Apple chief executive Gil Amelio ran the gauntlet of angry shareholders on Wednesday with promises of cutbacks, aggressive advertising and an end to fat bonuses for senior executives.
While Wednesday?s annual general meeting was calmer than last year's - when shareholders were baying for management blood - Amelio was not given an easy time. "I have never felt comfortable meeting with stockholders at a time when the stock is hitting new lows," he admitted when he addressed the crowd.
The mood of the shareholders was not helped by a clumsy attempt by Apple officials to adjourn the meeting before Amelio could present his analysis of the company?s plight, effectively rendering his remarks off-the-record. Amelio was forced to stage a quick retreat, insisting: "I?m perfectly delighted to have these comments on the record."
It was the first of two concessions to the mood of the audience. The second came when he bowed to their wishes to stop paying hefty performance bonuses to the top executives of a company that is reporting annual losses of $816 million. "Until we restore profitability to the company, we?re suspending the merit bonus programme for executive VPs and above," he promised, adding: "And that applies to me as well."
Amelio began his address by recalling what he dubbed the "five devastating crises that threatened the company?s survival as a viable business" when he came on board as chief executive last year. These related to cash - "We were broke!" he said - quality, operating system strategy, culture and fragmentation.
He insisted that, while the company continues to report abysmal results, its cash position of $1.8 billion puts it in far better shape, while quality issues have been addressed by former chief technology officer Ellen Hancock with her quality assurance scheme. The OS strategy issues will be resolved following the acquisition of Next Software at the end of last year.
Culture was a bigger issue to tackle, he said. "Apple acted less like a coherent organisation than a loose coalition of projects, a collection of tribes instead of a modern industrial enterprise," he said. "And perhaps that is a generous description."
He pointed to the corporate restructuring that was announced the previous day as evidence that he had tackled this issue, playing up the return of Apple co-founders Steve Jobs and Steve Wozniak.
The final crisis to be tackled is that of fragmentation, he went on, and work on this begins next week. "The company was simply doing too much, and not enough of it was profitable," he said. "I sometimes think that when it came to cool new projects, Apple?s eyes were bigger than its stomach."
He outlined his solution to this problem. "We?re going to have to get smaller before we can get bigger," he said. "It?s time to face up to the fact that we cannot do everything. We can?t be in every market. We can?t support every technology. We can no longer get bogged down in our own complexity."
While declining to specify how many jobs would go in the process or which product lines were likely to be sold or scrapped, Amelio told shareholders that he had to find a way to lose $400 million from Apple?s operating costs.
The process of selecting which employees will be made redundant and which products will go begins next week. Amelio said he was drawing up "a hot list and a hit list", but details will not be released until next month. It was clear from the comments of some of the more vocal shareholders, however, that the rumoured plan to abandon the Newton handheld computer would be extremely unpopular.
Amelio concluded by outlining plans to beef up the company?s advertising, which he said had lost its edge and become "fluff, soft and not very visible". There would be, he claimed, a "Mac Attack", which would be hard hitting and challenge the competition.
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