Turnaround · United States · 1997–2007
Apple 1997: from near-bankruptcy to the iPhone
When Steve Jobs returned, Apple had lost about $1 billion in a year and had a confusing product range. He cut it to four products and rebuilt the company around a few great ones.
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
by the numbers
- Loss (fiscal 1997)
- about $1 billion
- Microsoft investment (1997)
- $150 million
- Product grid after cuts
- 4 core products
- Revenue, 1997 → 2007
- about $7B → $24B
What happened
By 1997 Apple had a sprawling, confusing line-up of computers, printers, and devices, falling market share, and heavy losses — about $1 billion in fiscal 1997. Jobs later said Apple was within about 90 days of running out of cash. Apple had bought Jobs's company NeXT in late 1996, bringing him back, and he became interim CEO in 1997.
Jobs drew a two-by-two grid — consumer and professional, desktop and portable — and cut Apple's range to one product in each box. He ended the licensing of Mac clones, struck a deal for Microsoft to invest $150 million and keep making Office for Mac, and launched the ‘Think Different’ campaign. The colourful iMac (1998) became a bestseller and Apple returned to profit.
Apple then used its focus and design strength to enter new categories: the iPod (2001), the iTunes Store (2003), and its own retail stores. The iPhone in 2007 transformed the company. Revenue grew from about $7 billion in fiscal 1997 to about $24 billion in fiscal 2007.
Timeline
- 1996
Apple buys NeXT; Jobs returns as adviser.
- 1997
Jobs becomes interim CEO; product line cut; Microsoft deal.
- 1998
iMac launches; Apple profitable again.
- 2001
iPod and first Apple Stores.
- 2007
iPhone launches.
what made it work
- Ruthless focus — saying no to most products.
- Pragmatic deal with a rival to secure short-term survival.
- Design and brand as the core differentiator.
- Used each success to fund the next category.
the lesson
In a crisis, cutting to the few things you can do brilliantly is often the fastest way back.
Apply it to your business
- 1Draw your own product grid — what can you cut?
- 2Partnering with a competitor can buy time to recover.
- 3Clear, simple product ranges are easier to sell and market.
Laws at work in this story
Figures are rounded and drawn from public reports, company filings and widely cited coverage at the time. Check the company's latest filings before relying on any number.