Apple Computer will lay off a total of 4100 full- and part-time workers by 1998 and take a US$155 million blow to its second-quarter earnings as a result of the restructuring.
Of the company's 13,400 employees, 2700 full-time, and 1400 contract or part-time employees will be laid off beginning later this month, officials say.
"Despite the very painful employee action," said Apple Chairman and CEO Gil Amelio in a conference call with reporters, "we are confident that this action will put us back on the road to health."
Meanwhile, the firm expects revenues for the second quarter, which ends later this month, to be about $1.6 billion, down from $2.1 billion in the first quarter.
Apple will also streamline its product and technology development, including trimming its hardware and concentrating on three key markets: education, consumer and publishing. The company will replace its Performa line with a new line of entry-level computers in April.
"Apple has suffered in recent years from the lack of business discipline. The aim of Apple's reorganization is to focus on our key strengths," primarily the forthcoming MacOS based on NextOS, Amelio said.
Apple will be cutting development of its OpenDoc component technology in favor of Java-based technology, as well as dropping future development of its Cyberdog World Wide Web browser, Apple Video Conferencing, QuickDraw GX printing architecture, Open Transport technology and Pippin platform. Apple also will ax its AIX Server software following next month's release of version 4.1.5.
"I see very little point in supporting two languages that are very similar in very many ways," Marketing Director Guerrino De Luca said in reference to OpenDoc. "So our objective is to develop an incredibly good Java Virtual Machine (JVM)."
Analysts applauded the move as a step in the right direction. "Apple has been carrying the banner for OpenDoc for too long," said Chris Le Tocq, software analyst with Dataquest Inc. in San Jose, California. "OpenDoc was conceived before the industry's standardisation on HTTP (hyptertext transfer protocol)."
While the demise of OpenDoc comes as a surprise to few, many analysts were surprised by Apple's decision to hang onto the Newton. "I had not expected them to keep the Newton division on," said Le Tocq. "But they will have to make some adjustments to make it a worthwhile business."
With regard to the Mac OS, Apple altered the delivery schedule for releases beyond Mac OS 8. Instead of two full retail releases of Mac OS in 1998, Apple will ship one complete release in mid-1998, code-named Allegro, and a full release yearly from then on. Customers will get the latest system improvements through two updates that will come between Mac OS 8 and Allegro.
Some analysts questioned whether the announced cuts would be enough. "The big mistake would be not to cut deep enough," said Dataquest's Le Tocq. "Then everybody waits around for the other shoe to drop."
"This might be their last chance," said Tim Bajarin, president of Creative Strategies Consulting in San Jose. "I think they are in entrenched mode. The need to really attack the desktop publishing and education markets or their customers will jump ship. I just wish they did this six months ago."
With regard to the layoffs, 80 percent will come from manufacturing, marketing and research and development, with 30 percent to 40 percent from marketing and research and development and 20 percent from sales and distribution. Most of the job losses will occur in the third quarter, executives said.
Amelio was resolute in his position not to resign in the face of the continuing bad news for the company. "Why should I step aside now?," he asked. "I have worked very hard over the last year and we are on the cusp of putting the company's troubles behind us."
Apple's stock was up .187 to $16.562 at the close of the Nasdaq market, before the announcement today.
Apple, based in Cupertino, California, can be reached on the World Wide Web at http://www.apple.com/.