(Originally published by the Daily News on Sept. 17, 1980. This story was written by Mark Liff.)
The latest harvest from California’s “Silicon Valley” is a four-year-old company founded by a couple of 20-year-old college dropouts. From those modest beginnings in 1977 in a Cupertino, Calif., garage, Apple Computer Inc. has blossomed into the country’s second-largest in-home personal computer company. And now the company, the largest privately held manufacturer of personal computers, is about to go public in spectacular fashion.
This is no ordinary public offering, you understand. Indeed, there is a frenzy surrounding the impending stock debut.
No one yet knows how many shares will be issued, or the opening price. But experts on The Street predict that Apple will be sold out from the start, whatever the price.
The stakes are high. According to a consulting firm, Creative Strategies International, in San Jose, Calif., personal computer sales which totaled $172 million three years ago, could hit $3.5 billion — yes billion — by 1985.
Until the stock offering, Apple officials are barred by the Securities and Exchange Commission from discussing the company’s history or prospects. But Apple has not been a low-profile operation and much is known about it and its founders.
New York Daily News published this on September 17, 1980.
The college dropouts, Stephen Wozniak and Steven Jobs, became friends four years ago at a home-computer club in Palo Alto, Calif., and soon decided to liquidate their assets — a Volkswagen van and a programable calculator — to raise the $1,300 they needed to start building their own computer.
Their first major effort, the 1977 Apple II, was a personal computer that not only could be programed but also could be bought assembled, rather than in cumbersome kits like its competitors.
Amazingly by year’s end, the two friend had an accelerating $2 million business. And by 1978, sales had exploded to an estimated $15 million. Last year, the company promised its employes a week’s vacation in Hawaii if sales hit $100 million, and then topped the target.
Now it is moving an estimated $175 million worth of computers and software each year — and earning about 20% profits — while straddling Tandy’s Radio Shack and Commodore in the middle of the big three in home computers. In addition to getting $1,200 to $3,750 for its hardware, its catalogue includes 100 software programs that sell for $7.50 to $600 each.
From the beginning, Apple thought big — a key to its remarkable success, industry observers point out.
“We had to dominate the business or go bankrupt trying,” Mike Markkula, the company’s 36-year-old chairman, told an interview last year. “We anticipate growth, we count on it and we plan for it.”
Markkula was a restless, retired millionaire when he met Jobs and Wozniak. He had worked for Intel Corp. and Fairchild Semiconductor and finally hit it big in the stock market. He was all of 30 years old at the time. And where Jobs and Wozniak had the technical smarts, Markkula had real talent as a consummate manager and corporate strategist.
As the first Apple II computers were coming off the production line, the company was already committed to an annual $1 million for color advertisements in national magazines and for promotion. And Markkula decided that $100,000 for tooling was a small price to pay for the stylish foam cabinets that set Apple II apart from its metal black-box competitors.
The self-made millionaire quickly nailed down a solid line of credit from the Bank of America in San Jose. He then picked up a reported $600,000 from Venrock Associates (the Rockefeller family’s venture capital outlet), Continental Illinois Bank, Arthur Rock & Associates and Henry Singleton, the founder of Teledyne.
Markkula then put an estimated $250,000 of his own money into Apple, in return for a 20% share of its stock and his title as chairman. Jobs and Wozniak each kept 20% shares and the remaining 40% has been held by the initial investors.
If Apple flounders, Markkula figured, these investors probably could be relied on for additional capital. But literally from the day it began, the company made enough money to finance its own expansion, and those original investors were never asked for another cent.
Also from the beginning, the company’s prospects apparently were so bright, that Markkula was able to raid established competitors for his management team. Michael Scott was hired from the National Semiconductor Corp. to become president. Thomas Whitney, who spent 15 years at Hewlett Packard Crop. was named executive vice president and F. Rodney Holt came from rival Atari Corp. to become vice president for engineering.
They were all men who had been through the kinds of corporate growing pains that could be expected at Apple. So, for example, after a six-month search for a capable materials supplier, they settled on Digital Equipment Corp., which reportedly can handle sales up to $500 million, more than three times company’s present volume.
Its software, which includes the Apple II computer retailing for $1,200 and the more sophisticated Apple III, selling in stores for $4,500, has become the apple of many an executive’s eye. Both are durable, portable and easily programable, say consumers who own them.
“I started a year ago,” said Steven Stadler, a senior vice president of GenRad Corp. and instrument testing company in Concord, Mass. “The nice thing about Apple is that there are so many packages available for relatively little money so you don’t have to program it yourself,” he says.
Stadler began by keeping his checkbook on the computer and progressed with software for his friends’ addresses and phone numbers. Then he moved on to chess and one program which catalogues his wine celler by region and vineyard.
Stadler said he chose Apple over the other personal computers in part because “it is one of the so called ‘friendlier’ machines around,” and because it had the capability of making displays in 16 different colors.
He experiments with business ideas on his console at home before bringing them to the office. “Now I have seven Apples in the company doing analytical work and graphic displays,” Stadler said.
Clearly there are battalions of Steven Stadler’s out there, leaders of small to medium-sized businesses who like to fool with computers in their home and increasingly rely on them in the office, too. Apple’s impending public stock offering, in fact, is undoubtedly a move to pile up the expansion capital it will need to go head to head with corporate behemoths like IBM, which is eyeing the market, and Texas Instruments, which is already dabbling in it.