Apple Computer Needs New Shine; Sun Reported Ready to Do the Job
APPLE Computer chairman Mike Markkula tried to squelch reports that the company is for sale. But for most observers, the question is not whether Apple will be bought, but by whom and how soon.
Sun Microsystems emerged this week as the likely buyer. The Wall Street Journal said yesterday that a $4 billion buyout by a Silicon Valley neighbor had been agreed in principle.
The woes of Apple, the innovator that launched the desktop computer revolution 20 years ago, have become a staple of business pages in recent weeks. Financial losses, announced layoffs of 1,300 employees, and the departure of more than a dozen top executives have led some to predict the company's downfall.
But a deal with Sun, a maker of high-powered workstation computers and networking software, may point the way to creation of a powerful new computer giant, some industry analysts believe.
''It's a good fit,'' says analyst Peter Hartsook, who has followed Apple since 1984. Though different in culture, both are known for being innovative in their engineering and brash in their ambitions. Both are fierce opponents of the powerful ''Wintel'' combination - Microsoft, maker of the dominant Windows software, and Intel, the leading chipmaker - on most computers.
Most important perhaps, the two companies have very little overlap between their products. Apple's strength remains in personal computers equipped with its own Macintosh software rather than Windows. Macintosh machines hold about 10 percent of the PC market but are dominant in certain key segments, such as education and publishing.
Sun has made waves with its workstations, networks of which are replacing mainframe computers in corporate offices around the country. And Sun has attracted major attention with its Java programming language for the Internet.
''Both companies are very much interested in - and have technology that could have a major impact on - the Internet,'' Mr. Hartsook says. And both share the strategic vision that the Internet, with its openness and common standards, allows them to compete more equally with Microsoft.
The deal had not been confirmed at press time, and could still fall through. The sale of Apple has been on the table since 1994 when the company held talks with IBM but failed to agree on a price. In recent weeks a number of companies have been reported as potential buyers including hardware firms Hewlett-Packard, IBM, and Motorola, and database-software giant Oracle.
One potential flaw in a Sun takeover of Apple is Sun's lack of experience in the volatile consumer retail market. This area has proved vexing for the current Apple management, led by CEO Michael Spindler. The company's Macintosh software is considered by many analysts superior to Windows, but Apple is challenged by improvements in Windows and rival hardware. The company has recently focused on market share at the expense of profits. Apple's annual shareholders meeting Tuesday was marked by stormy attacks on the current management. Mr. Spindler said Apple would focus more on higher-end, higher-profit computers, as well as on Internet-related business.
Many still call for new leadership.
''Apple doesn't need cash,'' Apple-watcher Hartsook says, pointing to substantial reserves of over $1 billion. ''What they need is management, strategic direction, and the ability to get products out the door. A Sun takeover may precipitate the reorganization of the current management structure.''