Apple clone licence move boosts shares

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The Independent Online
Apple Computers yesterday startled industry-watchers by agreeing to buy back the cloning licence it sold to Power Computing Corp in 1995 for $100m (pounds 63m).

The bold move, which boosted Apple shares, was instigated by Apple's co-founder Steve Jobs, who has been running the troubled computer maker for the past month while a search is conducted for a new permanent chief executive officer.

Mr Jobs is known to have disapproved of the agreements entered into by Apple since 1993 to sell licences to other computer makers to manufacture and distribute clone Apple products. Among those, Power Computing emerged as the most successful with an annual revenue last year of $300m.

Rather than helping to expand the market share for the Macintosh operating system, as Apple had originally hoped, the clone-makers have instead eroded Apple's own sales through aggressive discount pricing and direct marketing. It is this cannibalising process that Mr Jobs wants to reverse.

Apple and Power Computing had been in dispute for several months over access to Apple's technology and some kind of new arrangement between the two companies had been expected. Power Computing's former chief executive, Joel Kocher, resigned from the company last month over the arguments with Apple.

Under the deal unveiled yesterday, Apple will acquire the core assets of Power Computing, including the right to retain key employees with expertise in direct marketing and distribution. Apple will also gain Power Computing's customer data base.

Power Computing will retain its name and continue to sell Mac-compatible computers until the end of the year.

"Power Computing has pioneered direct marketing and sales in the Macintosh market, successfully building a $400m business," Mr Jobs commented. "We look forward to learning from their experience, and welcoming their customers back into the Apple family".

The deal comes almost one month after a huge shake-up at Apple, which saw Mr Jobs returned to the board of directors as well as the revelation that Apple's former arch-rival Microsoft would be investing $150m in the company.

It remained unclear what the implications of the Power Computing deal would be for other holders of Apple clone licences, which are principally Motorola Inc and Umax Computer of Taiwan.