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Apple Falls After CEO Cook Overhauls Management Team

Oct. 29 (Bloomberg) -- Bloomberg Businessweek Senior Correspondent Sam Grobart, Bloomberg News Tech Reporter Adam Satariano and Cory Johnson report on management changes at Apple. They speak with Nicole Lapin on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

Apple Inc. (AAPL) declined after Chief Executive Officer Tim Cook embarked on a sweeping management overhaul at the world’s most valuable company.

Shares of Apple fell 1.4 percent to $595.32 in New York. Today is the first trading session since Apple announced the departure of mobile software head Scott Forstall and retail leader John Browett. Trading shut down for two days this week because of Hurricane Sandy.

Forstall will leave next year and serve as an adviser to Cook until then, Cupertino, California-based Apple said on Oct. 29. Executives Jony Ive, Eddy Cue, Bob Mansfield and Craig Federighi will take on added management responsibilities, the company said. Forstall was pushed out, according to a person with knowledge of the dismissal who asked not to be identified because the matter is private.

“Both departures were likely forced by Apple’s CEO and weren’t voluntary,” Amit Daryanani, an analyst at RBC Capital Markets, wrote in a research report today. “While there will be concerns about future execution given Mr. Forstall’s departure, we note that Apple has navigated through past turnovers impeccably.”

Forstall oversaw products such as mapping software and the Siri voice-recognition tool, which met with criticism. He also frequently clashed with other managers, people with knowledge of the matter have said. Cook, who succeeded co-Founder Steve Jobs last year, is revamping leadership as Apple’s stock price sags and competition accelerates from rivals including Google Inc., Microsoft Corp. and Amazon.com Inc.

Mapping Software

Forstall was responsible for the mapping software introduced last month that was widely faulted for bad directions and missing features, marring the debut of the iPhone 5. Forstall had extolled the maps’ features before its release at a software developer conference in June.

Cook dismissed Forstall after he refused to sign a public letter to Apple customers apologizing for the mapping software’s flaws, according to a person briefed on the matter. Cook signed the letter instead.

“The buggy and poor-performing Maps app, which displaced Google Maps as part of the iOS 6 launch, has been a black eye for Apple,” Mark Moskowitz, an analyst at JPMorgan Chase & Co., wrote in a research report today. “The one risk, in our view, is if Forstall potentially heads to a competitor such as Google or Microsoft to build out their mobile operating system prowess.”

The management changes leave Ive, who already heads industrial design, with more authority over the vision and details of Apple’s products. He takes on responsibility for so- called human interface, the software that governs how customers interact with Apple devices. Before he died last year, Jobs controlled the experience, melding input from disparate teams. In the new structure, Ive takes on that role.

Retail ‘Mistake’

Browett joined Apple in April, after being hired in January from his post as CEO of Dixons Retail Plc (DXNS), the largest U.K. consumer-electronics retailer. Apple had searched for more than seven months to find a replacement for Ron Johnson, who left last year to run J.C. Penney Co.

In August, after Apple had reduced staffing at some retail locations, cut hours and limited store transfers under Browett’s leadership, the company backtracked on the new policies, calling them a “mistake.”

Cook’s other changes include giving Cue responsibility for Siri and maps, which puts all the company’s online services in one group, Apple said. Federighi will head up iOS -- the mobile software that runs iPads and iPhones -- as well as the Mac operating system, merging the mobile and desktop teams.

Mansfield’s new Technologies group will combine Apple’s wireless teams as well as the semiconductor groups.

To contact the reporter on this story: Lisa Rapaport in New York at lrapaport1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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