Apple Lays Off 900; CEO Takes Pay Cut of 15% : Technology: The firm is cutting costs as part of its effort to gain market share with a new line of low-priced Macintosh computers.
Apple Computer Inc. laid off 900 people Thursday, and Chief Executive John Sculley--under fire for a fat compensation package--unexpectedly agreed to take a 15% pay cut.
Apple announced last month that it will eliminate 1,560 jobs through layoffs and attrition, and it appears that almost all the cutbacks will come in the form of layoffs. The first 900 “pink slips” were delivered Thursday, and another 400 layoff notices will go out within three weeks, according to spokesman Christopher Escher.
The layoff plan has thrown the Cupertino-based personal computer company into turmoil as employees wait to see who gets the bad news. An employee group held a protest rally outside company headquarters Wednesday and has raised the possibility of forming a collective-bargaining unit.
In an apparent effort to quell growing resentment over high executive pay, Sculley agreed to a 15% cut from his 1990 $2.2-million salary and bonus package. Sculley took in another $14 million last year from a stock plan.
Other senior executives, including Chief Operating Officer Michael Spindler, will take a 10% pay cut, and vice presidents and directors will absorb a 5% reduction. Escher said a total of about 50 executives would see their salaries reduced.
In addition, the company will temporarily stop issuing stock options, which often represent a substantial source of income for company executives.
Apple is cutting costs as part of its effort to gain market share with a new line of low-priced Macintosh computers. The new machines have proven popular, but margins have dropped from more than 55% to around 45%, and profits dipped slightly to $131.1 million in the first quarter.
Although financial analysts say some work force reductions are necessary, Apple management has apparently created a serious morale problem with its handling of the layoffs. The company was still hiring until early this year, and Escher acknowledged that management seriously misjudged the extent to which the low-price strategy would cut into earnings.
At the protest rally employees read from Sculley’s book “Odyssey,” which urged companies to resist becoming slaves to short-term earnings considerations.
