The ousting of Apple CEO Gil Amelio and chief technology officer Ellen Hancock is being interpreted as the beginning of the end for the vendor.
Apple chief financial officer Fred Anderson confirmed that the board was unhappy with Amelio?s performance. Since taking the helm from Michael Spindler 17 months ago, Amelio has presided over a 50 per cent drop in Apple?s share price and a loss of $1.64 billion.
Anderson, who is standing in as interim CEO, said in an official statement: ?We?ve strengthened our cash position, we?ve lowered our break-even point and we?ve improved product quality. But the fact is we?re not on a growth path.?
The timing of the resignations ? exactly a week before the company is due to announce its quarterly financial results ? has fuelled speculation that the results are even worse than analysts predicted.
On Wall Street, faith in Apple is at rock bottom. Reuters reported the day after the resignations that of the 27 analysts which follow Apple, 21 suggested shareholders sell.
With stock price at a 12-year all-time low of $13 dollars a share, it now seems viable that a rival could purchase the company. Inevitably, speculation was rife that Oracle CEO Larry Ellison, who made a half-hearted bid to acquire the company earlier in the year, will move in. Ellison has commented that the Apple operating system could be run very effectively in a network computing environment. Oracle has issued a tight-lipped ?no comment?.
Despite Apple?s financial troubles ? the manufacturer lost #1.64 billion and laid off nearly 5,000 staff while Amelio was CEO ? its operating system is still rated by many as superior to Windows. It has a loyal customer base in niche markets, notably publishing and graphics, which account for about an 80 per cent share.
But market share for Apple units sold is diminishing rapidly against the onslaught of Wintel and, increasingly, Mac clones. Mark McGillivray, at US consultancy H&M Consulting, said: ?Apple?s options are more and more limited. Its stock price will probably go down to $10 a share. At this point you and I could buy Apple. I think somebody like Sony, Matsushita or Motorola is now the most serious contender. It?s now out of the league of the likes of Ellison.?
It seems likely that the Mac OS will survive in some form for a number of years, but the platform is less and less dependent on Apple. Dataquest reported that in the US, clones have more of the Mac market share than Apple. Power Computing has announced its intention to sub-license the Macintosh operating system from IBM.
The Mac OS may be fated to go down the same road as the Amiga, which fell victim to vendor Commodore?s bankruptcy, but has been kept alive by enthusiasts, who have continued to write software for it.
If, as analysts predict, the writing is on the wall for Apple, it may still continue to license one of the most popular operating systems in the history of computing. But if it attempts to weather the storm in its current form, how long can it last? Lou Mazzucchelli, analyst at investment bank Gerard Klauer Mattison, estimated that without a return to profit, the company has around $1.5 billion in cash ? enough money for 18 months to two years.
Apple may have to forgo its hardware business to survive. The next CEO faces the toughest task in the industry.
Dealers anticipate recovery
Apple UK dealers have reported customer concern after the resignation of CEO Gil Amelio, but seemed surprisingly upbeat.
Hugo Kirby, managing director of Apple corporate reseller Trams, said: ?Apple UK seems to have turned a corner. We?re getting some positive feedback from customers, the product ranges are promising and delivery has improved.?
One reseller seemed more affected by the resignation of Ellen Hancock than her former National Semiconductor colleague Amelio. Kashif Merchant, sales manager at London reseller Micro Anvika, said: ?Ellen Hancock?s resignation is a shock. But maybe Apple needed someone less sedate than Gil Amelio. This might be what the channel needs to rejuvenate the market.?
But resellers were alarmed at the timing of Amelio?s resignation. One source said: ?The fact that Amelio has bailed out just before the results doesn?t bode too well.? He said the best hope now was for an acquisition by another IT company.
The channel seemed braced for the possibility of a buyout. A source said: ?With the right management, Apple could put its troubles behind it for good. But we need someone with a bit of vision.?
- Amelio is the third CEO to leave Apple due to management disagreements in the last four years. In 1993, former Pepsico executive Michael Spindler replaced John Sculley after Apple lost a copyright wrangle against Microsoft over the Windows OS. Sculley joined Apple in 1985, then ousted Steve Jobs.
Spindler, another technologist with limited management skills, presided over a 48 per cent drop in fourth-quarter profits. Amelio replaced him in January 1996.
1997: The year Apple fell to earthMarch
Apple restructures, losing 4,100 jobs worldwide and slashing technologies including Cyber Dog and Open Doc
April Apple UK axes around 20 per cent of its workforce in a restructure
May Oracle CEO Larry Ellison ends second hostile takeover bid
June Apple UK managing director Jon Molyneux pledges to reward loyal dealers in Apple?s core market sectors ? publishing, graphics and education
Steve Jobs is slammed by Apple shareholders after it emerges that he has sold all but one of his $1.5 million shares in the troubled vendor
Major clone manufacturer Power Computing announces plans to produce Wintel PCs
July Apple stock hits all-time low at $13 a share
Automation firms UiPath and Automation Anywhere close out their funding rounds with $265m and $300m respectively
View photos of last night's awards ceremony in London
View photos of all the winners from the 2018 Channel Awards
After a glittering awards evening in Battersea celebrating 25 years of the Awards, we are pleased to share the list of winners and judges' commended winners