Apple Computer Inc. will cut its product line in half and increase its Internet focus in a recovery strategy that its chief predicts will leave the current troubles a distant memory a year from now.
"Hey, this is Apple. Expect the impossible," Gil Amelio said Monday.Amelio, three months after becoming CEO at what many consider Apple's lowest point, promised a new, more focused company eager to complete its mission of producing innovative, easy-to-use computers "for the rest of us."
Apple, based in Cupertino, Calif., is the nation's No. 3 personal computer maker. It pioneered the commercial personal computer in the 1970s and made it easy to use in the 1980s. But it has been struggling in the 1990s as rival PCs using Intel Corp. chips and Microsoft Corp. software have eroded the Macintosh's technological edge.
The company has had to slash prices to compete. It also has had trouble carrying out its plans, has misjudged demand and, critics say, confused customers and developers with a swollen product line and lack of focus.
Speaking to 4,000 developers of software for the Apple Macintosh, Amelio announced a company reorganization, a slimmer product line, and new commitments to such "megatrends" as the Internet.
Apple will cut costs and ease buyers' confusion by reducing its product line, slashing the number of models by 50 percent in the next 12 months, Amelio said, drawing applause from developers.
But on Wall Street, as technology stocks rallied, Apple idled, dipping 183/4 cents to $27.063/4 Monday on the Nasdaq Stock Market.
Amelio, who became chairman and CEO in early February, has given hints of the company's new strategy in the past but asked for 100 days to study Apple's problems before outlining his plan.
"Gee, these 100 days went awful fast," he joked.
But Amelio was serious in discussing Apple's problems, many of its own making, which have sent the company's market share, profits and stock price tumbling. Apple is now trading at almost half of the $50.121/2 a share it commanded in June 1995.
He said the company will increase its focus on the Internet, the global mesh of computer networks, which is changing the way people use computers to communicate. Apple will build Internet accessibility into the Macintosh operating system, even before the release of Copland, the new version of the system that is not to be released until next year.
Amelio also outlined a reorganization that features several new divisions, including one to focus on such "information appliances" as the Newton hand-held computer and the Pippin, a simplified computer that connects to television sets and can play games and surf the Internet.
Other new divisions will focus on the Mac, products that will work on different computer platforms, software, the Internet and customer service, particularly helping first-time buyers.
Amelio, the former chief at National Semiconductor Corp., was hired in February to replace ousted Apple CEO Michael Spindler.
Last month, Apple reported its biggest quarterly loss, $740 million for the January-March period. Most of the red ink went to pay for the dropping value of unsold computers and severance for employees laid off in a restructuring intended to restore profitability in a year.
Apple is at a crossroads, with one path leading to prosperity and the other to "a long slow decline into irrelevancy," Amelio said.
"The difference depends on how well this organization can come together . . . and united rediscover those elements of greatness that brought us to the forefront of this industry."
Amelio and other Apple executives discussed the company's recovery plan at the Worldwide Developer Conference in San Jose. Apple needs to regain the support of software producers if its Macintosh is to survive as an alternate to the industry-leading PCs using Intel Corp. chips and Microsoft Corp. software.
Developers were heartened to hear Amelio's promise to work with them more closely and cut the price of Apple equipment they need to write programs.
"I was glad he acknowledged the contributions of the developer community," said Symantech employee Michael Nosal. But he and co-worker John Micco had hoped to hear more details of Apple's recovery plan, particularly how the company planned to cut expenses.