There are a few different articles on this issue including:
Basically the NYT article stated that Bill Gates had a meeting with Gil Amelio, at Apple, on January 15th (the day Apple was announcing their quarterly results). That they discussed whether Apple would use WinNT and make Macs based on the Intel processor. The rest of the press picked up on this part, and went to town with their own articles, all based on an unreliable authors erroneous report.
My take is as follows -
Apple likely is talking to Bill Gates and Intel about a variety of different things -
Most likely among these is Apple has been discussing better Windows compatibility with many Mac models. Apple is likely to be designing some hybrid motherboards with both a PowerPC processor and Intel processor that could run both systems, and Apple has had Intel Processors on daughter cards for sale separately or included in Mac models for quite some time (Apple's DOS-Compatible machines and cards). Apple will likely extend this Windows compatibility in the future, and since the MacOS (and the Code Fragment Manager) have the ability to run other systems apps from within the MacOS - this too will likely come to pass - someday. For now I imagine Apple was just discussing what kind of licenses they could get for WinNT and/or pricing on Pentium processors.
Apple is also much more diplomatic of late, and likely extending the olive branch of peace to Intel and MS.
Apple has had interest in using WinNT in their server side of the market - though it seems likely that AIX, Solaris, or their own Rhapsody technology are better choices (for Apple).
Apple may have been just checking off possibilities on their Kernel for Rhapsody - just making sure that MS wouldn't give them the Kernel for free, or other possibilities on those lines. (Sometimes you just do you homework no matter how silly it is).
Then a reporter for the NYT got wind of some second (or third) hand information, added his own speculations, and wrote an article about it - along with his usual stuff trashing the Mac and spinning things as negative as possible. Those leaps in faith and errors became the one article that started a deluge of misinformation. I imagine the dates were wrong (seems like an odd date for the meeting), the location seems silly (no one would have a meeting they wanted to keep private on their home campus) and so I have little reason to believe they got the content of the meeting correct.
On a side note one should look at the reliability of the author of the article to judge the likelihood of what was said. The article was co-written by John Markoff. This guy likely wouldn't be allowed to write for the National Inquirer because of a lack of journalistic credibility - and the NYT is cheapened each time they run one of his ignorant pieces.
Most of this piece was devoted to Markoff's usual style - which is to think of how many creative ways to trash Apple and spin things negatively. (Also neither the NYT nor WSJ point out that they have business arrangements with MS which might taint their perceptions - I would also be curious if Markoff has MS stock, or is selling Apple short). Basically the article trashes Apple for a specialty luxury box they are creating and because a prototype didn't work during a demo (like that has only happened to Apple), trashes Apple for doing a more whizzy marketing blitz than ever before, tries to spin NeXT and Copland in the most negative light - then goes on to try to spin things that Apple is going to go out of business if they don't cave in and become Intel-clone manufacturers and WindowsNT application writers. And tries to make a link between Wall Streets perceptions and reality - like there is any relationship there.
Markoffs credits include -
Apple CEO Seen Backing Away From Price-Discounting Policy. Basically Gil Amelio had made a passing reference to Mag-Lite creating quality products and charging for that value, and Markoff ran haywire with that and said Apple is no longer going produce machines in the low end of the market. The original statement was taken out of context - and dramatic leaps were made - and nothing close to that was implied or came to pass. So this guy was way off base, but he was able to get attention and this article ran in 20 different flavors and started a sensation of misinformation.
In July '96 (after had socked away almost $2B in the bank for safety), Markoff ran an article expressing that Apple was looking at selling off its most critical technologies (including QuickTime, Newton, Printers, or Imaging divisions) to raise cash. Nothing close to this ever happened, and NYT seems to have edited their own history by removing this piece from their archives.
New Chip Offers Fresh Hope To Humbled Apple Computer. Here is the most negative spin you could put on the fact that the Exponential chips (x704) are going to be twice as fast as anything Intel has to offer in the same time frame. There are brilliant quotes in here like - " If you take away California, France and Japan, Apple has only 4 percent market share". What relevance that has to the new exponential chip, or Apples sales is beyond me. It goes on to quote the technologically ignorant and bias making commentaries on Apple technology. Then spends the rest of the article bashing Apple and saying how they are clawing to hang on to their 70% (roughly) publishing market share (without pointing out the actual percentages), and delves into the PowerBook issues with low accuracy and relevance.
I believe Markoff also wrote a couple of commentaries on the Apple-Sun merger rumors, but most of his spins sounded like a beleaguered Apple was going to be bought out by Sun at fire sale prices - and then scrapped for parts. The realities were closer to Apple and Sun talking about merging technologies (and Companies) because their technologies complemented each other. While Apple has chosen to remain separate as a company, much of the technological merging has come to pass with much tighter cooperation in development. So once again Markoffs spins seemed to miss the mark, and his predictions were not exactly "on-target".
So Markoff has a history of missing the mark when he discusses Macs, and consistently spinning things in the most anti-Mac light. This is not an unbiased observer, and does not even seem to be a very good journalist. So I take his articles (and its derivatives) with a rather large grain of salt, and recommend that others do the same. The derivative articles off of Markoffs initial article seem even more distantly related to anything resembling facts or unbiased analysis - something similar to the kiddie game of telephone where kids whisper a message in each others ear down the chain until it resembles Markoffs spins on Apple.
Apple probably did talk to MS and/or Intel - but likely not about replacing Macs PPC based Hardware with Intel Chips, nor about replacing the MacOS with the technologically inferior Win95 or WinNT (from a users perspective of usability). It was likely not at the date or locations implied in some of the articles. And lastly that Markoff is a biased sensationalist jerk whose articles should be Marked-off!