Sculley to give up CEO job at Apple Decision comes as profits decline


SAN FRANCISCO -- John Sculley, the chairman of Apple Computer Inc., said yesterday that he would relinquish his role as chief executive to pursue alliances involving new computer-based technologies.

Mr. Sculley, 54, who came to Apple 10 years ago from PepsiCo Inc., will retain the title of chairman and hand over the chief executive's job to Apple's president, Michael Spindler.

In an interview, Mr. Sculley said he would direct most of his energy to creating new markets for the personal computer maker, in concert with communications, publishing and entertainment companies.

Mr. Sculley's decision to relinquish a title came just a week after the company warned that a price war in the personal computer industry had continued to erode Apple's profit margins and that quarterly results were likely to suffer as a result.

That announcement, and speculation that he might take another corporate position or accept a political appointment in the Clinton administration, led some to believe he was looking for a graceful way out.

"The bigger question is what does this mean for John Sculley in the long run?" asked Tim Bajarin, a computer industry consultant at Creative Strategies in San Jose, Calif.

The bad financial forecast came amid evidence that demand for per sonal computers is flagging, and it sent Apple's stock tumbling more

than 19 percent in three days last week. Apple's stock price fell 25 cents yesterday, to $41.

Since its founding in 1977 -- in a Silicon Valley garage by two long-haired youths, Steve Wozniak and Steven P. Jobs -- Apple has been a symbol of freewheeling, idealistic, high-tech creativity. The company virtually invented the personal computer industry with its Apple II and achieved a second breakthrough with the Macintosh, so user-friendly it has developed a rabid following.

Although Apple today has lost much of its youthful culture, it is still the world's No. 2 personal computer vendor and a leader in many technologies. And it still wages war against the IBM-compatible standard that dominates the market.

Mr. Sculley's decision to step down fueled reports that the company would soon undertake -- possibly as early as Monday -- a new round of cost-cutting and layoffs.

Some Apple employees said yesterday that they expected such layoffs to be as deep as those in June 1985. At that time, Apple laid off 1,200 workers -- more than one-fifth of the employees it nTC had at the time.

Mr. Spindler, 50, has a reputation as a no-nonsense manager who is willing to make tough cuts when needed. He was hired in 1980 by Mr. Jobs as marketing manager for the company's European operations; in 1990, Mr. Spindler came to the United States to serve as Apple's chief operating officer.

Mr. Jobs resigned from Apple in September 1985, driven out as Mr.Sculley reorganized the company.

Mr. Sculley's announcement yesterday was made after a daylong emergency meeting on Wednesday of Apple's executive management team and a similar meeting of the company's board on Thursday.

Several Silicon Valley executives close to Apple's board said earlier this week that the board had begun putting pressure on Mr. Sculley to step aside because of the company's recent lackluster performance.

Wall Street analysts who follow Apple said that board pressure was logical, because in the past year, Mr. Sculley had been been paying less attention to the details of the business as he became more involved in future projects and political issues. He was an outspoken supporter of President Clinton in last year's presidential election campaign.

"This is no great surprise given Apple's performance over the last several quarters, and Sculley's view from 10,000 feet, rather than down and dirty," said Bruce Lupatkin, a financial analyst for Hambrecht & Quist in San Francisco.

"Spindler has been acting as the CEO, although he hasn't had the authority."

But Apple executives and one board member disputed suggestions that the board was easing him out.

"John has always been very open about the fact that he wanted at some time in his life to get more balance and be able to spend more time on the East Coast, which he loves," said A.C. "Mike" Markkula Jr., the vice chairman of Apple's board. He said that the board had discussed the issue of succession in general terms in the last several years but that the decision to make the change was Mr. Sculley's.

Friends of Mr. Sculley said that personal as well as business factors were at work in his decision. His wife, Leezy, is said to prefer the East Coast to Silicon Valley, the area between San Jose and San Francisco.

Apple is based in Cupertino, Calif., north of San Jose.

The Sculleys had built a home in Woodside, Calif., in the foothills west of Stanford University, but never occupied it. The couple recently bought a home in Greenwich, Conn., to be closer to one of Mr. Sculley's daughters, who is in college in New England.

Mr. Spindler, 50, is a German national who has been given credit for helping to orchestrate the turnaround of Apple. That reversal began in 1990, when Apple began to broaden its product line and adopted aggressive pricing to compete head-to-head with IBM-compatible computer vendors.

"Mike really come in and took over and has managed things well," said Regis McKenna, a Silicon Valley publicist who has worked with Apple since it was founded in 1976.

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