Re: Rumor vs. Fact about Apple

Joachim Feise (
Thu, 18 Feb 1999 16:55:59 -0800

Wendy Mattson wrote:
> Rohit Khare wrote:
> >
> ....
> >
> > Rumor: Disney to buy Pixar, Apple? Jobs still CEO?
> > By AppleInsider Staff (
> > February 16, 1999
> read in part:
> > With the Disney shareholder meeting quickly approaching (next week,
> > February 23rd), Apple's somewhat low-key (and premature), release of
> > its highly touted Java Virtual Machine, MRJ 2.1, and Jobs's expected
> > keynote at Macworld Expo Tokyo '99 on Wednesday night (Eastern
> > Standard Time), we expect details on the emerging deal--confirmation
> > or otherwise-- to surface very quickly.
> AppleInsider is a *rumor* site.
> The first full report -- with facts -- on the keynote Steve Jobs gave at
> Macworld Expo Tokyo '99 is on the MacWEEK site at:

Too late. The rumor now got a life of its own:

more significant even than scarfing free drinks form Microsoft. There is a rumor
amok that Apple is about to be bought by Disney. It is actually supposed to be a
three-way deal with Disney buying both Apple and Pixar for about $12 billion.
Steve Jobs would go from being interim-CEO-for-life at Apple to heir apparent at
Disney. I have no inside information on this supposed deal, but as always, that
sure won't keep me from speculating on it.

First, let's look at this from the perspective of Steve Jobs, then of Michael
Eisner, the Disney CEO. I am taking the perspectives of the company leaders
because any deal like this would be personality-driven. It makes no business

Steve Jobs is interim CEO at Apple for several reasons. One is to make him
unfireable. Another is because there has been to this point no viable endgame
for Jobs at Apple. The perfect scenario, of course, would be for Jobs to make
Apple the next Compaq, but that won't happen. It simply can't happen. The
economics isn't there to support such an outcome. Apple will always have higher
development costs than Compaq. This is not going to change. Jobs has made it
appear to change somewhat by gutting the Apple R&D budget to improve earnings,
but this has been a conscious decision for the company to consume its seed corn.
It cannot last. My sense has always been that Jobs was positioning the company
to be sold.

Jobs likes the idea of being a movie maker, but he doesn't like Pixar's
dependence on the success of specific pictures. The outfit simply doesn't have
economies of scale to allow it to easily survive a flop. That's why Jobs would
love to roll Pixar and Apple into Disney.

Jobs is envious of Ted Turner. Turner sold his company to Time-Warner and in the
process became T-W's largest shareholder and biggest gadfly. Ted Turner can do
anything he damn well pleases at Time-Warner. Jobs's 60 percent of Pixar and his
substantial Apple options would make him the largest shareholder in Disney. Then
he could out-Turner Turner.

But why would Disney -- or more correctly Eisner -- be interested in Apple and
Pixar? Buying Pixar helps shore-up Disney's animation operation, make the
company look smart to the market at a time when Disney hasn't been looking so
smart, and gets Disney out from under its current contract with Pixar. Jobs did
a good job of negotiating that deal, and Disney is feeling had.

Moreover, Disney is both stalled and worried about new technology hurting its
existing businesses. Apple's software expertise -- especially QuickTime -- is
attractive. If Disney could flog Apple's hardware business to Sony or some other
Asian manufacturer, this might even make some sense.

Michael Eisner needs an heir apparent. After the death of Frank Wells, he turned
to superagent Michael Ovitz for that role. Ovitz, like Jobs, is a svengali. So
Eisner likes charismatic salesmen. This is the single greatest reason why I tend
to believe this rumor. Eisner could not resist Jobs in seduction mode.

The irony in this is that Gil Amelio, Jobs's predecessor at Apple, literally
couldn't give the company away. Yet if this deal actually happened it is
predicated on Apple being worth about $7 billion. This would have made Apple's
turnaround the best and most spectacular in U.S. corporate history. Now THAT'S
an endgame.