Apple of No One’s Eye : CEO Amelio Takes On a Very Tough Assignment Today
Now comes the hard part.
As former National Semiconductor chief Gilbert F. Amelio takes the reins today as chairman and chief executive of Apple Computer Inc., he will find a company with both short-term and long-term problems that many industry analysts consider intractable.
At the outset, he’ll have to deal with Apple warehouses filled to the rafters with surplus Macintosh computers--about $1 billion worth--that must be sold before they become obsolete. He will see many executive offices empty because of defections and dismissals, and a work force immobilized by uncertainty.
As he deals with the immediate crisis, he will also have to design road map for Apple’s future. And with the company awash in red ink--it reported a $69-million loss for the last quarter and projects another shortfall for the current one--shareholders, customers and industry analysts are not likely to be patient.
For a time, Amelio can probably appease Wall Street by cutting costs, and may be able to bolster a stock price now languishing in the high 20s. Some investors are pleased simply that Michael Spindler was ousted as chief executive on Friday.
“There are obvious things Amelio has to do like cut costs and the like,” said Stewart Alsop, editor of Infoworld, an influential trade newspaper. “What’s more interesting is how he makes Apple a well-managed, viable company. I hate to use the word ‘vision,’ because it sounds so trite, but that’s what Apple needs.”
“Focus” is another word used by many industry watchers in talking about Apple, but there is little agreement on where the company should concentrate its diminishing resources. Tim Bajarin, president of Creative Strategies, a Santa Clara, Calif., consulting firm, believes Apple should concentrate on markets such as desktop publishing where the Macintosh is dominant, and where the profitable high end of the Mac line is strongest.
“Apple can’t afford to compete against the Packard Bells of this world who compete only on price,” Bajarin maintains.
But others believe it would be a mistake for Apple to retreat from the mainstream of the computer industry. Unless Apple remains a broad supplier of computers, it will lose many third-party applications software developers and thus sabotage its future, they say.
By moving out of the mainstream, Apple would also risk losing out on new opportunities such as those being created by the Internet computer network. Companies like Oracle and Sun Microsystems are working on a low-cost computer for browsing the Internet, and Apple has designed an inexpensive CD-ROM and Net-surfing machine called Pippin, which it is licensing to third parties. If Apple becomes a niche supplier, its ability to market a product like Pippin would be seriously undermined.
No matter what the strategy, Apple must also communicate its advantages to a broader audience--something at which the German-born Spindler, with his rambling speaking style, was particularly weak.
“If the chief executive of Apple can’t articulate in 15 seconds why a Macintosh is better than a Windows/Intel machine, then Apple has no future,” said Pieter Hartsook, editor of an industry newsletter based in Alameda.
Opinion is mixed as to whether Apple should continue to license its technology. Some, like Alsop, see little advantage in it. But Hartsook believes the small number of clone makers has brought new customers to Macintosh technology.
There are some who contend that Apple is unsalvageable no matter what Amelio does. “The depletion of talent at Apple has reached a point where the company is irretrievable,” maintains author and computer industry expert George Gilder.
But the new boss might at least bring day-to-day leadership to a company that sorely needs it. “Apple needs a conductor,” said a mid-level manager at the Cupertino, Calif.-based company. “We do well with our marketing so that people want our machines, and then we don’t have any to sell them. I expect my CEO to be on top of things like that.”
Amelio, who was unavailable for an interview, is said to have spent this past weekend in the country, recharging before starting his new position. He’ll need all energy he can muster.
* FAREWELL LETTER
Excerpts from ex-CEO Michael Spindler’s farewell letter to Apple employees. D4
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Erratic Earnings
Apple Computer has doubled its sales since 1990, but translating that growth into decent earnings has been problematic.
Sales (in billions)
1996 (Estimate): $12.0
Earnings per share (excluding extraordinary items)
1996 (Estimate): $1.00
Note: Figures are for fiscal year ended Sept. 30.
Source: Value Line Investment Survey
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Advice From All Sides
As the new chairman and CEO of Apple Computer, Gilbert F. Amelio must right a company staggered by losses, and exodus of talent and paralysis brought on by weeks of rumors that it is about to be sold. Here are some suggestions:
“Microsoft has been the leading developer for the Macintosh for years. If I was him, I would come up here and renew this relationship. Apple needs to learn that you can compete and cooperate.”
Pete Higgins
Group vice president of applications and content for Microsoft Corp.
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“It’s probably not what he wants to hear, but Gil should engineer a sale to Sun. Sun has all the energy, creativity and culture that Apple used to have.”
George Gilder
Industry expert
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“I think Apple is doing quite well. The press likes to believe one person makes a huge difference, but Apple is a huge company and that makes it hard to really change things.”
Steve Wozniak
Apple co-founder
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“If there’s one word, it’s focus. Apple needs to focus on which markets, which models, on elmployee morale and its customers. The only thing Apple should not focus on is Microsft.”
Guy Kawasaki
Apple fellow
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“I would narrow down the models of machines severely. I’d tell Apple to start blowing its own horn louder and clearer.”
Deborah Shadovitz
Officer of the 5,000-member L.A. Macintosh Group
