apple guru would take the stage wearing a cape, save Gotham from impending ruin, and, in his spare time, remake Apple's strategy for the Internet, introduce a network computer device, unveil a new management team, and maybe fill John Lennon's role in a newly reformed Beatles.

But Jobs may have given the Apple faithful something more visceral than new

  Greg Maffei
Greg Maffei, Microsoft CFO, on Apple and NT
 
products and appointments: renewed faith. Jobs's confident though sometimes critical words spilled over the audience like a soothing melody: "Apple is executing wonderfully on many of the wrong things. They're doing some of the wrong things because the plan has been wrong," Jobs told the packed hall. "What I see is the makings of a very healthy company.

"Apple needs to find where it is still relevant and focus on those areas," he continued.

Jobs noted two specific markets as Apple strongholds: what he called creative content (advertising and graphic arts, for example) and education. These two areas have long been filled with Apple loyalists. The company continues to hold dominant shares in both segments.

He also highlighted what he believes are the two fundamental strengths of Apple: 20 to 25 million fiercely devoted active users and the Mac operating system, which some believe is still superior to the Microsoft Windows alternative.

"We've been walking all over it," Jobs said of the previous marketing strategy for the software. "We are going to invest a lot more in it. Apple is about the Mac OS."

Despite signs bearing the phrase "We demand choice," Jobs did not address the ongoing controversy over licensing agreements for the Mac OS with hardware clone vendors. Reports suggest that Apple is rethinking its licensing arrangement with cloners because of their success in stealing market share. The company is thought to want to raise licensing fees. (See related story)

The cloner controversy is only the latest episode in a recent string of unwanted attention for Apple. Former CEO Amelio, once billed as the

 
Anderson on Apple's use of Internet Explorer
savior of the company, was pushed out of his CEO post in early July after a string of disappointing financial quarters. Devotees gained a minor reprieve when Apple posted a narrower loss than expected a week later, bleeding $56 million in red ink for its fiscal third quarter.

Then rumors started to swirl around Silicon Valley that Jobs would fill the breach and regain a formal leadership role within the company. Some reports quelled the initial optimism, as insiders disclosed that Jobs had rejected the chairman role. But others surmised that the mercurial Jobs simply wanted to make a big splash when he returned to the Apple fold.

Jobs returned to Apple late last year as a technical advisor when Apple purchased his new company, Next Software. Jobs had been ousted himself in the 1980s by former Apple CEO John Sculley. Jobs cofounded Apple nearly two decades ago.

Macworld Expo continues through the end of the week.

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