March 13, 1997: With Apple preparing to cut thousands of jobs, CNN reports that “the coffin door is closing” on Cupertino.
Apple is doomed! Doomed!
Now, with Apple’s stock price soaring two decades on, we guess this could technically be considered “fake news.”
With “Today in Apple history,” I typically steer clear of highlighting comically inaccurate stories predicting Apple’s doom. Hindsight is 20/20. Writing about Apple for a living, I’m sure I’ve covered some dubious rumors over the years that failed to materialize as reported.
Still, with 20 years since the publication of CNN’s story, “Apple running out of time,” it’s fun to go back and see how wrong the pundits were.
The death of Apple?
For this particular story, CNN spoke with Gene Glazer, technology analyst at Dean Witter. “I don’t see how [Apple] can go much lower than that and do what they have to do, which is get back on track and turn the company around,” Glazer said. Elsewhere in the article he noted that, “They don’t have a lot of time. I would say even two years is too long.”
As if to compound his incorrect predictions, Glazer said one thing people could likely bank on was that the Newton MessagePad would continue. Apple had just debuted a new version of its Newton operating system, and was in the process of spinning off Newton
as its own startup.
According to Glazer, the biggest problem Apple faced was its reputation on Wall Street, which was in tatters.
“The people investing in Apple are contrarians,” he said. “The analysts are generally very pessimistic about the outlook.”
Apple doomed: What happened?
The story, as reported, wasn’t totally wrong. In fact, Apple soon would announce plans to cut 4,100 jobs — about one-third of its workforce at the time.
On top of this, Apple soon reported a quarterly loss of $56 million that effectively ended then-CEO Gil Amelio’s 500 days running the company.
The $56 million hit contributed to an overall Apple loss of $1.6 billion during Amelio’s reign. The losing streak wiped out every cent of profit Cupertino had earned since fiscal 1991.
It didn’t take long for Steve Jobs to turn things around, however. Aggressive cost-cutting, which also included slashing Apple’s R&D spending on unnecessary projects, helped reduce the company’s losses. In addition, new products like the beige Power Macintosh G3 computer performed very well with customers. (It sold 130,000 units against a forecast of 80,000.)
(Oh, and the Newton — whose future was supposedly all but guaranteed — soon wound up being canceled, so Apple could focus on building Macs.)