Print 46 comment(s) - last by .. on Aug 30 at 9:10 AM

Apple CEO Steve Jobs reportedly made a possibly illegal proposal to Palm in 2007 that the companies stop hiring each other's employees. Palm reportedly refused.  (Source: Sydney Morning Herald)
Palm's leader says that the deal is "wrong" and "probably illegal"

When it comes to hardware, Apple only has one legitimate competitor in the smart phone market -- Palm.  Palm's Pre is the only smartphone besides the iPhone to support multi-touch, and its also the only other smartphone to be able to be able to easily sync with iTunes.  Both of these assets reportedly came thanks in part to the inside knowledge former Apple engineers brought to Palm.

Apple, which has poached employees employees from Palm in the past (including during the development of the various iPods and iPhone), nonetheless, was not to happy about the launch of the Pre.  It tried to block the phone out of iTunes only to see Palm outmaneuver it again and let the Pre back in

Back in 2007, Apple's Chief Executive Office, Steve Jobs, reached out to former Palm CEO Ed Colligan and proposed a moratorium on the two companies stealing each other's employees.  Mr. Colligan reportedly rejected Mr. Job's proposal, saying that it was not only wrong, but "probably illegal". 

Palm's smartphone team is headed by Jon Rubinstein, a former Apple veteran who had headed the company's pivotal iPod unit.  Mr. Rubenstein was promoted to Palm's CEO in June, succeeding Mr. Colligan.

Steve Jobs would not comment on whether he proposed a secret arrangement with Palm.  He would only say that Apple has more patents and money than Palm if the companies go to war legally.  He perhaps was referring to Apple's patent on multi-touch technology, which it has threatened to sue Palm and others with in the past.

If Mr. Jobs did propose such an arrangement, it appears it would likely be illegal.  According to Donald Russell, an antitrust lawyer who worked at the Justice Department for more than two decades before going into private practice in Washington, "It's a form of competition that is usually protected by antitrust laws that prohibit agreements that restrict competition."

Apple and Palm, according to a Reuters source, are under investigation by the U.S. Justice Department for collusion in hiring.  Neither company would acknowledge that they were being investigated, though.

If Apple did reach out to Palm for such an arrangement, it would also have been a rather ironic move as Apple itself has poached employees from many other tech giants over the years.  Most recently, Apple hired IBM's Mark Papermaster to replace the departing Tony Faddell as iPod team leader.  IBM fought the move, saying Mr. Papermaster violated the terms of his contract.  Apple and IBM have since reached a settlement, allowing Mr. Papermaster to go to work at Apple.

Comments     Threshold


RE: apple
By michael2k on 8/20/2009 2:18:23 PM , Rating: 2
You say "bailout" and I say "settlement".

Microsoft settled a lawsuit in 1997 for 150m:,_Inc._...

The terms were simple:
Office for Mac
Internet Explorer for Mac was the default browser
Lawsuit dropped
$150m in shares purchased by Microsoft (non-voting even)

At the time Apple had cash to the effect of $11 per share with no debt. Put another way, they still had over $1b in cash at hand. Today they have over $30b.

RE: apple
By Shadowself on 8/20/2009 2:50:36 PM , Rating: 2
The stock purchase was not directly part of a settlement. There was a separate, not publicly disclosed payment for that. This is one of many, many areas where what is posted on Wikipedia is just plain wrong.

Also at the time of the deal Apple did have a significant amount of debt even though they had some cash on hand too as most companies do. The "book value" of Apple was indeed in the $10 to $11 range and the stock was trading at about $12.80 a share, IIRC.

Whether it was a bailout or a forced deal as a corollary to a settlement depends upon your point of view. The simple fact is that Apple needed this deal to stay alive. Microsoft needed the settlement in order to stay focussed on other things (e.g., anti trust lawsuits). Also Microsoft willing to help out a company that some thought was a competitor to Microsoft certainly did not hurt their stance with regard to the anti trust issues.

