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Apple Exec Quits in Rift With CEO : Computers: Joseph Graziano tells the board the firm's future is bleak. A company spokesman says the parting is amicable.

October 05, 1995|JULIE PITTA | TIMES STAFF WRITER

In a startling turn of events that indicates the company's escalating problems, Apple Computer Inc.'s respected chief financial officer has resigned after telling the board of directors that Apple's future as an independent company is bleak.

In a prepared statement released by the company Wednesday, Apple said that Joseph Graziano would leave his job by year's end "due to differences" with Chief Executive Michael Spindler. Graziano relinquished his board seat at Tuesday's directors meeting.

Apple spokeswoman Lynne Lawlor said the company will have no further comment regarding Graziano's abrupt departure.

Graziano, who is on a six-week paid sabbatical, did not answer phone calls. Lawlor emphasized that the parting is amicable and that Graziano is expected to return to work in three weeks to help Spindler search for a successor.

Sources close to Apple said Tuesday's board meeting in Austin, Tex., became a showdown between Spindler and Graziano. Graziano, a 10-year veteran of Apple, has become convinced that the personal computer maker no longer has the wherewithal to go it alone. He told board members that Spindler is an obstacle to an acquisition and that he should be ousted so that Apple can enter into serious talks with potential buyers.

For more than a year, there has been speculation that Apple would be sold. Among the rumored buyers have been IBM Corp., Oracle Corp. and Japanese printer manufacturer Canon. Whenever he has been questioned about the possibility, Spindler has tersely responded that the company is not for sale.

Graziano was unable to convince Apple's board, led by A.C. (Mike) Markkula, the only one of its three founders still active at the company.

"The board will continue working with Mr. Spindler to address the challenges and exciting opportunities we face in the dynamic personal computer industry," Markkula said in a prepared statement.

Markkula recently sold more than 850,000 shares of his Apple stock at prices ranging from $42.25 to $47 per share, a sign that he is less than optimistic about Apple's future. His recent trades have reduced his stake by about 20%, though he is still Apple's largest shareholder with 3.7 million shares, a 3% ownership.

About the same time, Spindler sold 100,000 shares from $46 to $47.

Shortly after those trades, Apple warned that components shortages were hurting the company's ability to meet demand for its Macintosh computers, a problem that has plagued the company for two years. As a result, Apple said sales--and, in turn, profit--in the fourth quarter ended Sept. 30 would be down sharply.

Apple has always been rife with palace intrigue. In the mid-80s, Apple co-founder Steve Jobs plotted to overthrow Chief Executive John Sculley, the man he had hired to run the company but had become disenchanted with. Instead, Sculley, with the backing of Apple's board, fired Jobs.

In 1989, Sculley was pushed out in favor of Michael Spindler, the head of Apple Europe who Sculley had brought to headquarters and promoted to chief operating officer.

Under Spindler, Graziano's role grew. Spindler asked him to straighten out troubled divisions such as PIE, the group that made Apple's hand-held computer called the Newton. Graziano, a plain-spoken New Yorker with a wry sense of humor, was popular among employees and the news media. "Joe's always been a straight-shooter," said a former Apple manager. "They're losing one of the last really stable executives."

On the other hand, Spindler has a reputation for being frosty. Since he has taken over Apple, a number of executives have been encouraged to leave the company.

In the weeks before the board convened, speculation grew that Spindler would be ousted by his board of directors.

In Spindler's two years as chief executive, the company's market share has eroded even though demand for Apple's Macintosh computers has remained relatively strong, the result of its inability to accurately forecast sales. At the end of Apple's fiscal third quarter in June, executives said unfilled orders had reached $1 billion.

Although Spindler has blamed the problem on component shortages, IBM, which supplies most of its microprocessors--the engine of a personal computer--has "given them what they want," an IBM executive said.

IBM, Apple's partner in microprocessor design, no longer seems interested in a broader relationship.

"We have no plans to license the Macintosh," said the IBM executive. "And I keep hearing these rumors coming out of Apple that acquisition talks are heating up. I can't imagine what they're talking about."

Furthermore, Microsoft's success with Windows has rendered Apple's Macintosh--if not obsolete--at least largely irrelevant, said David Coursey, editor of the PC Letter, an industry newsletter.

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