Mehdi Ali: Commodore spinmeister

Last Updated on October 28, 2018 by Dave Farquhar

I found the thumbnail biography of one Mehdi Ali recently. It reads, in part:

“His prior experience includes serving as the President of Commodore International, where he accomplished a major operational turnaround.”

I don’t think he and I share the same definition of “major operational turnaround.”

Mehdi Ali: From special advisor to president

He worked for Commodore starting in 1986, as “special advisor.” He became president in 1989. Commodore did briefly experience a renaissance in the 1987 timeframe or so. In its February 1987 issue, on page 8, Ahoy! magazine compared it to the turnaround of Chrysler Corporation and The Monkees. But that resurgence was temporary, so the comparison proved overly generous. These days when you read about Commodore, more often than not it’s remembered as just being Irving Gould’s stock scam.

Commodore lost $237 million in 1986, so it had  nowhere to go but up when Ali came on board. 1987 was profitable and 1988 more so.

Commodore in 1987-1988

What was special about Commodore in 1987-88 was that it had products at several price points and none of them had a particularly bad year. At the low end, the venerable Commodore 64 sold its usual million or two units. At the high end, the Amiga 2000 came out, providing an expandable, big-box machine for professionals and superenthusiasts. The Commodore 128 and Amiga 500, Commodore’s second and fourth most successful products ever, held the middle ground. The 128 had a year or two left, and the Amiga 500 was at the beginning. And if you didn’t like any of that, Commodore had a couple of sturdy PC/XT clones.

With that lineup, Bill Lumbergh from Office Space could have had a good two-year run.

Those were peak years for the Amiga, which was finally looking like it might be able to take the baton from the 64. The original Amiga 1000 was revolutionary, but priced awkwardly. They fixed that with the Amiga 500 and 2000 in 1987. The Amiga 500, which cost $600 less, was the ultimate home computer for the day. The Amiga 2000, which cost $600 more, provided expansion capabilities for the high end. In 1987 and 1988, there was nothing else on the market like them.

Fleeting success

But the turnaround didn’t last. Ali became president in 1989. That year, Commodore lost money again in two quarters. Christmas of 1989 was profitable but income was 70 percent lower than it had been in Christmas of 1988. Then 1990 was more of the same, bouncing between profit and loss from quarter to quarter. Releasing the Amiga 3000 wasn’t enough. In a year that they released what was then the most powerful computer on the market, Commodore turned a tiny profit of $1.5 million for the whole year.

Meanwhile, Ali, his boss Irving Gould, and several other executives collected lavish seven-figure salaries while the operational portions of the company tried to figure out how to pay their bills. For example, in 1989, Ali netted $1.38 million. In 1990, it rose to $2 million. IBM chairman John Akers earned $713,000 in 1989. IBM was a much larger and more successful company.

Generally everything they did after 1987 was two years too late. The company had great products and ahead-of-its-time vertical integration. But since it never invested its profits in enhancing its chipmaking capabilities, it squandered those advantages. In time that vertical integration perhaps became a disadvantage. It took until 1994 for the company to run out of money, go out of business, and into liquidation. Ali was still president of Commodore at the end in 1994. During Commodore’s final 18 months, the company lost $374 million.

But back to the biography. It’s a generous take on those years. I won’t deny that Commodore turned around after Mehdi Ali came on board. The problem was that it didn’t take long for Commodore to turn back in the wrong direction again. If you’d like to have a look at the numbers yourself, I’ve collected Commodore’s financial history from 1978 to 1994 for your perusal.