What Steve and Bill Didn't Mention

Posted by: Stephen Wildstrom on May 31, 2007

I’m not going to try to mduplicate the saturation blog coverage of Bill Gates’ and Steve Jobs’ joint appearence at Dow Jones’ D5: All Things Digital conference Wednesday. But both omitted one very important fact from their mutual history.

As recounted by Jobs and Gates, the historic 1997 Apple-Microsoft agreement was an expression of mutual love and respect that settled some obscure patent disputes and created a new market opportunity for Microsoft’s applications software. Both avoided mentioning the key piece of the deal, Microsoft’s $150 million investment in restricted Apple stock.

That part was critical to Apple because the company was within weeks of running out of cash and was not regarded as creditworthy. The cash infusion kept Apple alive to move on to its current success—and turned out to be a highly profitable investment for Microsoft.

Reader Comments

innerdaemon

May 31, 2007 4:48 PM

Stephen,

Your statement is not completely accurate. Apple had $4 billion in cash at that point and the Microsoft cash payment was part of the settlement to forget patent pending litigation over Microsoft Video for Windows (which had "stolen" code from Quicktime).

"That part was critical to Apple" because it was a way to secure investor confidence and consumer interest - both of which were at the lowest point - and get over pointless and expensive litigation. One thing was sure: cash was not a concern.

Bobby W

June 1, 2007 6:00 PM

That's not even true. Apple had $1.2 billion cash on hand at the time of the investment by Microsoft, and was nowhere near such dire financial straits as you suggest.

I agree that the investment was important, but only in that it demonstrated to users and developers, Microsoft's commitment to the Macintosh platform, and their confidence in the long term survival of Apple. This, and the promise of continued development of Office for Macintosh, was far more important than $150 million investment. It's simply not accurate to portray Apple as "running out of cash" or on the brink of insolvency.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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