Sun Courting Apple, Report Says But Apple’s Chairman Denies Company Is For Sale
Apple Computer Inc. denied on Tuesday that it’s for sale, seeking to contain a frenzy of speculation and shareholder anger about the growing crisis at the legendary computer maker.
Chairman Mike Markkula made the statement to reporters after an annual shareholder meeting marked by widespread criticism of his management team, which has led the company that popularized the desktop computer into a morass of losses, layoffs, misjudgments and a clouded future.
Markkula’s remark came after a report in the The Wall Street Journal that a $4 billion buyout of Apple by Sun Microsystems Inc., a maker of powerful desktop computers, was imminent. Like Apple, Sun Microsystems is rooted in California’s Silicon Valley technology powerhouse and has helped shape the evolution of the computer industry.
Asked by a reporter whether he cared to repeat earlier statements that the company is not for sale, Markkula said, “Apple is not for sale.” Neither Apple nor Sun executives would comment beyond that.
Nonetheless, speculation about Apple and Sun drove a frenzy of trading that pushed their stocks to the top of the Nasdaq most active list. Apple shares rose $1.12-1/2 to $31.62-1/2, up 4 percent, while Sun’s fell $4.44 to $44.12-1/2, or 9 percent, as analysts tried to make sense of the combination.
With Apple bruised by a financial loss and declining market share, some shareholders called for the resignation of directors and top executives, including chief executive Michael Spindler.
Both Spindler and Markkula said they were aware of how serious problems are at the second-largest personal computer maker.
“I take responsibility. How can I not?” Spindler said after the meeting. “What do you want to hear? Mea culpa?”
An Apple-Sun combination would change the personal computer industry, which Apple helped start in the 1970s.
One person told the Journal that Sun might pay $4 billion, or $33 per share, for Apple. That would be about half what Apple reportedly sought from IBM when those companies discussed a merger in 1994.
“I am groping now to try to understand. I can see some logic behind it,” said George Elling, analyst at Merrill Lynch in New York, citing their common Internet interests. “We don’t know yet if this is a fait accompli.”
John DuPriest, analyst at Chatfield Dean & Co. in Greenwood Village, Colo., said Apple needs “the horsepower of a major player like Sun Microsystems to remain viable.”
The company is now in an unenviable “distressed” situation, said Eugene Glazer, analyst at Dean Witter Reynolds in New York.
That’s because Apple last week announced a $69 million loss in the quarter that ended Dec. 29, usually its best of the year, and forecast another loss for the current period.
Apple would fetch a higher price after it turned around. But, Glazer asked, “Would a potential acquirer be willing to buy the company by then? That’s the dilemma.”
While Apple’s sales have grown healthily, they have not kept pace with the overall personal computer industry. Apple has trouble matching the prices of rivals since it bears all its development and marketing costs.
Other PC makers use a different design, based on Intel Corp. chips and Microsoft Corp. software, and can spread out costs. They represent 90 percent of the overall market.
The situation has been clear for years, of course, and shareholders drilled executives for not doing more to improve Apple. Spindler, who took over in 1993 after John Sculley was forced out, felt the sharpest barbs.
“You have mismanaged assets and damaged a franchise and brought a great company to its knees and Mr. Spindler it is time to go,” Orin McCluskey, an investment manager from New York who owns 10,000 Apple shares, said during the annual meeting.
Spindler said nothing in response, but told reporters later, “I think the criticism is fair.”
Mike Millen, a lawyer in Santa Clara, Calif., and former Apple programmer, said it would be a mistake for some company to take over Apple and wipe out its free-wheeling culture. “It’s one of the things that has made Apple great,” he said.
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