Management Exodus Speeds Up At Apple Computer Embattled Company Plans Cuts To Help Regain Its Footing
Management departures are already under way at Apple Computer Inc. on the eve of a major restructuring expected to result in widespread layoffs.
The company confirmed Thursday that four top executives, three in marketing, are leaving. A fifth reportedly will soon leave.
The departures continue a management exodus from Apple, which has been plagued by price cuts and high costs. The company said Wednesday it will reorganize and report an operating loss of $68 million for the important October-December quarter.
Four key executives left last year, including top marketer Dan Eilers, who was left without a role when Apple decentralized its marketing and sales operations.
The departures stem from that reorganization, said Apple spokeswoman Pam Miracle.
Among those leaving are Don Strickland, Apple’s vice president of business and government sales, Keith Fox, vice president of the home division, and Jim Groff, vice president of education marketing. Also leaving is Barbara Krause, vice president of corporate communications, who will start her own public relations company.
The four will leave over the next few months, Miracle said. She would not confirm that a fifth executive - Peter Friedman, vice president and general manager of Apple’s Internet sources - also was quitting.
Industry analysts say the Cupertino, Calif., company probably will lay off at least 1,000 of its 14,600 employees as part of its restructuring, expected to be one of its most extensive. Layoffs could reach 2,000 or 3,000, analysts said.
“I think the targets will be everything and everyone but especially the ranks of … management,” said John Rossi, an analyst with Robertson, Stephens & Co. in San Francisco. “They’ve got to give more power and responsibility to creative young people at lower ranks, cutting out his sort of thick middle layer that has built up.”
Apple will discuss its restructuring when it announces first fiscal quarter results on Jan. 17.
The company disclosed the loss after the financial trading ended on Wednesday. Apple actually rose 75 cents a share Thursday, closing at $35 on the Nasdaq Stock Market.
Analysts said investors had been prepared for more bad news. The company’s stock has fallen from $50 a share in June.
Apple, the nation’s No. 2 computer company, has slashed its prices to gain market share from industrydominating personal computers using Intel Corp. chips and Microsoft Corp. software.
Apple already has said it will concentrate on its core businesses: desktop publishing, video editing, education and the home. The restructuring will emphasize those strengths and ditch less profitable operations, analysts predicted.