Apple?s bloodiest day came and went on Friday, leaving a third of the workforce facing redundancy, several previously high profile product lines canned and the company bracing itself for a likely $600 million quarterly loss at the end of this month.
In what had become the most anticipated restructuring in the history of the IT industry - plans for it were first revealed in January - Apple chief executive Gil Amelio made good on his previously announced conviction that Apple?s only chance of survival lies in becoming a smaller, more narrowly focused company and swung his axe accordingly.
The biggest news to emerge from Friday?s upheaval was confirmation that Apple will cut 4,100 workers, or 31 per cent of its total worldwide payroll of 13,400. Some 2,700 of its 11,000 full time employees will be laid off, while 1,400 temporary workers will not have their contracts renewed.
Amelio declined to go into specifics about where the cuts will come - "I don?t see any point in going into microscopic detail", said Amelio - but 55 per cent of the lost jobs will come in the US, with the rest spread across subsidiaries throughout the globe. The vast majority - 80 per cent - of the redundancies will occur in manufacturing, research and development and marketing, with the remaining 20 per cent coming out of sales and administration.
Despite the massive bloodletting, Amelio tried to put a positive spin on this latest set of redundancies, the second since he took over as CEO last year. "These people will be in demand because they are very good and had worked for a company unparalleled in innovation. I feel very confident that they will land on their feet," he said, adding: "If someday things get better, maybe we'll see them again."
In terms of technology, Amelio?s latest overhaul reflects the company?s decision to focus almost exclusively on the Mac with further spending on non-core projects frozen. Notable among these casualties are the formerly high profile Opendoc and the Cyberdog Web browser. Java has outflanked Apple?s component strategy and it is towards Java-based technology that the company is now looking.
Opendoc and Cyberdog will ship in MacOS 8, but will then be discontinued. In a change to previously stated policy, Opendoc will not be ported to the Openstep application programming interfaces in Apple?s forthcoming Rhapsody operating system. What will happen to CI Labs - providers of the Opendoc sourcecode - remains to be determined and is being discussed with the other board members, IBM and Just Systems. In a separate announcement, IBM and Sun have also turned their back on Opendoc (see separate story).
Apple also said it was killing its Performa brand and would ship new lower cost Macintosh products under the Power Macintosh brand. The company claims that this will simplify the product line and end confusion for customers trying to decide between Performa and Power Macintosh models.
Apple?s speech techology will not be upgraded and its videoconferencing development gets no more money for future enhancements. The company is also discontinuing its AIX server software as it refocuses its operating systems strategy on Rhapsody and MacOS.
The delivery schedule for future operating systems has also been altered. Version 8.0 of the MacOS - codenamed Tempo - is due in July. But instead of shipping two full releases in 1998, as announced in January, the company will now ship one release - Allegro - in mid-1998 and then move to a one release a year schedule.
Despite predictions to the contrary, the Newton notebook survived the cull - for now. Sources close to Apple claim that the only reason the handheld digital assistant was not sold off this time was because, despite hawking it around the industry, Amelio was unable to find a buyer for this operation. But according to a company statement on Friday: "Apple is exploring a wide range of options for future Newton business. We have no specifics regarding these discussions at this time."
Financially, things are unlikely to get much better in the near future, confirmed chief financial officer Fred Anderson, with revenue for the quarter to the end of March likely to be down 25 per cent on the previous year at around $1.6 billion. A charge of around $325 million will have to be taken to cover the cost of acquiring Next, while a further $155 million will go on restructuring costs. An overall quarterly loss of around $600 million seems likely.
Amelio insisted that this latest round of cuts was what was needed to restore the company to profit. He declined to comment on speculation that his own position was not secure and refused to discuss a forthcoming issue of the influential 'Red Herring' hi-tech investor magazine, which calls for his resignation. "I think what this company needs is a period of focus and stability," he said. "That's what I intend to do."
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