A Very Messy Divorce

By JOHN F. DICKERSON/MANHASSET

On a sunny weekend day last September, John Sculley scribbled a note on the screen of his Apple Newton palmtop computer in the living room of his Greenwich, Connecticut, home. "Let's make Spectrum a world success," he wrote to Peter Caserta, president of Spectrum Information Technologies. Caserta and his aides, who had come to woo Sculley, then demonstrated how their wireless technology could reproduce the scripted message on a fax machine a few rooms away. As the fax whirred, the former chairman of Apple Computer saw visions of a global wireless revolution and his own role in it. "That's when the light bulb went off in my head," he remembered. Within weeks, Sculley and Caserta announced their corporate betrothal, whereby Sculley would become Spectrum's new chief executive, bringing to the marriage the reputation of a man who had transformed Apple from an $800 million upstart to an $8 billion giant.

Last week the marriage ended as precipitously as it had begun. Sculley resigned from Spectrum and filed a $10 million lawsuit against Caserta. Two days later, Spectrum countersued for $300 million.

With a vision he once publicly compared to Barry Diller's plans for QVC, Sculley had hoped to parlay the valuable patents of the once little-known company into a behemoth befitting a new name he dreamed up for Spectrum: Global Wave Communications. What was to have been a comeback for the 54-year- old executive, who stepped down last June after failing to restart Apple's stalled rise, instead poses new questions about his business acumen.

Sculley claims that he was hoodwinked and blames Caserta for tarnishing his image. His suit charges that Caserta made "fraudulent misrepresentations" in order to reap profits on the stock-price increase inspired by his hiring. Indeed, Spectrum shares rose from 3 1/4 to 11 1/8 on the announcement, and a month later, Caserta and two of his top executives cashed in some of their options for a reported $13.2 million profit. It was not until late last month, says Sculley, that he learned of an eight-month-old investigation of the company by the Securities and Exchange Commission. Nor did he find out until after becoming chief executive that Spectrum had been using aggressive accounting practices to report licensing fees. At Sculley's insistence, Spectrum recalculated its earnings for the past six months using more conservative methods. A restatement, issued just moments before his resignation, turned the company's earnings for that period from a $1.1 million profit to a $5.3 million loss. "If I had been properly informed," said Sculley in a press release, "I would not have joined the company."

Caserta denies that he and his colleagues were out to make a fast buck, and says Sculley was made aware of their plans to sell stock. His company also denies that Sculley was kept in the dark about the SEC inquiry, claiming that Spectrum executives briefed him at a dinner three days before he signed his employment contract.

Caserta and his fellow Spectrum officers are also accusing Sculley of concocting his charges as part of a shrewd "exit strategy" that would release him from his employment contract. "He wanted out. He didn't relate to us. He was like a fish out of water," Caserta told TIME last week. "He needed someone to attack so that he could get out of this gracefully."

Spectrum also contends that Sculley's Monday- morning phone call to ensure + that the restatement of earnings was released came five minutes before he announced his resignation. It was not, the company says, a final act of fiduciary duty, as Sculley claims, but a maneuver to protect himself by covering a potentially negative market reaction to his departure with an equally depressing earnings report. In record trading volume Monday, Spectrum's stock lost more than half of its value -- dropping from 5 9/16 to 2 1/4. At week's end the company's shares, once as high as 13 1/8, were trading at 3 3/8.

Sculley's lawyer responded to the Spectrum suit by accusing Caserta of "combining shreds of facts with wild, unsubstantiated theories to arrive at the version of events he desperately wants the world to believe." Sculley claims to have investigated the company thoroughly before signing, but his suit suggests otherwise. Though rumors of an SEC investigation had been swirling since May, Sculley says he took Caserta at his word that there were no outstanding "problems" at the company. Also slipping through Sculley's inquiries were the aggressive accounting measures he lists among his reasons for leaving. The same procedures were included in a quarterly report filed before he joined the company. Sounding oddly like one of Sculley's detractors at Apple, his spokesman conceded, "He paid more attention to the patents and technology than the financial stability of the company."

As in most divorces, the courts will take months to sort out who did what to whom. Meanwhile, Sculley did manage to make an appearance Thursday at Vice President Al Gore's panel on the information highway. When it came time to introduce himself, he said, "I'm John Sculley, and I don't work for anybody." Given his recent troubles, that might just become a permanent answer.