Reprinted from MacWEEK, 3 October 1989. Courtesy John Woodall.
San Francisco – A jury must decide whether Apple’s “unqualified
optimism” about its failed Twiggy disk drive deceived investors in the
early 1980s, but similar Apple exuberance about the ill-fated Lisa computer was
not legally misleading, a federal appeals court ruled last week.
The ruling, by the 9th U.S. Circuit Court of Appeals here, came in a
shareholders’ suit filed after Apple’s stock plunged 75 percent in 1983
as a result of the product’s failure. The court upheld a 1987 ruling by
U.S. District Judge Robert Aguilar that extensive press coverage portraying the
Lisa as a gamble balanced Apple’s upbeat statements about the machine, which
was the Mac’s pioneering but unsuccessful predecessor.
Overturning another aspect of Aguilar’s earlier ruling, however, the appeals
court said Apple and its top officers in 1982 – including John Sculley, Steve
Jobs, Mike Markkula and Delbert Yocam, among others – should face jury trial
to determine whether “Apple’s failure to disclose Twiggy’s technical
problems had no misleading effect on market price.”
Twiggy was a proprietary high-density double-sided 5.25-inch floppy drive intended
to work with the Lisa and other Apple computers. Shortly after unveiling the
Lisa, Apple replaced Twiggy with another drive technology.
While the company was proclaiming Twiggy’s superiority, “internal tests
conducted by Apple indicated slowness and unreliability in Twiggy’s
information-processing capabilities,” the appeals court said.
Apple spokeswoman Carleen LeVasseur hailed the decision as reaffirming “our
position that Apple acted properly at all times and did not violate
“We continue to be confident that the remaining issues in the case will
be resolved in our favor,” she said.