June 27, 1997: The worst financial year in Apple history comes to an end. During the quarter, Apple lost $56 million — effectively bringing an end to then-CEO Gil Amelio‘s 500 days running the company.
The $56 million loss contributes to an overall Apple loss of $1.6 billion during Amelio’s reign. It effectively wipes out every cent of profit Cupertino had earned since fiscal 1991. In other words — ouch!
Another terrible quarter ends Apple’s worst year
The day before the end of the financial quarter, June 26, Apple stock suffered another kick in the teeth when a single sale of 1.5 million shares were sold by an anonymous party — which was later revealed to be Apple co-founder Steve Jobs. This shockwave-sending move was made by Jobs because, as he later admitted: “I pretty much had given up hope that the Apple board was going to do anything. I didn’t think the stock was going up.”
Amelio’s stint at Apple coincided with the nadir of Apple’s 1990s bad performance, in which Dell Computer founder Michael Dell said his strategy as Apple boss would be to shut the company down and give the money back to shareholders. (Although he’s since “clarified” this infamous blunder by arguing he only said this because he was so dedicated to running Dell at the time.)
Despite this, turnaround artist Amelio’s mid-1990s rise to the top at Apple was initially greeted warmly. He rejected a buyout offer from Sun Microsystems and announced he would go ahead with what many people thought was the most sensible move Apple could’ve made at the time: licensing out Mac OS to third-party vendors.
Mac clones hurt Apple’s market share
Unfortunately, this triggered the arrival of a large number of low-cost Macintosh clones. This eroded Apple’s share of the market, while doing very little to address the fact that Apple’s operating system at the time was incredibly dated — particularly given how much ground had been lost to Microsoft and its astonishingly successful Windows 95.
The net result was Apple announcing the firing of 3,000 people and Amelio stepping down as CEO. This event became a defining moment in Apple history, highlighting one of the company’s most challenging financial periods.
Of course, as we now know in retrospect, today’s historic event marked the beginning of Apple’s turnaround. Despite Apple being less than 90 days from bankruptcy when Apple co-founder Steve Jobs took over as interim CEO in 1997, the following spring he appeared at MacWorld and revealed that Apple had turned a corner, with a $45 million profitable quarter. In fiscal 1998, Apple earned an impressive $309 million.
And all of us kicked ourselves for not remortgaging the house to buy all the AAPL stock we could afford!
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
