Apple Chairman Jobs Resigns, Citing Firm's 'Hostile' Response to New Venture

By Patricia Bellew Gray and Michael W. Miller, Staff Reporters
The Wall Street Journal

September 18, 1985

Cupertino, Calif. -- Apple Computer Inc. chairman and co-founder Steven P. Jobs resigned, saying he is "perplexed and saddened" by top management's "hostile" reaction toward him and his proposed new venture.

Mr. Jobs's resignation comes less than a week after he told directors that he planned to start another computer company and had hired away five Apple employees.

The 30-year-old chairman said in a statement yesterday that he initially submitted his resignation to directors Thursday, but that he was persuaded to remain in his post while directors considered investing in the new company.

But now, "the company appears to be adopting a hostile posture toward me and the new venture," Mr. Jobs said, referring to published reports that Apple might seek his resignation.

"This morning's papers carried suggestions that Apple is considering removing me as chairman," Mr. Jobs wrote yesterday in a letter that he said would be delivered to A.C. Markkula Jr., Apple vice chairman. "I don't know the source of these reports but they are both misleading to the public and unfair to me . . . . I must insist upon the immediate acceptance of my resignation."

Mr. Jobs's letter continued: "I find myself both saddened and perplexed by the management's conduct in this matter, which seems to me contrary to Apple's best interests. Those interests remain a matter of deep concern to me, both because of my past association with Apple and the substantial investment I retain in it."

Apple's president and chief executive officer, John Sculley, wasn't available for comment. In a statement, however, Apple said it hasn't received a letter of resignation from Mr. Jobs. According to the company statement, Mr. Markkula said, "As chairman of the board, Steven Jobs is responsible for protecting Apple and acting in the best interests of the company." Mr. Markkula said the board is evaluating "what possible actions should be taken to assure protection of Apple's technology and assets."

Mr. Markkula said Mr. Jobs on Thursday informed the board that he was forming a company that wouldn't compete with Apple "and implied that he wouldn't recruit any key Apple personnel for his company." Mr. Markkula said that Mr. Jobs promised to show the board plans for the new company and said that if the board felt those plans "would be in conflict with Apple" he would resign. The board at that time didn't see any reason for seeking his resignation.

But on Friday when Mr. Jobs disclosed that he had recruited five current Apple employees to join him in his new company, "The board interpreted this action to be in direct contradiction to his statements of the previous day and began the evaluation that is currently under way," Mr. Markkula said. Company sources said directors and top executives were stunned to realize that the five employees included engineers who were privy to important research projects. Mr. Jobs's new venture plans to make computers for universities, one of Apple's fastest-growing markets.

As reported, Mr. Jobs this summer said he would sell about a fifth of his stake in Apple, the nation's second largest personal-computer maker, for roughly $20 million. With about 5.5 million shares of Apple left in his portfolio, he remains the company's largest individual shareholder, with about 9% of the 61.8 million shares outstanding. In June, Mr. Jobs was stripped of operating responsibilities at the company in a major management reorganization.

Last night, an Apple director, who asked that he not be identified, took strong exception to Mr. Jobs's statements and said Mr. Jobs had "tried to deceive" the company's board and officers.

The director, who isn't a company officer, said, "I've never seen such an angry group of people in all the companies I've ever done business with. The board of directors and executive staff of Apple are incensed, as I am. I think all of us think he has tried to deceive us."

"Absolutely not true," Mr. Jobs said, when told of the director's comments. In his letter, Mr. Jobs said he believes that Apple fears that he will use the company's proprietary computer technology in his new venture. "If that concern is the real source of Apple's hostility to the venture, I can allay it," Mr. Jobs said in the letter.

But the director said the board has asked Mr. Jobs "to outline what he's doing in detail" and added that the board suspects that Mr. Jobs will market a computer "directly competitive with (Apple's) markets and products." The director said he was concerned that "some of those products (planned by Mr. Jobs) and some of his plans belong to Apple."

Mr. Jobs and Steven Wozniak, who resigned in February, founded Apple eight years ago. Many attribute the company's success to Mr. Jobs's flair for marketing and to his genius for conceiving innovative personal-computer technologies.

Under Mr. Jobs's direction, Apple grew from a tiny company operating out of a garage to a concern with annual sales of $1.5 billion. He led the group that developed and marketed Apple's Macintosh, a machine that has been hailed by many as a great technological achievement, but that hasn't been the sales blockbuster that Apple hoped it would be.

The rift between Mr. Jobs and Apple began widening with Apple's announcement in June that its chairman had been removed from day-to-day operating responsibilities as part of a major restructuring aimed at cutting costs and restoring stability to the company. Apple then said Mr. Jobs would "take on a more global role in new product innovations."

Several weeks after the reorganization, Mr. Sculley told securities analysts, "There is no role for Steve Jobs in the running of this company, either today or in the future." Mr. Sculley, whom Mr. Jobs wooed to Apple two years ago from PepsiCo Inc., was said to have been one of the architects of the restructuring.

His removal from day-to-day operating responsibilities obviously has been painful for Mr. Jobs. "The recent reorganization left me with no work to do and no access even to regular management reports," he said. "I am but 30 and want still to contribute and achieve."

Copyright Dow Jones & Company Inc