Remember When Apple Was the J.C. Penney of the Tech World?

Before you go, we thought you'd like these...
Before you go close icon
Steve Jobs 1997There's no question that what Apple (AAPL) has accomplished in the past 15 years is truly remarkable. All of the new products, the innovative retail stores, and the explosive stock price have put the company in a class above anyone else.

But what's even more remarkable is where Apple was when Steve Jobs returned to the company in 1997.

Back then, Apple was hardly a healthy tech company. In fact, it was struggling to even survive.

What Happens When Giants Fumble

Turnarounds are what legends are made of. The much more common outcome of a revival plan is what appears to be happening right now to another big brand -- J.C. Penney (JCP).

Earlier this week, J.C. Penney's merchandising and marketing head, company President Michael Francis, stepped down not long after the company reported an 18.9% drop in quarterly sales. Francis was a star at Target (TGT) and was supposed to team with another Target alum, the man behind Apple's retail kingdom, CEO Ron Johnson, to help turn the struggling retailer around. The star duo hasn't succeeded so far, and another potential turnaround tale appears to be fizzling.

J.C. Penney's story arc could have been Apple's, too.

A Rotting Core Business

In 1997, the year Jobs returned as CEO, Apple saw sales fall 28% to $7.1 billion and the company racking up a loss of $1 billion. Times were so desperate that archrival Microsoft (MSFT) was brought in to invest $150 million to help save the company. (Now Bill Gates has his own $160 billion issues to deal with.)

Sponsored Links
The following year, sales fell another 16.1% and Apple's sales would amount to only slightly more than a third of what Microsoft's were. The company was clearly heading in the wrong direction.

The iPod didn't exist. The iPhone wasn't even a twinkle in Steve Jobs' eye. The iPad was more than a decade from being a reality.

If you would have told someone in 1997 that Apple would go on to become the largest company in the world, they would think you were nuts. That's not what happens to dying tech companies trying to compete in a largely commoditized business.

Steve JobsNow Look Who's Eating Apple's Dust

There simply aren't many stories of turnarounds like this, and none with the incredible rise to fame, fall to disgrace, and rise from near death that Apple went through.

Certainly, other tech giants haven't fared nearly as well as Apple since 1997. They've struggled to adjust from the days of stacking up piles of cash in the 1990s and early 2000s to today's ultra-competitive landscape.

Sony (SNE) has tried almost everything to stay relevant to the younger generation. The company that gained fame by bringing us the Walkman -- the first widely accepted portable music player -- had a similar fall from grace as Apple. But CEO changes, layoffs, and a slew of new products haven't had nearly the same result there as at Apple.

Dell (DELL) is going through similar trials: Since its peak in 2000 the company can't seem to gain traction. While Apple dominates the high end of the PC market, Dell struggles against low-cost competition from China.

Then there are companies such as Motorola, Zenith, and Kodak: All once were major figures in new technology, but they've been forced into bit player status or bankruptcy. And on the retail side, while Apple's retail presence is expanding, we've watched electronics retailer Circuit City forced to file bankruptcy and Best Buy (BBY) fight to stay relevant.

Making Lightning Strike Twice

Many have tried to copy Apple's retail success. But even the man behind the Apple Store concept, Ron Johnson, has been unable to re-create that hat trick elsewhere.

5 Companies Americans Can Be Proud Of
See Gallery
Remember When Apple Was the J.C. Penney of the Tech World?

Nucor (NUE)  A company in a cyclical industry like the steel-making business could certainly be excused for paring down its workforce during tough times. During the Great Recession, Nucor's revenues were cut in half -- and yet the company didn't lay off a single worker.

Following a plan instituted by his predecessor, F. Kenneth Iverson, CEO Dan DiMicco has the company carry out a "pain-sharing" program when business is slow. Executives are the first to take pay cuts -- and they can be steep. After that, hours are reduced. That can hurt, but in the end, everyone keeps their jobs.

Whole Foods (WFM)  Sure, it's great that this grocer is encouraging Americans to eat smarter, but that alone isn't enough reason to celebrate it. The presence of Whole Foods has encouraged the proliferation of organic foods, which are unquestionably better for the environment. The company's color-coded seafood sustainability index encourages customers to consume responsibly, and it has taken huge steps to encourage sustainable farming in Costa Rica.

But it doesn't end there: Whole Foods also has an admirable approach to salaries. Co-CEO and founder John Mackey gets a $1 salary and took home just $78,000 in 2011 in accrued vacation time; no executive is allowed to earn more than 19 times the average worker's total pay.

Berkshire Hathaway (BRK-B)  Warren Buffett's baby makes it on to the list for how it's run: with an uber-long-term horizon and the utmost respect for shareholders. Arguably the greatest investor the world has ever seen, Buffett has also set the standard for transparency when it comes to communicating with the financial community.

Case in point: the David Sokol fiasco of early 2011. Sokol, one of Buffett's top charges, convinced Berkshire that Lubrizol -- a chemicals company -- was worthy of acquisition. The problem: Sokol held a substantial amount of Lubrizol shares that stood to appreciate upon the acquisition, and he didn't disclose the holding.

Sokol left the company around the time this information became known. Buffett was quick to give a full account of the situation, baring all for outsiders to see -- including his later bewilderment with Sokol's behavior.

Starbucks (SBUX)  Sure, it's easy to see this coffee king as a symbol of all that's wrong with corporate America. Satirical newspaper The Onion once joked that the stores were so ubiquitous, a new Starbucks was being opened in the restroom of an existing Starbucks.

All jokes aside, the company has been a model employer and partner with suppliers. Any employee who works just 20 hours per week is given health-care coverage. During the economic downturn, the company spent more money on this benefit annually than it did on all the coffee it bought. Starbucks has spearheaded the move for fair-trade coffee as well. It is the world's largest purchaser of fair-trade coffee, and it often pays above market value to its producers in developing countries.

And this past year, CEO Howard Schultz launched a drive to kick-start American job growth. In the program dubbed "Create Jobs for USA," the company collects donations from customers. All of the donations are poured into a fund that facilitates micro-loans to spur small-business job growth.

Costco (COST)  Competitor Walmart (WMT) has been in the headlines a lot lately. Whether it's for bribing officials in Mexico or not allowing employees to form unions, there seems to be a dark cloud hanging over the company. So why doesn't Costco get any bad press when the majority of its employees don't have union representation either?

It's actually quite simple: The company believes in its employees, and it backs that up with its actions. Employees are paid an average of $17 per hour and have generous health-care and retirement benefits -- two things Walmart employees certainly can't claim.

And customers are huge beneficiaries as well. Costco has razor-thin margins -- which means nearly every penny of savings Costco can squeeze out using its size and efficiency is passed on to customers. The company's profits, in fact, are almost entirely accounted for in membership dues -- not sales. The approach has worked out well for shareholders, too; including dividends, Costco shares have returned 131% over the past decade, doubling what the larger market has offered up and quintupling Walmart returns.

What Johnson learned at Apple, and what both he and Michael Francis learned at Target hasn't yet given them the keys to turn J.C. Penney into a success. They weren't the first to try a turnaround and they won't be the last, but no one does it like Apple.

For more on three companies that are poised to rule the tech world in the future see The Motley Fool's free in-depth video report.

Motley Fool contributor Travis Hoium manages an account that owns shares of Apple and Microsoft. You can follow Travis on Twitter at @FlushDrawFool. The Motley Fool owns shares of Best Buy and Apple and has sold shares of Sony short. Motley Fool newsletter services have recommended buying shares of Apple.
Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading