All eyes in the industry were looking towards Cupertino yesterday as US PC Week reported that Apple Computer Inc’s John Sculley was in talks with AT&T Co on close collaboration that could go as far as AT&T buying Apple and merging it with NCR Corp, and the New York Times did an in-depth study of the company as talk swirled that the company would have to lay off up to 2,000 of its 14,000 employees worldwide. According to PC Week, AT&T chairman Robert Allen and other AT&T executives have been meeting with Sculley and his management team since March. Their talks have dealt with everything from potential joint ventures involving personal digital assistants to the ramifications of merging the computer operations of Apple with NCR. Apple’s big problem is that it has already invested heavily in technologies that will not bear fruit for years, needs to invest more to bring them to market – just at a time when the personal computer price wars are savaging its margins. Sculley is understood to believe that the company cannot pursue its vision without the financial backing of a giant partner – which is why he tried to sell the company to IBM Corp two years ago. IBM has clearly proved a disappointment as a partner, and Apple’s management is tremendously frustrated, an industry observer who requested anonymity told the paper. It recognises and understands the new market opportunities, but the core business doesn’t provide the time or capital to do them justice. No major announcements are expected in the near future, however, the sources said. An AT&T spokesman declined to confirm any specifics, but acknowledged that discussions are taking place between the two companies. AT&T and Apple are already partnered in the General Magic Inc multimedia communications software developer, and the only real lack of fit is that Apple’s Newton uses the ARM RISC rather than AT&T’s Hobbit – something that is unlikely to change since word from Cambridge is that the ARM is proving perhaps an order of magnitude faster than Hobbit. A merger of Apple with NCR would not derail the latter’s strategy, and with the Macintosh Finder due to be offered for Intel Corp processors, new synergies are possible. On the expected lay-offs, Apple is declining comment, and one report says that they will be less than 10%, implying perhaps 1,200, although others go for 2,000. Groups to be hit the hardest include the Enterprise Systems Division, the Macintosh Systems Division, the Macintosh Software Architecture Division and Apple USA, sources told PC Week, adding that Apple’s Advanced Technology Group, formerly a sacred cow, is reported to be on the hit list.
