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URL:  https://boards.fool.com/watchingtheherd-says-from-the-books-and-articles-25000457.aspx

Subject:  Re: The WSJ: New Look, Same Blind Spot Date:  1/4/2007  10:19 PM
Author:  crassfool Number:  200327 of 603896

WatchingTheHerd says

From the books and articles I've read since about 1988, I have my doubts about Jobs. Jobs gets much of the public acclaim as the technical visionary of Apple. However, Apple has been blessed with some AMAZING engineering talent where the rubber meets the road at crucial times in their history (the team of 12-16 core engineers that created the Macintosh being the prime example) who were treated pretty poorly from a financial and cultural standpoint by Apple management. They worked hard because they believed in what they were doing, not because management was dangling financial incentives. I recall stories about the Macintosh effort that said most of the core team probably made maybe $60-70k/year from 1982-1984 but worked 100-120 hours/week the entire time and got NOTHING from Apple in terms of options.

I was there. All of the Macintosh core team did just fine on options. I wasn't on that team, but I did OK on options too.

Funny story: when I was being hired as a technical writer, I was made an offer that didn't say anything about stock. I said to the hiring manager, "How about some stock options?" She said "Oh, I'll have to ask Steve and Mike." Two days later she was back with a stock option offer which I accepted. A couple of years later, I said to myself Geez, I should have insisted on twice as much stock and they would have given it to me. It was just pre-IPO stock, nobody had any idea what it was worth.

But some time after that, I was apparently the only technical writer who had stock options. This was brought to the attention of Steve Wozniak, and he just gave a bunch of his options to the other writers.

In short, my take on Apple is that its darkest days were typically caused by marketing-focused executives who were able to lead the company during stable periods but lacked the technical expertise and vision to steer the company through the routine technology "lurches" that occur in Apple's industry. Apple didn't survive these downturns by managers like Jobs actively coming in and PULLING the company from under the water, they survived when INCOMPETENT management left and allowed the core of technical expertise to quickly bob back to the surface. It might look the same to the casual observer but the underlying organizational reasons are vastly different.

But those dark days were when Jobs was absent. Believe me when I say that the company was on its way underwater for the last time when Jobs came back and took over, with a team from NeXT.

To the extent options backdating was taking place in Apple to stabilize the firm, I doubt it helped stabilize the talent that wound up producing the iPod or designing the iTunes on-line retail experience or porting the OSX operating system to Wintel in 18 months without a hitch. (Disclaimer: I obviously bring a pretty pro-engineer, dubious-executive slant to the analysis...)

I was an engineer throughout that time, and I will tell you two things: One, the options stuff definitely played a part in keeping the NeXT people on board -- after all they had just commandeered a sinking ship. Two, my emotional bias goes the other way -- like most old Apple employees I despised the NeXT engineering executives who treated us like dirt. But the fact remains that Steve Jobs saved the whole company from going down the tubes. He's not my friend, and his friends are not my friends, but he and his friends made my AAPL stock worthwhile.

Along with the AAPL stock of millions of other grateful investors. That's why Apple is a poor example of the evils of stock-option manipulations.

crassfool
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