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Amelio Sits Down in Spindler’s Chair

Just days after Apple Computer chairman A. C. Markkula told concerned shareholders that Apple’s Board of Directors supported Michael Spindler, the board "agreed that it was in the best interest of Apple Computer to have a transition in leadership." Last Friday evening, Apple’s board announced the replacement of company president Michael Spindler, effective immediately, by National Semiconductor boss Gilbert Amelio. In an unprecedented move, Amelio was also named chairman, giving him solid control over the company. Markkula, one of Apple’s founders in 1977, will continue to serve as vice chairman.

The move comes on the heels of a string of changes at Apple following last quarter’s significant financial loss (which came at the same time Apple shipped more Macs – including over a million based on PowerPC technology – than in any other quarter in its history, totalling sales of over $3 billion). Among the changes were a major restructuring announced in mid-January, with goals of a reduced staff and a consolidated use of financial resources in markets that have traditionally seen duplicate efforts. Rumors of an impending merger or acquisition resurfaced last month as well, with Sun Microsystems discussed as a suitor in the pages of publications such as MacWEEK, the Wall Street Journal, Newsweek, and the New York Times. (See recent TidBITS issues for details.)

In response, Apple has created an Apple Americas organization from the separate Apple USA, Apple Canada, and Apple Latin America divisions under Jim Buckley, Apple USA’s president. Though technically a regional change, Apple Americas should provide a major component of the required streamlining. Apple announced last Wednesday that Buckley’s management team would include Apple veterans Mike Dionne, Terry Crane, and Mike Lorian as senior vice presidents of the Business Markets Division, Education Division, and Consumer Division, respectively; this group will be responsible for the lion’s share of Apple’s marketplace. (Lorian’s appointment is described as an acting position.)

Spindler, a German engineer who helped Apple break into the European market in the late 1980s, replaced John Sculley in 1993, about ten years after Sculley took the place of Steve Jobs. In each case, the CEO’s departure could not be described as voluntary or happy.

Amelio has clearly taken to heart the title of his recent book; Profit from Experience, co-written with Bill Simon, chronicles Amelio’s transformation of the National Semiconductor Corporation into a leaner, more profitable business. Since he joined the company in 1991 as president and CEO after leaving his president’s post at Rockwell International, Amelio has been credited with the company’s dramatic reversal of fortune, including record earnings the past two fiscal years. (The company lost money in eight out of the eleven years prior to his arrival.) Just last July, Amelio was elected chairman of National’s board.

Amelio is no stranger to Apple; he has served on the company’s board of directors since last year, and Apple has long been a National Semiconductor customer. At the same time, Amelio has been serving on the board of Pacific Telesis and is on the board of governors of the Electronics Industry Association.

The challenge before Amelio is to accomplish what Apple has been struggling to do since profit margins began to drop precipitously a few years ago: focus product lines and markets to maximize profit margins, while reducing costs. Apple’s loss last quarter, despite record sales (both in unit volume and dollars), clearly shows that the company must change the way it does business in order to stop losing money.

It’s not likely to be an easy transformation for Apple; Amelio’s successes at National came at the expense of thousands of layoffs, closed divisions, and shut down factories. At least the stock market seems to think the changes will be good for Apple. Even though Apple didn’t release an official announcement until after the U.S. financial markets had closed, Apple stock traded heavily on Friday, closing at $29.25, up 88 cents, on the strength of National Semiconductor’s 8:30 AM announcement of Amelio’s departure and the quick spread of the unofficial news. /1996/q2/

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