SAN FRANCISCO (AFX) - Apple Computer Inc. named Google Inc. CEO Eric Schmidt to its board of directors Tuesday, creating a high-profile link between two of Silicon Valley's most prized companies as they try to expand their recent successes and topple Microsoft Corp. as high technology's kingpin.
Schmidt becomes Apple's eighth director. He joins the company's board amid a brewing stock option scandal that has raised questions about the board's oversight of the past compensation practices and exposed Apple to a possible de-listing from the Nasdaq Stock Exchange as it considers restating some of its past profits.
Some of Apple's mishandled stock options were given to its renowned chief executive, Steve Jobs, who also formerly ran another company, Pixar Inc., under scrutiny for its past stock option practices. Before making any money on them, Jobs returned the stock options under review at Apple.
Pixar, a computer animation pioneer, is now owned by Walt Disney Co., where Jobs is a board member.
'The timing of this appointment is certainly interesting in terms of corporate governance,' said American Technology Research analyst Shaw Wu. 'Being able to attract a guy like Eric Schmidt certainly has to be viewed as a positive.'
Apple shares fell 50 cents to close at $66.48 on the Nasdaq Stock Market, then regained 32 cents in extended trading after Schmidt's addition was announced.
Besides deflecting some of the recent attention on Apple's stock option woes, the new management bond between the Internet's search engine leader and the maker of iPod portable devices and the Macintosh computer seems likely to heighten intrigue surrounding a pair of companies known for their innovation and disdain for Microsoft.
'It makes a lot of sense for this to happen,' Wu said. 'They both have a common enemy -- and that's Microsoft.'
Wu believes Mountain View-based Google and Cupertino-based Apple could help each other become even bigger thorns in Microsoft's side.
For instance, Apple computers could feature recent online applications developed by Google to make more consumers aware of alternatives to Microsoft's long-dominant word processing and spreadsheet programs. Meanwhile, Google might devise ways to use Apple's pervasive iPod franchise to offer more of its services on portable computing devices.
The possibility of future partnerships wasn't mentioned in Tuesday's board announcement, but Jobs and Schmidt emphasize they share a mutual admiration of each other's companies.
'Like Apple, Google is very focused on innovation and we think Eric's insights and experience will be very valuable in helping to guide Apple in the years ahead,' Jobs said. That written statement echoed remarks Jobs made at a conference in San Francisco earlier this month when he applauded both Apple and Google for engineering breakthroughs that he derided Microsoft for simply copying.
Schmidt hailed Apple as one of his most-admired companies. 'I'm really looking forward to working with Steve and Apple's board to help with all of the amazing things Apple is doing,' he said Tuesday.
Both Schmidt, Google's CEO since 2001, and Jobs, who rejoined Apple in 1997 after being ousted from the company in the 1980s, rank among the nation's richest men. Schmidt's fortune stands at $4.8 billion while Jobs has a net worth of $4.4 billion, according to Forbes Magazine's latest ranking.
The star power of Apple's board doesn't end with Jobs and Schmidt. Other board members include former Vice President Al Gore, J. Crew Group Inc. CEO Millard 'Mickey' Drexler, Intuit Inc. Chairman William Campbell and Genentech Inc. CEO Arthur Levinson, who also serves on Google's board.
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© 2006 AFX News
