EXCLUSIVES

The Board sided with Spindler, and Graziano said he decided that evening to leave. Apple issued a news release stating Graziano had resigned "due to differences in opinion" with Spindler that weren't explained.

Asked why he thinks Apple's Board wasn't amenable to his warnings, Graziano said he believes the Board decided to stick with Spindler because they expected that the company would soon be sold to Sun Microsystems and that Sun would want to keep Spindler in charge. But that deal fell apart in January 1996 when Sun got a close look at Apple's financial situation, and drastically lowered its original offer.

Ultimately Apple found itself stuck with a predicted excess of unsold inventory, triggering a downward spiral from which the company has only recently recovered. After the deluge, the board nixed Spindler, according to what Graziano told Knight-Ridder.

Under Spindler's reign there was uncertainty as to what strategic direction Apple should be taking. By November 1995, three top executives had left within a seven-month period. Daniel Eilers, Senior Vice President of WorldWide Sales resigned under heavy media speculation that he backed Graziano, who had resigned a month earlier.

Years later Dan Eilers, now with Kleiner, Perkins, Caufield and Byers, a California venture capital firm, told Roy Harris of CFO Magazine that the seed of Apple's problems in the '90s were in its decision not to open up the Mac operating system in the prior decade, when Windows did. Because Apple had become such a niche player, "a fresh approach was needed," he says. In addition to encouraging investment from software developers, Apple had to beef up forecasting, a major need because "Apple is not a build-to-order company, but a build-to-forecast company." The company also diluted its focus on key education and publishing markets in favor of making Macs "all things to all people." And even when prices were cut to help boost market share, costs weren't. "The two things needed to be coupled."

This was the general consensus of Apple watchers outside of the Board of Directors' loop.

Perhaps because of the insularity of The Board, Apple went through further tribulations.

What's eating Gilbert Amelio? > Even after Gilbert Amelio had left the Board, he continued to cause trouble from the sidelines. As recently as January 28, Amelio was publicly chastising Steve Jobs. That day, Amelio scoffed at Steve Jobs' compensation package, but also used the opportunity to make a pointed remark and telling remark about the Board. Here is that remark to Jennifer Reingold of Business Week:

"JR: how has the board changed since you left?
Amelio: the board is worse than it was then. first, it's smaller. it's made up primarily of close friends of steve's for decades. "

By all accounts Gilbert Amelio was such a controversial CEO because of the lavish compensations he bestowed upon himself. In the previous Knight-Ridder interview, Graziano aimed his barbs mostly at Amelio's 1996 pay package, which included a bonus for turning a tiny profit in the quarter that ended September 1996.

That quarter not withstanding, during the fiscal year Apple lost $816 million on sales of $9.8 billion this was due, in large part, says Graziano to accounting maneuvers that included taking back $28 million of previously booked charges. Hell hath no fury, it seems, like a CFO scorned.

"Only in corporate America can anyone get away with that stuff," said Graziano at the time. "It's theft on a grand scale,"
He concluded "only it's legal."

Amelio received $3 million in salary and bonuses for that fiscal year, as well as getting stock options that in the end were worth millions.

Asked for a response to Graziano's remarks at the time, Fred D. Anderson, Graziano's replacement as CFO, said:

"Whatever his comments, I don't think they are worthy of any comment by me because he hasn't been here for 18 months and, therefore, I don't think he has any special insight relative to apple."

Calling Dr. Amelio > By the time Gilbert Amelio was let go, all he had to show for his 17-month stint as Apple chief executive was a larger executive office, a retooled private jet and at least $15.2 million in salary, bonuses, stock options and severance pay.

Amelio's defeat essentially began in April, when the company reported an unexpectedly massive $708 million loss for the second quarter. But his departure schedule was speeded up in his last week or two with a series of missteps that culminated in Amelio's forced resignation.

The week before his ouster, Education Access of Sunnyvale - Apple's largest distributor of Macintosh computers to schools - ended its relationship with Apple and decided to work instead with IBM, Compaq Computer and Power Computing. The cancellation alarmed the company because education had been, for nearly twenty years previous, one of Apple's last strongholds.

Simultaneous to that announcement, Power Computing, the biggest maker of Macintosh clones, announced that it would begin making Windows-based computers.

In a document related to its planned IPO at the time, Power Computing stated that it was renegotiating its licensing agreement with Apple. Power, based in Round Rock, Texas, contended that Apple is slow to approve Power's designs because clone sales are eating into Macintosh sales.

Days before the ouster, Apple abruptly cancelled a meeting scheduled to discuss its long-term strategy with the California Public Employees Retirement System. CalPERS, which owned about 0.6 percent of Apple's stock, had been a vocal critic of the company. The meeting, originally scheduled during April, had been cancelled once before.

Rumor was circulating that shipment dates for Apple's new line of desktop computers had slipped by at least three months.

But the worst was yet to come.

Although Amelio had predicted the company would return to profitability in the fourth quarter, Apple lost millions once again.

Amelio later recalled in his kiss-and-tell memoir "On The Firing Line: My 500 Days At Apple:"