Thursday, August 7, 1997, page 1 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Microsoft to Invest In Apple Computer Steve Jobs Rejoins a Board That Adds Top Industry Names ---------------------------------------------------------------------- By Victoria Shannon International Herald Tribune ---------------------------------------------------------------------- BOSTON - Steve Jobs, taking forceful action to revitalize Apple Computer Inc., surprised the technology industry Wednesday by forging an alliance with Microsoft Corp. and shaking up the board of directors of the company he co-founded in his garage two decades ago. Before a throng of the company's fans at the MacWorld Expo in Boston, Mr. Jobs announced that Microsoft would invest $150 million over three years in nonvoting Apple stock and, more significantly, would continue to develop business programs for the Macintosh platform for at least the next five years. Apple also revealed a board of directors comprising some of the top names in the computer industry, including Mr. Jobs and Lawrence Ellison, the chairman of Oracle Corp. Mr. Jobs recently rejoined the company as an adviser, but he took on an expanded role after the ouster of Gilbert Amelio as chairman last month. The reaction on Wall Street was sharp and favorable. In heavy afternoon trading, Apple's shares were up $6.75, to $26.50. They closed as low as $13.0625 last month. Some analysts saw the announcements as a sign that the charismatic Mr. Jobs had reclaimed control of the company. But other observers at the Boston conference noted that despite his inspirational presence, Mr. Jobs was still an adviser to Apple and not the chief executive officer. Apple said it was recruiting a new chief executive, who would be asked to join the board, and that a chairman would not be named until a CEO was found. The computer maker has traditionally split those positions. The unexpected developments, along with word of good unit sales of the company's new operating system, gave investors hope that Apple, the only significant competitor to Microsoft in the desktop computer business, has some life, perhaps even profitability, left in it. ''This was the most pragmatic Steve Jobs I've seen,'' said Tim Bajarin, industry analyst and president of Creative Strategies in San Jose, California. ''He was very realistic - he talked about issues that were important. It was very clear that he realizes they need some serious management to take them forward.'' Apple has lost hundreds of millions of dollars over the past two years as Microsoft's Windows software carved into the 15 percent market share that Apple's Macintosh computers had in home and office desktop computing. ''I don't think Apple is in the clear, but I think now they have people who know what to do, now they have to execute,'' Mr. Bajarin said. Microsoft, in addition to its investment in nonvoting Apple stock, committed to developing Macintosh software in concert with Windows versions for at least the next five years. Microsoft already sells more than $1.5 billion in Mac software each year, Mr. Bajarin estimated, ''so this was a predictable promise for them,'' he said. The stock investment shows that Bill Gates, the Microsoft chairman, was interested in ''partnering with Apple, not owning it,'' Mr. Bajarin said. Mr. Gates appeared on screen in Boston via a satellite connection and drew hisses from the audience of Apple faithful. The audience also groaned when Mr. Jobs said Apple would make Microsoft's Internet Explorer the default browser for viewing the World Wide Web on Macintosh computers. That development was a blow to Netscape Communications Corp., which makes a more popular competing browser. Mr. Jobs assured the crowd, however, that browsers such as Netscape's Communicator would remain available to Mac users. ''We have to let go of the notion that in order to for Apple to win, Microsoft has to lose,'' Mr. Jobs said. ''The era of setting this up as a competition between Apple and Microsoft is over as far as I'm concerned.'' Nonetheless, by appointing Mr. Ellison to the board, Apple has made one of Mr. Gates's top competitors one of its directors. Oracle makes popular database software, and Mr. Ellison popularized the idea of network computers, which instead of running on a high-powered operating system such as Windows or Macintosh, tap into central servers and run programs that essentially reside on those units. Mr. Gates at first opposed the idea, although he has softened his position. Also joining the Apple board are Bill Campbell, chief executive of Intuit Corp., which makes Quicken, the leading personal-finance software. Another new member is Jerry York, vice chairman of Kirk Kerkorian's Tracinda Corp. Mr. York, described by Mr. Bajarin as ''a hard-nosed superstar in the world of money management'' had been chief financial officer of International Business Machines Corp. and Chrysler Corp., both of which overcame situations of the same scale of seriousness as Apple's.

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