Apple Makes Sweeping Changes Among Execs
Apple Computer Inc. announced a sweeping executive reorganization Tuesday, giving Steven Jobs and Steve Wozniak potentially powerful decision-making roles at the company they founded in 1976 and streamlining the troubled computer maker’s fragmented marketing efforts.
Apple executives acknowledged that layoffs will take place but said the number will not be announced until the end of the month. As many as 3,000 of Apple’s approximately 13,000 employees could be laid off, according to company insiders.
Announcement of the reorganization came one day before Apple’s annual shareholder meeting and nearly a year to the day after Apple Chairman and Chief Executive Gilbert Amelio assumed control of the ailing company. This is the second reorganization Amelio has ordered, with the changes necessitated by dramatically diminishing sales and a $120-million loss for the quarter ended in December, typically the best sales period for computer manufacturers.
In January, after the latest earnings were released, Amelio had warned that for Apple to break even, the company would have to cut $400 million in costs--the same amount Apple agreed to pay in December to acquire Jobs’ company, Next Software Inc.
Tuesday’s announcement was made after the close of the stock market. Shares of Apple fell 94 cents to $15.375 on Nasdaq, its lowest price since 1985.
Indeed, the reorganization was designed to appease shareholders by giving them an indication of how Amelio plans to bring the company back to profitability.
“We had a multiplicity of product development programs, we had a multiplicity of marketing organizations that the company can no longer afford,” said Guerrino De Luca, former president of Apple’s Claris software subsidiary who Tuesday was named head of its centralized marketing efforts.
De Luca has been replaced at Claris by Dominique Goupil, formerly sales and marketing vice president for the software unit.
Wozniak and Jobs, the latter of whom returned to Apple in late December in a part-time role as advisor to Amelio, will join Apple’s decision-making executive committee. The Apple co-founders, who separately left the company in 1985, will serve as part-time advisors. Company insiders say Jobs has become Amelio’s trusted confidant and has played an important role in the restructuring plan, particularly in the demotion of Apple Chief Technology Officer Ellen Hancock.
Hancock, who was stripped of systems software development duties Tuesday, has disagreed with Jobs on how to proceed with Apple’s radical rewrite of its Macintosh operating system, company insiders say.
Hancock, a 28-year veteran of IBM, has been replaced by Jobs ally Avie Tevanian, former research and development chief for Next. Ironically, Hancock was instrumental in bringing Jobs back to Apple. Last summer, she pulled the plug on Copland, the ill-fated new version of the Macintosh operating system, and encouraged Amelio to acquire Next, proposing its technology as a replacement. Next’s software forms the foundation for a new version of the Macintosh operating system scheduled for release later this year, and its acceptance is crucial to the company’s turnaround. Tevanian will report to Amelio.
Under the new organization, Hancock, whose title has not been determined, becomes head of Apple’s technology office, giving her responsibility for “reliability and quality,” as well as the company’s advanced technology projects, the company said.
Hancock expressed disappointment with the change in her responsibilities.
“It would be fair to say I’m not elated, but I’m going along with it,” she said in an interview. “This was done because Gil wanted to directly manage . . . software.”
Another loser in the reorganization is Satjiv Chahil, formerly senior vice president of corporate marketing, who will serve as a consultant to De Luca for an indefinite period.
Amelio had been sharply critical of Apple’s marketing efforts, which he called “wimpy” during a recent company meeting. However, Chahil has had little authority for marketing programs that were the responsibility of Apple’s half a dozen product groups.
Amelio said the groups will be streamlined into three areas in which Apple has a strong following: publishing, education and consumer marketing--with an emphasis on Internet products.
In addition, Chief Operating Officer Marco Landi was named head of worldwide sales and support, only a small portion of the responsibilities he previously held. Chief Administrative Officer George Scalise will assume responsibility for manufacturing in his new role as operations chief. Apple newcomer Jon Rubenstein, formerly chief operating officer of Motorola-owned FirePower Systems Inc., a Silicon Valley start-up that makes desktop computers, will head hardware development, an area previously overseen by Landi. Rubenstein will report to Amelio.
Amelio continues to examine ways for the company to cut costs, and rumors continue to circulate that Apple will dump money-losing product lines, such as its hand-held computer, Newton, and its game player, Pippin. Company executives have declined to comment on the speculation.