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APPLE: WHAT IS STEVE JOBS UP TO?

Apple's founder keeps denying he has designs on the top job. Why won't people believe him?

On the wall of a cubicle in Apple Computer Inc.'s Infinite Loop engineering campus hangs a picture of Steven P. Jobs, the 41-year-old high-tech superstar and legendary Apple co-founder. Above the photograph are the words: ''I was here when Steve came back.'' In the adjoining cubicle, the same picture is tacked up on the wall with the caption: ''He'll be here when Gil leaves.''

Welcome to the latest installment of Silicon Valley's most-watched soap opera. Since Dec. 20, when Jobs sold NeXT Software Inc. to Apple for $430 million and became an adviser to Apple CEO Gilbert F. Amelio, the computer industry has been rife with talk that Jobs was out to retake the company he founded 20 years ago. These days, every doing at Apple is examined for the Jobs factor--a management change could be a power play, a strategy shift might be proof Jobs is remaking the company, a new product direction becomes confirmation that the good old days of ''insanely great products'' are returning.

NIXING NEWTON. The reality? Jobs is indeed back, putting his imprint on everything from executive hiring to a massive reorganization now in the works. But, says Jobs, forget once and for all the rumors of a palace coup. His heart is still with the company he started in his parents' garage, but his mind is on other things--such as running his computer animation studio, Pixar Inc. ''People keep trying to suck me in,'' says Jobs. ''They want me to be some kind of Superman. But I have no desire to run Apple Computer. I deny it at every turn, but nobody believes me.''

Some of the confusion could stem from the impact Jobs already is having in just 11 weeks. Working only a half-day a week on Apple, he has persuaded Amelio to overhaul his executive staff--now, half of the eight-member team are Jobs's recommendations. Jobs's fingerprints are all over Amelio's restructuring plan due on March 14, say Apple managers. Jobs, for example, urged Amelio to shed the Newton handheld group started by former CEO John Sculley, who bounced Jobs from Apple in 1985. Now, Amelio is looking to sell or spin off the unit. Jobs also is pushing a plan to raise licensing fees to cloners.

Then there's research and development. As Amelio hunts for $400 million in expense cuts, he's following Jobs' advice by targeting Apple's advanced research group. Jobs argued hard for cutbacks, saying Apple should use its best brains to build snazzy new Mac products rather than futuristic gee-whiz technologies. Apple managers say Amelio is now considering slashing the advanced R&D group, which spent $30 million last year, by more than 50%. ''The whole focus is to get lean, mean teams doing great things again,'' says one manager. ''That's the Steve Jobs influence, and that's good.''

Amelio couldn't agree more. When he took over the CEO job a year ago, the company was in a shambles. Its Macintosh computers were no longer standouts after the arrival of Microsoft Corp.'s Windows 95. Sales had stalled, losses were mounting, and top executives were fleeing the company. Over the past year, Amelio has tried reversing the slide by propping up the balance sheet, fixing the Mac's embarrassing quality snafus and, in a last ditch effort, slashing prices--but no luck. In the past year, Apple's market share has plunged from 7.9% to 5.2%, and the company has racked up $936 million in losses over the last five quarters. What's more, the loss this quarter could top $600 million as Apple pays for NeXT and the upcoming restructuring.

Now Amelio is shedding his by-the-book turnaround tactics to try everything--including Jobs. He says their give-and-take discussions are a partnership that can only benefit Apple. And, more often than not, the two see eye-to- eye. ''That doesn't mean all the ideas are Steve's,'' he says.

In early February, for example, Jobs sat through a detailed review of an advertising campaign backed by Amelio. He listened intently, then launched into a speech about why advertising was a waste of money given the bad press that still plagues Apple. Amelio still approved the media campaign. ''Gil doesn't take all of Steve's advice or all of anyone's advice,'' says Fred D. Anderson, Apple's chief financial officer. ''With all due respect, we have some seasoned executives here.'' As for Jobs's popularity at Apple, if Amelio is ruffled, he isn't showing it. ''If the price for getting Apple healthy is involving Steve...I'm O.K. with that. I'm a big boy,'' he says.

Besides, Amelio says he's all for getting tougher himself. He concedes he underestimated the challenge of reining in Apple's unruly culture. ''I didn't realize it, but people would listen to me, say 'Gee, that was a nice speech,' and go do what they wanted,'' says Amelio, 54, who came to Apple from National Semiconductor Corp. ''This time, I'm going to use the two-by-four approach. I'm going to put this place through the most gut-wrenching change it's ever had.''

Starting with Jobs. So far, his major role has been as Amelio's unofficial casting director. Within days of the NeXT acquisition, Jobs began lobbying for the demotion of Chief Operating Officer Marco Landi and chief technologist Ellen Hancock, whom he repeatedly referred to as a ''bozo,'' say Apple managers. Both executives, Jobs says, lack personal-computer experience and the entrepreneurial zeal that made Apple the technology leader it once was. On Feb. 4, Jobs got his way when Landi was bumped down to head of sales--he resigned two weeks later--and Hancock was stripped of her R&D duties.

Now, half of Amelio's management team is made up of fresh blood. R&D will be shared by NeXT software chief Avadis Tevanian Jr. and Jon Rubinstein, a hardware engineer who worked under Jobs for three years at NeXT. Jobs also urged Amelio to promote Guerrino De Luca, formerly head of Apple's Claris Corp. software unit, to marketing czar. And he pushed for the rehiring of David S. Manovich, a former salesman, as Apple's head of sales.

One of Jobs's most powerful tools may be E-mail. He rarely makes it to senior executive meetings, relying instead on occasional appearances, several phone conversations with Amelio each week, and a steady stream of electronic missives. Take the proposed R&D cuts. While managers in that sector have argued that great companies spend upwards of 8% of R&D on advanced research, Jobs isn't buying it. He says that Apple can't afford that luxury. When researchers agreed to slightly deeper cuts, Jobs shot back: ''Why do we need any [advanced research] at all?'' Says Rubinstein: ''One thing you can always be sure of is that Steve will have opinions.'' But Rubinstein also is quick to say Amelio is the one running the company. ''I'm working for Gil,'' he says.

''DYNAMIC.'' So far, the two seem to complement one another. Apple executives say Amelio, smarting from the lost ground of the past year, was ready to make big changes even before Jobs's return. But with Jobs's prodding, he's moving quickly. Case in point: Even though Jobs has been vocal about dropping products, it's Amelio who is taking action. At a recent staff meeting, Amelio had managers list all projects in order of priority. He then began cutting from the bottom. Two casualties that day: OpenDoc, a technology devised with IBM Corp. that was supposed to streamline the way software is developed, and computer servers that run IBM's AIX operating software.

Indeed, far from the presumed plots and palace coups, Jobs and Amelio have forged an unlikely--and possibly potent--partnership. ''If they can work together, it's a pretty dynamic duo,'' says Bob Miles, a consultant to Amelio.

If only the rumors would subside. Jobs is doing what he can to squelch talk that he's after Amelio's job. He even chastised his close friend, Oracle Corp. Chairman Larry Ellison, for telling the press he would bankroll Jobs in a takeover bid for Apple. ''I chewed him out,'' says Jobs. ''I don't know where Larry got that.''

For once, there may be less melodrama than meets the eye for Apple soap-watchers.

By Peter Burrows in San Francisco



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