Apple
Schmidts effectiveness as a director will be “significantly diminished” as he needs to recuse himself from more meetings because of potential conflicts of interest, Apple CEO Steve Jobs said in a statement today. The decision was mutual, he said.
Google has expanded into computer and mobile-phone software, creating direct competitors to Apples products. Schmidts move is a reversal from his stance three months ago, when he said he had no plans to resign amid speculation that his overlap on Apples board violated U.S. antitrust rules.
“You cant serve two masters,” said Keith Bachman, an analyst at BMO Capital Markets in New York. He advises investors to buy Apple shares and doesnt own them. “Google and Apple are increasingly on a collision course.”
Google is developing a computer operating system based on its Chrome Web browser, competing with software from companies including Apple. Googles Android mobile-phone operating system also competes with Apples iPhone software.
Google, based in Mountain View, California, added $8.95 to $452 in Nasdaq Stock Market trading at 1:44 p.m. New York time. Apple, in Cupertino, California, rose $2.48 to $165.87.
Interlocking Boards
“I have very much enjoyed my time on the Apple board,” Schmidt said in an e-mailed statement. “Its a fantastic company. But as Apple explained today weve agreed it makes sense for me to step down now.”
Steve Dowling, an Apple spokesman, had no additional comment beyond the statement. He declined to say whether the board will seek a new director to replace Schmidt.
The U.S. Federal Trade Commission began examining whether the companies are breaking antitrust law by sharing board members, a person familiar with the investigation said in May. The FTC was looking at whether the interlocking boards could hurt competition in markets such as mobile-phone software and services, the person said.
“The two companies are increasingly competing,” said Charlie Wolf, an analyst at Needham & Co. in New York. He owns Apple shares and rates them a “strong buy.” “The Federal Trade Commission inquiry might be the last straw.”
Peter Kaplan, an FTC spokesman, declined to comment on Schmidts resignation.
Besides Schmidt, Genentech Inc. Chairman Arthur Levinson also serves as director at both Apple and Google. Schmidt has served on Googles board since 2001 and on Apples since 2006. Levinson has been at Google since 2004 and at Apple since 2000. He declined to comment, Genentech spokesman Geoff Teeter said.
Apple sells the iPhone, which runs Google Maps and gives users the ability to play videos from Googles YouTube. Google, owner of the worlds most used search engine, helped develop Android, software that runs mobile phones.
Last week, Google said that Apple rejected its program for the iPhone that allows people to make free calls. The Google Voice application lets users place U.S. calls, send text messages and organize voice mails without charging fees. The U.S. Federal Communications Commission began an inquiry into Apples rejection of the program.
The companies are starting to compete in computer operating systems, with Googles Chrome OS set to be introduced next year. Computer makers are also planning to offer Android as an alternative to Microsoft Corp.s Windows.
Without Schmidt, Apples board will consist of Jobs and six outside directors. In addition to Levinson, former U.S. Vice President Al Gore, and Millard “Mickey” Drexler, CEO of J. Crew Group Inc., serve as directors.
Intuit Inc. Chairman Bill Campbell, an Apple board member since 1997 and co-lead director with Levinson, has served as an adviser to Google. Gore is also an adviser to Google.