Apple reshuffles but is mum on layoffs

Apple announces yet another reorganization, but remains quiet about upcoming layoffs as expected.

CNET News staff
4 min read
Apple Computer (AAPL) announced yet another reorganization today as a first step in a yearlong belt-tightening exercise, but the company left employees in suspense about upcoming layoffs.

Some Apple watchers had expected the company to announce exactly how many Apple workers will lose their jobs this year and exactly which divisions, if any, it intends to sell off. But as previously reported by CNET, executives kept mum on both those questions, prefering to concentrate on the less dramatic details of the latest in a long series of Apple reorganizations.

Apple, which reported its news after the market's close, ended the day at a 52-week low of 15-3/8, down 15/16. The previous low had been $16 per share.

The only surprise was the disclosure that the famed Steven Wozniak, an Apple founder and grade-school teacher, will join Steve Jobs as an adviser to Apple chairman and chief executive Gilbert Amelio. The pair will now participate in weekly executive committee meetings, bringing Apple almost full circle to its historical beginnings.

Wozniak, who of late has been in more contact with Apple after spending many years focusing on his teaching career, will advise on product ideas and serve as a sounding board on Apple's efforts in the education market, where its dominance is diminishing. (See related story)

Wozniak's return may also be calculated to inspire confidence in Apple diehards as the company is faced with plummeting revenues and a loss in market share and profits.

On a more practical level, today's reorganization also streamlines Apple's multiple marketing groups, reshapes its sales and marketing team, and focuses its research and development on key businesses.

Apple executives said the goal is to streamline operations so that products can get to market faster.

Apple's marketing operations is one area that will undergo major change. For the first time, the company plans to combine the marketing operations for each of its business units, including the newly acquired Next Software, into one worldwide marketing department headed by Guerrino De Luca. De Luca was previously the head of Apple's Claris subsidiary.

Satjiv Chahil, who formerly headed corporate worldwide marketing, will now serve in an advisory role to the marketing department.

Research and development will also be greatly consolidated. Apple's multiple product development organizations will be divided into two groups. One group will be a system software engineering team headed by Avie Tevanian, a vice president who came with the $400 million acquisition of Next. The hardware engineering group will be led by Jon Rubinstein, a former chief operating officer with FirePower Systems.

Ellen Hancock, who joined Apple last July as chief technical officer, will continue to head the technology office in charge of reliability and quality control, the Apple Fellows, and the advanced technology group. It's not clear if she will retain her CTO title, but an Apple spokesperson said that Hancock's role will not be diminished. Hancock was instrumental in Apple's decision to look outside the company for new technologies, a policy that lead to the Next acquisition.

As expected, the effort to create a brand-new operating system based on Next's technology will fall to Tevanian.

Marco Landi, former chief operating officer in charge of Apple's overall business plans, will head the company's worldwide sales and support organization. Sales and marketing for both Claris and Next will now report to this group.

George Scalise, who will oversee operations, and Fred Anderson, head of the finance and administration group, will see few changes to their responsibilities.

Each of the group heads will report to CEO Amelio. It is these executives who will recommend to Amelio by March which products, programs, and employees should be cut.

Analysts generally weren't surprised by today's announcement but said it makes sense for Apple to merge its marketing and research and development operations to save money

"Apple can't afford to have multiple departments," said John Rossi, an analyst with brokerage house Robertson Stephens.

Eugene Glazer, an analyst with Dean Witter, however, says he doesn't understand what Apple is getting from the reorg.

"This announcement was a prelude to headcount reductions," Glazer said. "I don't see how this will be potentially better. There will be fewer people to do the work and this isn't a company with a lot of fat."

He's concerned that Apple is moving too fast to slash costs as it anticipates a revenue drop this year of around 20 percent, or $1 billion.

The computer maker wants to cut $400 million from its operating costs to return to profitability by September. Amelio has said layoffs will be part of those plans, but the company has not released a specific number of job cuts. Industry watchers have speculated that Apple might get rid of 20 percent of its 13,000-member workforce. Published reports have also said that Apple may sell off its Newton device.

This is the second round of layoffs since the arrival of Amelio, a former National Semiconductor chief renowned for his cost-cutting skills.

Shortly after he arrived in February, Apple posted a $740 million quarterly loss and passed out pink slips to 1,500 employees. The company also underwent major management restructuring in an effort to stop the flow of red ink.

Under this first reorganization, Amelio formed a core of six senior executives to report directly to him. Each of the six business units had to break out its profits and losses for greater accountability.

Scalise said today that the first reorganization was designed to quickly grab control of the company's operations and assets, whereas the latest reorganization will concentrate on recapturing market share.

"If we didn't put our house to order, we would have run out of cash by June [of last year]," said Scalise. "But it turned out we were able to end the quarter with money in the bank."