Amelio: No hugs, just hisses

Last year, as Apple (AAPL) was hemorrhaging red ink and facing a cash shortage, Gilbert Amelio stepped into the hot seat as chief executive.

His arrival in February 1996 heralded great hope: He did, after all, hold a Ph.D. in physics and was coauthor of a book impressively titled Profit from Experience: The National Semiconductor Story of Transformation Management.

But now, 17 months after taking the reins, Amelio is leaving. And he holds the dubious distinction as the Apple CEO with the briefest tenure.

His departure, along with his executive vice president of technology Ellen Hancock, marks the end of a key chapter--albeit a short one--of Apple's tumultuous history.

Amelio leaves the company with its stock trading at the lowest price in more than a decade, market share that has declined to less than 5 percent in the United States, and losses during his leadership that are expected to exceed $1.6 billion when the company reports its third-quarter earnings next Wednesday.

Amelio's early history showed promise. Soon after his arrival, he recruited a promising team of executives from his old stomping grounds at National Semiconductor. Hancock was named chief technology officer in charge of revitalizing Apple's operating system strategy and George Scalise eventually rose to chief operating officer.

Former executives said the first 100 days of Amelio's tenure lead to a swift stabilization of the company's finances and renewed investor and employee confidence.

He made a contract with the public and Apple's employees. Said one former executive: "He said when things go well, I'll give credit. And when there's bad, I'll take the blame."

But those words rang hollow to employees as the turnaround effort failed.

The executive said that in a speech to employees at the beginning of the year, Amelio told employees that he would have to make some tough decisions and blamed them for the need to restructure. "It was the exact opposite of what he promised," the executive said. "He took all of the credit and shared none of the blame."

Amelio could not be reached for comment. A woman who anwered the door at his home in Los Altos, California, identifying herself as a "housesitter," would say only that the departing chief executive was not expected back for sometime.

Another former executive said it is no surprise that Amelio is leaving. He characterized the CEO as a slow decision-maker prone to allowing others to manipulate his vision for the company.

But Ike Nassi, former head of Apple's operating systems division, said that the challenges facing Dr. Amelio may have been insurmountable.

"The PC industry is a tough one, and I think Gil at times thought he could control more of Apple's success factors than was actually possible," he said. "Unfortunately, Apple has lost a great deal of talent under his tenure at a time when it needed insanely great talent, creativity and energy."

After the company purchased Next Software to revamp its new operating system, Next president and Apple cofounder Steve Jobs came aboard as a consultant to the executive committee.

Jobs has repeatedly denied in published reports that he has any interest in taking over the company. However, former executives say that they have heard Jobs describe Amelio and Hancock as "bozos." Jobs, through his assistant, declined to comment.

Since Jobs arrived, Amelio relied heavily on the former founder's advice, according to executives. Amelio's former right-hand man, Scalise, left last month to take a job as president of the Semiconductor Industry Association.

Hancock, who earlier this year was reassigned as executive vice president of technology after former Next employee Avie Tevanian took over the new operating system project, today also announced her resignation. With Amelio's departure, a new interim management team was announced.

"I will be working to close down next week," Hancock wrote in an email to CNET's NEWS.COM. "Given the new leadership in the company, I do not believe that I would be able to operate very effectively. I had stayed to help Gil since he is now leaving, that gave me another reason to leave."

Along the way, a number of other key executives were either fired or resigned, including Marco Landi, former chief operating officer. The company also slashed 2,700 full-time employees from its payroll, along with 1,400 temporary workers in the latest restructuring to obtain profitability in the fourth quarter.

Not all is lost for the departing senior executives, however. Amelio takes with him a severance package of about $3.5 million, according to a five-year employment contract. Hancock will receive a base salary of at least $480,000 and the potential to earn a bonus of $360,000.

Reporter Tim Clark contributed to this report.

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