Why did Microsoft Save Apple in 1997

By Sidirgot
September, 14 2018
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Apple Inc. the past month reached the 1 trillion-dollar mark in the stock market, thus giving the company the title of the First Company to be evaluated at 1 trillion.

Even thought that is a fact back in 1997, just 20 years ago the company was in the break of bankruptcy, and it wasn’t Steve job’s that saved them, but their biggest rival Bill Gates.

Apple in 1997

Back in 1990’s Apple wasn’t the mobile phone company we all know today, in fact the were a computer company and that was even reflected in their name Apple Computers.

Even thought they had a steady selling point, after 1995 the company’s sales where starting to decline. 

Back in those days, a computer was only as valuable as the software It had inside.

Microsoft in 1997 had around 90% of the market share in computer sails, so most of the software that was being developed at the time was made for Windows.

 Apple’s products were too expensive for mostly everyone and with Microsoft offering a great alternative to that of the Mac sails started to go down.

 In 1995 Apple Closed at $11,1 Billion.
         In 1996 the company closed at $9.5 Billion.
         And in 1997 just at $7 Billion.

 The company was worth $3 billion at the time, with the evalutation dropping around $1 billion in a single year and the thing was that Steve Jobs couldn’t do anything to resolve the situation, in fact Steve wasn’t even part of the company at that time, the board of directors had through him out in 1985.

Steve Jobs Coming Back

After a lot of unsuccessful CEO’s, the board brought Steve back. 

In February of 1997 Apple bought Next, a company that Steve had created after leaving Apple.

Since at that point Apple’s finances were in a very bad shape, Steve didn’t get any cash from this deal, he received 1,5million Apple Shares, but even that wasn’t enough, by the end of July Apple had about 90 days left of cash in the bank.

So, on August 6, 1997 Steve made a Socking Announcement, even though Microsoft was their biggest rival at that point they made a Partnership with them, a Partnership that left everyone in sock.

Microsoft and Bill Gates

Microsoft bought 150 million non-voting Apple Stock. The keyword here is the non-voting part, Microsoft wasn’t trying to buy Apple, instead they were just funding it.

Bill Gates from the other hand didn’t do this out of the kindness of his heart.

Back then he wasn’t the philanthropist we know today, rather he had a negative reputation, he was shown as a cruel Businessman that was willing to do anything to succeed in his industry, and so he did.

Microsoft was very successful and that was drawing in attention from anti-trust regulators, with the Department of Justice that was building a case against Microsoft since 1993.

A year after the Apple Partnership, the Department of Justice summoned Bill Gates for a three-day long deposition, that eventually ended up in the DOJ giving up and clearing Microsoft with minimal punishments.

The Apple shares Microsoft had where dropped immediately after they had served they purpose. Once the DOJ cleared Microsoft, Bill Gates converted his non-voting shares into regular stock, witch he sold in 2003.