07/21/97 DANGEROUS LIMBO AT APPLE

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DANGEROUS LIMBO AT APPLE
Amelio's departure leaves it without a leader--and without a game plan
On July 9, some 17 months after handing him the reins and a generous pay package, Apple Computer Inc.'s board of directors finally had enough. They sent CEO Gilbert Amelio packing. Amelio, who has told friends lately that he feels burnt out, leaves with a $10 million severance package; Apple is left in a shambles.
Instead of slowing Apple's decline, Amelio's regime presided over an accelerated loss of market share, deteriorating earnings, and a stock that, at less than 14, has lost half its value and is at its lowest point in a decade. In short, Amelio's forced resignation has all the signs of a classic Apple blunder--too late, too little, and providing too few answers. Where, for example, will Apple head next? Under whose leadership? What hot new products will it build and sell? ''It's too early to tell,'' says marketing chief Guerrino De Luca.
Trouble is, it may be far too late. Apple's market share has collapsed to 3%, from 9% when Amelio took the helm in February, 1996, according to market researcher Computer Intelligence. The company can't cut costs fast enough to turn a profit. When it announces quarterly earnings on July 16, Deutsche Morgan Grenfell analyst Michael K. Kwatinetz expects a $60 million loss on revenue that's 17.7% below year-ago levels.
For now, there's no replacement for Amelio. Chief Financial Officer Fred D. Anderson will pick up some of Amelio's day-to-day duties while a committee led by A.C. ''Mike'' Markkula Jr.--the longtime director who prompted the ousters of Amelio predecessors John Sculley and Michael A. Spindler--will begin a search for a new boss. ''It's going to be pretty hard to pull off any return to profitability without a CEO,'' says Dataquest Inc. analyst Bill Schaub. ''The company desperately needs leadership.''
NO QUICK FIX. Although he's not considering a full-time job at Apple, co-founder Steven P. Jobs will be taking on a bigger role in the interregnum. A part-time advisor to Apple since his NeXT Computer Inc. was purchased last December, Jobs is rarely seen at Apple. But he'll take the lead in defining Apple's future products and strategy, say executives. Insiders expect him to move away from the cutthroat personal-computer business where his beloved Macintosh is falling further and further behind, and focus instead on a new era of ''insanely great'' products. They will most likely be products for the Internet--possibly so-called network computers.
But insanely great doesn't happen overnight. And in the near term, Apple's mess will just get worse. With shrinking revenues, it will be hard pressed to come up with the research and development funds to crank out whatever gizmos Jobs plans. And Jobs could even make matters worse: Insiders say he remains dead-set against licensing technology to cloners--the only strategy that has given the Mac ''platform'' growth in the last year. While Apple's market share has plummeted, cloners have propped up the overall share of the Mac platform.
And hopes of a white knight to buy Apple and fix it are all but extinguished. Former suitors--the list once included IBM and Sun Microsystems Inc.--are long gone. ''The challenge is to figure out what Apple means today,'' says one mergers & acquisitions expert. ''It's hard to figure out what's in it for anybody. They still think of themselves as the really cool company that Steve Jobs founded, when Jobs was really cool and wore black. People no longer care if they're cool: They just want a company that performs well.''
As for Amelio, he leaves with his self-styled reputation as a turnaround expert in tatters. On his first day on the job, says one former executive, Amelio nixed a deal to sell the company to Sun, saying Apple's problems were surmountable. Now, with that opportunity and others squandered, few insiders were sad to see Amelio go. ''People are pretty resentful of the amount of money he made without doing a hell of a lot,'' says Apple engineer David Casseres. ''He took a lot of money just for showing up.''
By Peter Burrows in San Francisco, with bureau reports

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