Apple's Jobs Plans New Computer Firm, Hires 5 From Company He Co-Founded

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

Cupertino, Calif. -- September 17, 1985 -- Apple Computer Inc. chairman and co-founder Steven P. Jobs is preparing to start another computer company and has hired away five Apple employees.

The move could prompt Apple to seek the resignation of Mr. Jobs, who was forced out of day-to-day responsibilities at Apple in a major reorganization four months ago.

Mr. Jobs jolted Apple officials late last week when he announced plans to create a company to make computers for universities, one of Apple's fastest-growing markets. Though there has been widespread speculation that Mr. Jobs might embark on a new venture, his disclosure that he hired five Apple employees -- including some of the computer maker's brightest young engineers and marketers -- created some turmoil and resentment among top management.

"The executive staff has been stunned and shocked that this has happened," said William V. Campbell, an Apple executive vice president.

"I'm quite surprised that all this was being done while he was chairman, and, furthermore, it would concern me if he gets into a business that's competitive with Apple," said Delbert W. Yocam, the Apple executive vice president who, with Mr. Campbell, oversees the company's two corporate divisions.

Apple said it probably will convene a special board meeting to discuss Mr. Jobs's plans. None of the board's seven members, including Mr. Jobs and Apple President John Sculley, was available for comment, and it isn't clear whether the board will ask Mr. Jobs to resign. But Apple executives are said to be discussing whether the board should determine if Mr. Jobs violated his fiduciary responsibilities by hiring away company employees.

According to a senior Apple executive, Mr. Jobs told the board at its meeting Thursday that he intended to start the new company. Mr. Jobs assured the board that the new concern wouldn't compete with Apple, and the board reacted favorably to the plan, the executive said.

According to the executive, who spoke on the condition that he wouldn't be identified, board members even said Apple would invest in the start-up and resolved to determine possible links between Apple and the new company later this week.

But the next morning, before a 7:30 staff meeting, Mr. Jobs presented Mr. Sculley with a letter that said he had recruited five Apple employees to join the new concern, the official said. That information, according to Apple insiders, sparked the firestorm that now surrounds Mr. Jobs's plans.

"The board was upset to find out that this wasn't an idea -- it was an accomplished fact," an official said.

As reported, Mr. Jobs this summer said he would sell about a fifth of his stake in Apple for roughly $20 million. With about 5.5 million shares of Apple left in his portfolio, he remains the company's largest inside shareholder, with about 9% of the 61.8 million shares outstanding.

In national over-the-counter trading yesterday, Apple closed at $15.25 a share, down 50 cents.

Mr. Jobs apparently plans for the new company to build a computer workstation for universities that would be more powerful than current personal computers. Beyond that broad goal, however, the direction the start-up will take is still hazy.

"We don't have a name, we don't have a bank account," said Rich Page, a senior Apple engineer who is leaving to work with Mr. Jobs. Mr. Page said the new company's specific plans have been on hold until the five Apple employees involved in the venture resign. He said the five met with Mr. Jobs at his home Thursday night and offered their resignations from Apple the following morning.

The market for a powerful computer for universities could be a fertile one. Many university officials seeking to install computer networks complain that there is a big gap between today's personal computers and the next most powerful machines available: high-level scientific computers.

Apple has been seeking to narrow that gap by developing more powerful versions of its Macintosh personal computer. Even if Mr. Jobs's start-up doesn't compete directly with the Macintosh, the new company and Apple could wind up fighting for the same university dollars earmarked for high-level computer products.

Douglas Van Houweling, vice provost for information technology at the University of Michigan, said he estimates that the market for high-powered university computers is between one million and two million units a year. He said such computers, if they were priced around $6,000, could be used widely for writing, research and communication in fields ranging from science to music.

The quintet joining Mr. Jobs includes some of Apple's most talented engineers and managers. Mr. Page is an Apple Fellow, a prestigious title that lets him engage in a wide range of advanced research projects. He said he has built four computers at Apple in the past several years, including some high-powered models in the category Mr. Jobs's new firm appears to be targeting.

Another influential employee in the group is Dan'l Lewin, currently Apple's manager of education marketing and one of Apple's chief contacts with universities. The other three are Bud Tribble, Apple's manager of software engineering; George Crow, a manager of hardware engineering; and Susan Barnes, controller for U.S. sales and marketing.

Mr. Tribble was one of the original architects of the computer-program that controls Apple's Macintosh, and Mr. Crow helped design some of the Macintosh's key electrical features, such as its power supply.

The furor over Mr. Jobs's plans comes just as Apple is settling from the turbulence of its reorganization in May. As reported, two weeks after that realignment Apple fired 1,200 employees, or 21% of its work force.

"We've had a good quarter -- the organization has come together after the reorganization," Mr. Campbell said. "This incident seems to highlight turmoil at Apple, and nothing could be further from the truth."