March 13, 1997: With Apple preparing to cut thousands of jobs, CNN reports that “the coffin door is closing” on Cupertino. Apple is doomed! Doomed!
Knowing what happened in the years following, we guess this could technically be considered “fake news.”
CNN says Apple is doomed
With my Today in Apple history entries, I typically steer clear of highlighting comically inaccurate stories predicting Apple’s doom. After all, hindsight is 20/20. Writing about Apple for a living, I’m sure I’ve covered some dubious rumors over the years that failed to materialize as reported.
Still, more than two decades since the publication of CNN‘s story, “Apple running out of time,” it’s fun to go back and see how wrong the pundits were in 1997.
The death of Apple?
For this particular story, CNN spoke with Gene Glazer, technology analyst at (now defunct) securities firm Dean Witter.
“I don’t see how [Apple] can go much lower than that and do what they have to do, which is get back on track and turn the company around,” Glazer said.
Elsewhere in the article, he said Apple needed to turn things around — and do so quickly — or face the end.
“They don’t have a lot of time,” Glazer said. “I would say even two years is too long.”
As if to compound his incorrect predictions, Glazer totally missed the boat on the Newton MessagePad. He said people likely could bank on the success of Apple’s PDA. Apple had just debuted a new version of its Newton operating system, and was in the process of spinning off Newton as a startup.
According to Glazer, the biggest problem Apple faced was its reputation on Wall Street, which was in tatters.
“The people investing in Apple are contrarians,” he said. “The analysts are generally very pessimistic about the outlook.”
Apple doomed: What happened?
The “Apple is doomed” story, as reported, wasn’t totally wrong. In fact, Apple soon announced plans to cut 4,100 jobs — about one-third of its workforce at the time.
On top of that, Apple then reported a quarterly loss of $56 million that effectively ended then-CEO Gil Amelio’s 500 days of running the company.
The $56 million hit contributed to an overall Apple loss of $1.6 billion during Amelio’s reign. The losing streak wiped out every cent of profit Cupertino had earned since fiscal 1991.
Steve Jobs turns Apple around
However, it didn’t take long for Apple co-founder Steve Jobs to turn things around after his return to the company in September 1997. Aggressive cost-cutting, which also included slashing Apple’s R&D spending on unnecessary projects, helped reduce the company’s losses. In addition, new products like the beige Power Macintosh G3 computer performed very well with customers. (It sold 130,000 units against a forecast of 80,000.)
By January 1998, in fact, Apple became profitable again — well within the time frame Glazer laid out for a turnaround. From there, Apple debuted the iMac G3 and iBook, and never looked back.
Oh, and the Newton — whose future was supposedly all but guaranteed — soon wound up being canceled so Apple could focus on building Macs.