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. Last Updated: 07/27/2016

Apple Changes CEO, But Layoffs Possible

SAN FRANCISCO -- For the third time in its 20-year history, Apple Computer Inc. ousted a chief executive officer when it replaced embattled CEO Michael Spindler with former National Semiconductor Corp. head Gilbert Amelio.

On Friday, the troubled computer maker confirmed that its board had decided to replace Spindler with the former chairman of National Semi.

Amelio now faces one of the toughest turnaround situations of his career -- taking on one of Silicon Valley's most beloved companies, one that pioneered the personal computer industry but remained so closeted in its own world and unique culture that it refused to see market realities.

Cupertino, Calif.-based Apple is now awash in red ink and eroding market share amid an exodus of executives. It reported a first-quarter loss during the holiday season, as pricing pressures in the PC industry were fiercer than anticipated and demand not as strong as forecast.

Analysts said that Amelio may be the right man for the job, which will first entail developing a restructuring plan, but one that must be done carefully so that the company does not lose its respected engineers and other valuable employees.

He must also set a course for the future, either by adopting Spindler's strategy of focusing on high-margin PC products and contracting other products out to be manufactured by other companies, or by scrapping that plan and developing his own road map.

Part of his plan must include whether or not he wants Apple to stay independent. But analysts believe Amelio does not want to sell the company to Sun Microsystems Inc., which had been in talks with Apple in recent weeks. Sun and Apple were haggling over price, and, for now, a deal cannot be reached.

Amelio is heralded by some as turning around National Semiconductor from a broad line chip maker to one focused on analogue and signal processors, a similar parallel to Apple, which has said it can no longer be all things to all people.

He is also a technologist, having begun his career at Bell Laboratories, a holder of 16 patents and a Ph.D. in physics.

Wall Street is expecting Amelio to slash costs and get Apple's ballooning inventories and chaotic inventory control system in line. This could mean a write-off even bigger than the $80 million it took in the first quarter for "inventory adjustments" and more layoffs, with analysts guessing as many as 2,000 to 3,000 employees could receive pink slips.

The Macintosh computer has always been an industry rebel, using different processors than Intel's and its own operating system instead of Microsoft Corp.'s. Apple has scoffed at Microsoft's Windows operating system, saying the Macintosh was easier to use but it avoided licensing its own software to other computer makers until two years ago.