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Wednesday, August 30, 2006 - Page updated at 12:00 AM

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Google's Schmidt joins Apple board

The Associated Press

SAN FRANCISCO — Apple Computer named Google 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 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 past compensation practices and exposed Apple to a possible delisting 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, 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."

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 Google and 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.

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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.

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 CEO Millard "Mickey" Drexler, Intuit Chairman William Campbell and Genentech CEO Arthur Levinson, who also serves on Google's board.

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