Talk Persists That Apple Is Ripe for a Takeover Bid

Times Staff Writer

From the Silicon Valley to Boston's Route 128, rumors are flying that Apple Computer is ripe for acquisition.

Several big companies--AT&T;, Xerox, Wang Laboratories and General Electric--have been mentioned most recently as suitors, reigniting rumors that have surfaced periodically during the last two years. But computer industry analysts say there might be more teeth to those rumors now because confidence has waned in Apple's ability to go up against IBM.

An Apple spokeswoman said late last week that there is no truth to the rumors. AT&T;, Xerox and Wang denied that they are considering purchasing the Cupertino, Calif., company. GE officials declined comment, citing company policy.

Apple's stock has been hovering in the low $20s in recent weeks, its lowest price since before its Macintosh computer was introduced early last year.

In over-the-counter trading Monday, it closed at $21.375, down 37.5 cents, on trading of 880,300 shares. Last Friday, it closed at $21.75, up 37.5 cents, on volume of 945,800 shares. More than 1 million shares changed hands last Thursday. An Apple spokesman said normal daily trading volume is 600,000 to 700,000 shares.

Analysts said the low stock price reflects not only the current uncertainty in the computer industry but also Apple's own malaise. In recent months, Apple has closed and consolidated manufacturing facilities because of slower demand for personal computers and IBM's dominance in the all-important office market.

The low stock price and Apple's healthy cash situation ($194 million in the bank at the end of the second fiscal quarter) may make Apple ripe for the picking, analysts say.

$1.8-Billion Price Seen

Michael Murphy, editor of the California Technology Stock Letter in San Francisco, said that, at such a low price for the stock, Apple conceivably could be purchased for about $1.8 billion, or $30 a share for its 60 million shares outstanding. That, he said, is a good price for a company expecting about $2 billion in sales this year. Murphy also said that Apple "may be less resistant now to the idea of being taken over than in the past."

Another Bay Area analyst who closely tracks Apple disagreed, saying that Apple Chairman Steve Jobs and President John Sculley would not be amenable to an acquisition. Greg Kelsey of L. H. Alton & Co. in San Francisco said that any discussions between Apple and the other companies more likely would focus on a business relationship, such as marketing or product combinations.

Kelsey's comments were mimicked by the companies rumored to be eyeing Apple.

"We have no plans to buy Apple," AT&T; spokesman Tom Halub said. "We talk to Apple just like we talk to lots of computer companies about all kinds of things."

South American Sales

Xerox spokesman Tom Abbott said: "There's absolutely nothing to the rumor." He said one reason for the speculation might be that Xerox and Apple have arranged several marketing agreements during the last year.

Since November, Xerox has marketed and distributed Apple Computer products in most countries in South America. The two companies have had a similar arrangement in Canada and France for a year.

At Wang Laboratories in Lowell, Mass., a spokeswoman said that, although Wang and Apple have discussed--with no results--a possible business relationship, there have been no "talks with Apple as far as acquisition, takeover or merger is concerned."

An official at General Electric, which neither denied nor confirmed that it is considering buying Apple, said that, if the company sometimes denied rumors and other times took a "no comment approach, that would be automatic confirmation."

Earlier this month, Apple reached an agreement with Honeywell under which Honeywell will provide service for Apple's direct sales accounts nationwide. Honeywell would primarily serve Apple's corporate customers.

Kathleen Day reported from Boston and Donna K. H. Walters from Los Angeles.

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