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Apple boss declares comeback has begun

Published Sep. 16, 2005

"I was there when the comeback began _ July 22, 1996."

Those brave words were emblazoned on painter's caps that Apple Computer Inc. distributed to employees gathered for a pep talk by Gilbert F. Amelio, the company's chairman and chief executive.

Amelio made an upbeat pitch but also cautioned the Cupertino, Calif., company's 13,700 employees to retain "a sense of urgency" and focus on a surge in quality-control problems that he said are now costing "north of $300-million a year."

During a 90-minute session transmitted by closed-circuit television to Apple locations around the world, Amelio also asked employees to pull together.

Amelio opened his talk with relatively good news, emphasizing Apple's financial results for the three months ended June 28. Apple reported a quarterly loss of $32-million _ significantly less than Wall Street analysts expected and far below a loss of $740- million in the prior quarter _ on a 15 percent decline in sales.

"On the positive side, we've got some exciting products for the fall," he added.

In October or November, Apple is expected to finally ship long-overdue upgrades for its aging Macintosh desktop personal computers and PowerBook laptop computers. The first details of these new models are likely to be revealed at the Macworld trade show in Boston on Aug. 7.

Among the concerns discussed during Amelio's remarks, and during a question-and-answer session where he was joined by several top executives:

+ Quality control. The most visible example is the recall of the entire PowerBook line of portable computers in May to fix software and hardware glitches. The company doesn't expect to fully restock its suppliers until the end of August.

+ "Technical problems" that are hindering the launch of a new hardware design for the Mac, said Ellen Hancock, Apple's new chief technical officer.

+ Heavy memory demand by the new "Copland" operating system software, also known as Macintosh System 8. It appears Copland, due next year, will require 22 to 24 megabytes of RAM. The current Macintosh System 7.5 requires 8 to 16 megabytes.

Amelio said the higher RAM requirement shouldn't be a big problem because most PCs next year will come with 32 megabytes, up from the 16 megabytes standard on most machines today.