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Windows Of Opportunity For Claris?


Information Processing

WINDOWS OF OPPORTUNITY FOR CLARIS?

For Daniel L. Eilers, it was a gift rich in symbolism. In September, six months after becoming the new chief executive officer of Claris Corp., a group of employees at the Apple Computer Inc. software subsidiary presented him with a sailboat tiller to keep around the office. The meaning was clear: Claris had to get back on course after a year adrift. Eilers appreciated the confidence they expressed. "I was very touched," he says.

Eilers needed a shot of confidence. A former Apple vice-president, Eilers, 36, is among the first to admit that Claris has been tossed about. At its inception in 1987, the company had a simple mission: write applications programs that show off the Macintosh's talents. Eventually, Apple management said, Claris would be spun out as a separate, public company. But in mid-1990, with Apple's fortunes sliding, management did an about-face. It called off the impending initial public offering and gave Claris another mission: to come up with key software for making Macs more adept in networks. Now, IBM and Apple are suddenly allies. That detente may yield new projects for Claris.

BAD MOOD. These days, in addition to making Mac programs, Claris is planning to sell packages for PCs that run Microsoft Corp.'s popular Windows software. In October, Claris purchased from IBM its first Windows product, a program called Hollywood that does snazzy graphics presentations. Eilers says more non-Mac products are on the way, maybe even programs for laptops that read handwriting. He has doubled the company's development budget, in part to bring out Windows versions of Mac titles such as the FileMaker data base and ClarisWorks, a collection of programs for novice computer users. Eilers is also eager to acquire technology and form alliances with other software makers.

But before he can execute his ambitious plans, Eilers needs to shore up his organization. Morale never completely rebounded after Apple nixed the IPO. Claris executives were deciding on an underwriter when Apple CEO John Sculley and President Michael H. Spindler suddenly decided no-go. They said Claris was too vital to Apple's strategy to be under someone else's control.

For employees hoping to get rich on their stock, it was a blow. By early 1991, Claris' original CEO, William H. Campbell, resigned, and so did every member of his eight-person executive staff. Ten of Claris' 22 directors -- the next level of management -- fled as well. Developers are still leaving. Says Vern Raburn, founder of software startup Slate Corp.: "Hiring Claris people is not hard."

The upheaval has hurt. A word-processing program called MacWrite Pro may be a year late. "When going public was taken away, a lot of people felt betrayed," explains Michael Hilton, a key MacWrite Pro developer who left. "It took the wind out of their sails." After three years of healthy profit and revenue growth, Claris posted a loss of more than $2 million, on revenue of about $95 million, for the year ended Sept. 30. A big problem, insiders say, was that Claris figured on getting 75 to 100 Apple developers to transfer over. Claris even leased a building near its Santa Clara (Calif.) headquarters for them. But when most of those Apple workers balked at the idea, Claris had to take a write-down on the lease.

SHOCK THERAPY. Eilers concedes that the executive exodus and sudden strategy changes have "clearly been a shock." But, he claims, Claris is finally stabilized and moving full steam ahead to break into Windows and other hot markets. Says Eilers: "Claris is now en a path to be more successful than many people in this company could have imagined."

But some people wonder if Claris, without independence, can really compete aggressively in new software markets. "I don't know that Claris will survive within Apple," says one Claris employee. Rivals question whether any hardware maker can run a software operation to compete with the likes of Microsoft, Lotus, and Borland. Indeed, IBM recently decided to close down its lackluster PC-applications software division.

"It will be a tough competitive environment, no question." says Eilers. "But we think we have a tremendous opportunity." To seize it, Eilers must find ways to boost morale -- and fast. Otherwise, he may have to man the sails as well as the tiller.

CLARIS' ZIGZAG COURSE

APRIL, 1987 Apple forms Claris to make and sell Macintosh software

MAY, 1990 Claris prepares to go public; starts writing prospectus

JUNE, 1990 Apple halts public offering and reacquires 20% stake from Claris

employees for $40 million.

JANUARY, 1991 CEO William Campbell resigns to head Go Corp.

MARCH, 1991 Daniel Eilers becomes Claris CEO

OCTOBER, 1991 Claris buys rights from IBM to first non-Mac product

DATA: COMPANY REPORTS, BW.Kathy Rebello in Santa Clara, Calif.


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