Is Spindler A Survivor?

The hot gossip in Silicon Valley? Apple Computer Inc. Chief Executive Michael Spindler is in big trouble with his board. And if Apple's stock keeps sinking--it's down to $37 from $48 in mid-July--rumormongers say the company may be faced with an unwelcome bid from one of several interested suitors--including IBM and Oracle Systems.

Don't bet on either. Despite three straight quarters of disappointing results, including the company's announcement on Sept. 14 that fourth-quarter earnings would be lower than expected, Apple directors appear to be solidly backing their man. "The board has great confidence in Michael Spindler," says Bernard Goldstein, an Apple director and a partner at venture-capital firm Broadview Associates. "We think he's an extraordinary chief executive." And Spindler dismisses the takeover talk, saying Apple isn't a good strategic fit for any of the rumored suitors.

That's not to say Spindler isn't facing some serious problems. Demand for a new wave of Macintosh computers is booming--the company's backlog is more than $1 billion--but Apple can't cash in on the surge with stepped up production because it lacks critical parts, including modems and custom chips. And since Apple won't be able to get extra supplies from parts makers already deluged with orders, the company won't be able to make the most of one of the hottest Christmas selling seasons ever.

To be sure, parts shortages are plaguing all PC players. But Apple's are the worst. That's because many of its components are custom-designed and sourced from one supplier. The practice means that accurate forecasting is critical. And there, insiders say, Apple goofed. The company underestimated demand for 1995, predicting growth of 15%. So far, sales have surged along at 25%. The problem, one senior Apple executive says, is that Apple's salespeople "sandbagged" top executives by forecasting sales they knew could easily be surpassed in order to enhance their own performances.

Spindler says Apple's difficulties are fixable. "I resent this idea that we have systemic problems," he says. Still, Apple's profits will be flat in 1995. And it won't gain market share this year as Spindler had previously promised. Instead, since some consumers will be unable to find an Apple computer to buy, it's likely many will turn to computers running on Microsoft Corp.'s hot new Windows 95 operating system. That's leading some to begin nailing Apple's coffin shut. Says a former Apple senior executive: "There is no question Microsoft has won." Unless, that is, Spindler quiets down his critics by getting Apple back on track fast.