Talk:Steve Jobs

Apple Computer's 1997 Financial Rescue

PREAMBLE

The Wikipedia entry for Steve Jobs repeats a statement the subject and his biographer have claimed:

"Jobs brought Apple from near bankruptcy to profitability by 1998."

This however has not been proven true or confirmed by any other party than the subject and his biographer. Publicly available government filings suggest that this was highly likely not true.

SOURCE AND ANALYSIS

Steve Jobs has publicly claimed that Apple Computer, Inc., currently renamed as Apple, Inc. (both referred herein as "Apple"), was 90 days from bankruptcy when he rejoined the company in 1997. His biographer, Walter Isaacson, has repeated such claims in interviews. A review of the facts show clearly otherwise.

Reference is made below to the Apple Computer, Inc. Form 10-K filed with the United States Securities and Exchange Commission (the "SEC) December 5, 1997 and conforming to an annual fiscal period ending September 26, 1997 (the "Filing"). The Filing is found here: http://www.sec.gov/Archives/edgar/data/320193/0001047469-97-006960.txt.

The Filing states:

"Over the last two years, the Company's debt ratings have been downgraded to non-investment grade. In October 1997, the Company's senior and subordinated long-term debt were downgraded to B- and CCC, respectively, by Standard and Poor's Rating Agency. In the second quarter of 1997, the Company's debt ratings were downgraded to B3 and Caa2, respectively, by Moody's Investor Services. Both Standard and Poor's Rating Agency and Moody's Investor Services have the Company on negative outlook. These actions may increase the Company's cost of funds in future periods. In addition, the Company may be required to pledge additional collateral with respect to certain of its borrowings and letters of credit and to agree to more stringent covenants than in the past.

The Company believes that its balances of cash and cash equivalents and short-term investments, and continued short-term borrowings from banks, will be sufficient to meet its cash requirements over the next twelve months. Expected cash requirements over the next twelve months include an estimated $130 million to effect actions under the restructuring plan, most of which will be effected during the first half of fiscal 1998. No assurance can be given that the $25 million in short-term borrowings from banks can be continued, or that any additional required financing could be obtained should the restructuring plan take longer to implement than anticipated or be unsuccessful. If the Company is unable to obtain such financing, its liquidity, results of operations, and financial condition would be materially adversely affected."

In the Filing, Apple reported that it had $1.459bn in cash and short-term securities at its 1997 fiscal year-end--this is after paying $319mn in cash to purchase NeXT Software, Inc.,--and accounts receivable, including allowances for doubtful accounts, greater than $1bn. Note that the often-purported $150mn "rescue financing" from Microsoft Corp. ("Microsoft") is relatively minor compared to Apple's cash ($1.018bn) and short-term investments ($212mn) balances totaling $1.23bn the fiscal quarter before Microsoft's investment of $150mn. The SEC filing for the quarter ending Jun 27, 1997 can be found here: http://www.sec.gov/Archives/edgar/data/320193/0000320193-97-000014.txt.

In contrast, Apple had outstanding on the same date $661mn par value unsecured convertible subordinated notes maturing 2001, $300mn par value unsecured notes maturing 2004 and $25mn in notes payable to banks refinanced every quarter (see below) all totaling $986mn. The only other material itemized liability was $685mn for accounts payable.

Apple had a net cash balance of $473mn as of its fiscal year-end 1997. These figures suggest that Apple during this period had significant liquidity to meet its financial obligations and undergo significant restructuring. Furthermore, Apple's large accounts receivable balance could have added further liquidity had the company gone into further decline.

The Filing further reports:

NOTES PAYABLE TO BANKS

The weighted average interest rate for Japanese yen-denominated notes

payable to banks as of September 26, 1997, and September 27, 1996, was

approximately 1.3%. The Company had no U.S. dollar-denominated notes payable to

banks as of September 26, 1997 or September 27, 1996. The carrying amount of

notes payable to banks approximates their fair value due to their less than

90-day maturities.

It is supposed that the subject's claim that "We [Apple] were 90 days from going bankrupt." relates to Apple's Japanese operation's ability to continue to refinance its yen-denominated $25mn bank note. This small debt was immaterial to the organization and could have been immediately repaid if necessary. For the unfamiliar, SEC securities-issuing registrants will customarily state such worst-case scenarios where refinancing risks exists in order to reduce potential or perceived future legal liabilities, however remote such risks may be.

The downgrading of Apple's credit rating to "CCC" and "Caa" was not very meaningful either. With exception to the most established technology companies, most of the sector's credit instrument issuing companies are rated below investment grade ("BB" and lower) and most commonly "CCC". Apple's downgrade brought it in line with the average as it was no longer a leading company in the personal computing sector in 1997.

CONCLUSION

Further analysis of the referenced SEC document will indicate that Apple was not facing insolvency. In addition, it was still well regarded in Silicon Valley so additional financing may have been possible--if it needed it. This is evidenced by Apple raising $661mn in a private placement of 6% unsecured convertible subordinated notes the year before.

The subject and his biographer's claim that Apple Computer, Inc. was "near-bankrupt" or facing any other insolvency is not substantiated by the company's Filing with the SEC, which contains the signature of its full board of directors, including the subject.

Pdunbarny (talk) 00:47, 25 February 2013 (UTC)

— Preceding unsigned comment added by Pdunbarny (talk • contribs) 21:55, 24 February 2013 (UTC)

Jobs was known to exaggerate/lie about his importance in things. Dream Focus 22:14, 24 February 2013 (UTC)

Are you presenting this as an argument that the article should be changed? If so, there could be the issue that this is original research and makes use of synthesis. BashBrannigan (talk) 05:42, 25 February 2013 (UTC)

All of my above statement is based on Apple Computer, Inc.'s documents provided to the US government and is in the public domain. The only exception is the clearly stated supposition that the claimed "90 days to bankruptcy" may relate to Apple's Japanese yen refinancing and is the only remote connection to an insolvency.

The Wikipedia article includes a statement as fact, "Jobs brought Apple from near bankruptcy to profitability by 1998." and provides no other source for this statement than that of the subject and his biographer.

To date, no other party--either trade creditors / vendors, bank lenders, Wall Street research analysts or then-employees--have confirmed this statement. Auditors of Apple's financial statements, both Ernst & Young LLP in 1996 and KPMG Peat Marwick LLP in 1997, and its board of directors who approved the statements would have been misrepresenting the state of the company and conducting a fraud if the company was within days of bankruptcy and had not disclosed it to the financial markets.

The Wikipedia article should either remove the statement or make clear that it is, at best, an unconfirmed claim made by the subject. It does not appear factual and is thus far unconfirmed by any of thousands of parties that would have been affected had Apple filed for bankruptcy in 1997.

Pdunbarny (talk) 08:48, 25 February 2013 (UTC)

I don't think you understand the issue. Wikipedia cannot use original research. Perhaps others may disagree, but to me this appears to be from your own research and analysis. The "90 Days" statement is well-sourced and can't be removed or modified without a source explicitly saying its incorrect. BashBrannigan (talk) 22:38, 25 February 2013 (UTC)

Not true. The source is just what Jobs said in an interview. Thus it comes from a primary source. You need to find a better source to keep it there, and it a disputed tag can be added to it. Dream Focus 22:58, 25 February 2013 (UTC)

The below quote on Apple Computer, Inc.'s agreement with Microsoft Corp. in 1997 and referenced article from Fortune was published Sep 8, 1997, before the subject agreed to undertake the CEO position in Apple.

"[D]espite Apple's losses, with roughly $1 billion in the bank it doesn't really need cash now"

It is philosophically impossible to "prove" a false statement certainly incorrect. One can conclude however that there is no evidence that the subject financially rescued Apple from its being 90-days to bankruptcy other than the subject's claim, his biographer's repeating it and some media republishing it.

It may be said that Apple may not have become as successful as it is without the leadership of the subject person, however that is conjecture and speculation and a matter for readers to decide.

The Wikipedia article's quote that "Jobs brought Apple from near bankruptcy to profitability by 1998." has a high probability of being a false statement based on the below referenced article and the US government documents referenced earlier.

The quoted Fortune article can also be found here: http://money.cnn.com/magazines/fortune/fortune_archive/1997/09/08/230846/index.htm

Pdunbarny (talk) 09:54, 26 February 2013 (UTC)

The article and its quote have been registered for a dispute resolution case, which can be found here: Wikipedia:Dispute_resolution_noticeboard#Apple Computer's 1997 Financial Rescue

Civil and balanced thoughts and comments are welcome.

Pdunbarny (talk) 13:18, 26 February 2013 (UTC)

The DRN process failed. There is an alternate source supporting Apple's alleged probability of filing for bankruptcy.

In the subject person's authorized biography, Ed Woolard, former CEO of DuPont, is quoted as saying at a board meeting: “If we stay with Gil as CEO, I think there’s only a 10% chance we will avoid bankruptcy,...If we fire him and convince Steve to come take over, we have a 60% chance of surviving. If we fire Gil, don’t get Steve back, and have to search for a new CEO, then we have a 40% chance of surviving.”

The "90 days to bankruptcy" statement from the subject person still seems exaggerated, considering the company had about $1bn in cash with little debt coming due and the director, Woolard, attesting by signature to the company's financial statements that the company had adequate cash and adequate financing.

Since no corporate insider at the company is widely-known to have disputed the statement from the director confirming the assertion of the company's potential insolvency, it should nonetheless be part of the record.

The current reference footnotes 16 and 17 to a blog and CNET should be replaced or appended with the biography as a source Isaacson, Walter (2011). Steve Jobs (1st Simon & Schuster hardcover ed. ed.). New York: Simon & Schuster. p. 358. ISBN 978-1-4516-4853-9. {{cite book}}: |edition= has extra text (help).

Pdunbarny (talk) 16:19, 10 March 2013 (UTC)

Reference 18 added. Thank you very much for your contribution to the article. Darrell_Greenwood (talk) 19:19, 10 March 2013 (UTC)

Notice of Dispute resolution discussion

Hello. This message is being sent to inform you that there is currently a discussion at Wikipedia:Dispute resolution noticeboard regarding a content dispute that has been discussed on this talk page. Content disputes can hold up article development, therefore we are requesting your participation to help find a resolution. The thread is "Apple Computer's 1997 Financial Rescue". There is a Guide for participants at the top of the WP:DRN page. Please feel free to review the guide and join the discussion. Thanks!

--Guy Macon (talk) 05:38, 27 February 2013 (UTC)

Jobs did help design the NeXT computer

Some edit warring going on about this being listed as a sub category in the "inventions and design" section. I have read his biography and he did help design the NeXT computer, showing off the parts inside, showing how neat and orderly and beautiful it was, he obsessed with making things look nice that no one would ever see. The design was his inside and out. Dream Focus 18:35, 5 April 2013 (UTC)

You can't just say that because you've read his biography (and I have too, probably 4 times), he designed the NEXT computer. What I'm saying is that the site that the included citation linked to did NOT state that Jobs "designed" or "invented" the NEXT computer, hence why I removed it from the sub-heading "Inventions and designs". Plus, there isn't an official patent for the "NEXT computer" as a whole system, so I don't know how Jobs can be credited as being involved in the "inventing" of it. Also, if you can find a quote in the book that supports what you're saying, then I'd be happy for you to reword this part to make it clear that Jobs only "designed" the aesthetics of it.

(Nbanato (talk) 18:38, 5 April 2013 (UTC))

I'm not sure how much input Jobs had in the design, but I believe the section should be reinserted. I don't think we need to be slaves to the definition of "invent". Jobs is closely associated with its development that its appropriate to have the section in the article. JOJ ^Hutton 18:40, 5 April 2013 (UTC)

But that's not what the sub-heading is. The sub-heading is "Inventions and designs". Inventions are those that are certified by the USPTO (the NEXT computer isn't a USPTO certified invention), and unless a source specifically and explicitly says that Jobs designed something, it cannot be listed under his name in this sub-heading. (Nbanato (talk) 18:42, 5 April 2013 (UTC))

The spirit of Wikipedia is to create an encyclopedia of information so that general users can gain a grasp of the subject. You shouldn't let some technical definition if a word hinder our ability to create this encyclopedia. His involvement in that technology is well documented and the spirit of the encyclopedia is improved with its inclusion. JOJ ^Hutton 19:06, 5 April 2013 (UTC)

So Wikipedia isn't about providing accurate and reliable information? What I'm saying is that the cited source (for this particular part) doesn't say that Jobs designed or invented the Next computer,and therefore the inclusion of the NEXT computer in this sub-heading is unjustified. Agree or disagree? (Nbanato (talk) 19:20, 5 April 2013 (UTC))

Jobs founded, created, funded, and as CEO directed the company whose first product was the NeXT computer. The NeXT computer was Jobs's innovation. I've changed the heading being discussed to include innovations. Darrell_Greenwood (talk) 20:21, 5 April 2013 (UTC)

Accidentally submitted my edit before finishing the edit summary. An innovation is defined simply as a "new product". In terms of the technology at the time, the NEXT was NOT considered "new" technology by any standards. Jobs wasn't the only one that funded NEXT. When it began to fail, Ross Perot invested $20 million into the company (Steve Jobs by Walter Isaacson, page 174). (Nbanato (talk) 03:25, 6 April 2013 (UTC))

There you go with technical definitions again. The spirit of the section is to list products that he is closely associated with. Now did he sit at a desk and actually write the code and actually design the entire device? I don't know. But he is very closely associated with its development, mainly because it was his company. And listing it as it is is still correct and reliable.--JOJ ^Hutton 13:11, 6 April 2013 (UTC)

Jojhutton, the spirit of the section isn't to list all the products that he's closely associated with. Listing anything without evidence that supports its listing is not considered to be correct or reliable. (Nbanato (talk) 13:48, 6 April 2013 (UTC))

Call the section "Things Jobs helped create" then. Seriously, "design" is fine. Designed the appearance, directed what the operating system would look like, what the inside of it would look like, how it would be, etc. He designed it. Dream Focus 13:20, 6 April 2013 (UTC)

Dream Focus, I'm not disputing that because that isn't the what this discussion's about. If you can find evidence that supports your statement, then you're welcome to add that Jobs was involved in the designing of the aesthetics of the first NEXT computer! Reread what my edit was about, and then tell me what you disagree about it. (Nbanato (talk) 13:48, 6 April 2013 (UTC))

You want to find a better reference, then do so, but don't remove information if you don't sincerely doubt it is true. And the section "Inventions and Design" means things he invented and/or designed, he not having to do both on everything in the list. Dream Focus 14:02, 6 April 2013 (UTC)

I removed it because the cited source does not support its inclusion under the sub-heading of "Inventions and designs". It doesn't mention that he invented it, nor does it say anything about him designing it. If the heading was "Things that Jobs' companies did while Jobs was their CEO", then I'd be happy to let it stay there. (Nbanato (talk) 14:07, 6 April 2013 (UTC))

Three people have said it should be there, one person wants it done. Consensus is clear. Leave it in. Dream Focus 14:29, 6 April 2013 (UTC)

You still haven't explained why it should be kept there. The cited source doesn't support it. If there isn't any evidence for it to be there, then why shouldn't it be deleted? Do you have any other suggestions that might help us reach a conclusion? We have not reached a consensus.(Nbanato (talk) 14:49, 6 April 2013 (UTC))

I explained fine as have others. You have not convinced anyone else it should be deleted. Consensus is to have it there. Follow consensus and don't go edit warring again. Dream Focus 15:02, 6 April 2013 (UTC)

Asserting your opinions as fact without the slightest form of evidence for your assertions is not explaining it. "I've read somewhere that it's true, and therefore you should listen to what I say." It is the same as editing without giving a reason in the edit summary. You may keep the NEXT computer there if you find a source that supports your argument. Unfortunately, we have not reached a consensus, and consensus without reasoning doesn't warrant anything. See WP:BRD Also, you haven't actually commented on what you thought was wrong about my reasoning for the edit. That's what I think should be discussed. (Nbanato (talk) 15:23, 6 April 2013 (UTC))

Darrell_Greenwood, do you agree that the cited reference does NOT mention that the NEXT computer was designed or invented by Steve Jobs? (Nbanato (talk) 06:39, 7 April 2013 (UTC))

Yes. But easily fixed. Darrell_Greenwood (talk) 18:48, 7 April 2013 (UTC)

Again, see my above explanation for why I don't consider the NEXT computer as being an innovation. (Nbanato (talk) 03:58, 8 April 2013 (UTC))

Lots of reliable sources do credit Jobs for NeXT and characterize the computer, its design, and/or its software as "innovative". Here is one. Dicklyon (talk) 05:32, 8 April 2013 (UTC)