Gil Amelio’s Reign at Apple, and his Eventual Ouster

According to many economists, Gilbert Amelio is the savior of businesses in trouble. With this in mind, the board of directors at Apple decided to appoint Gil Amelio to the board after reporting another huge loss in 1994. At the time, Michael Spindler was the head of Apple, and sales in every division. The board accepted Spindler’s resignation and appointed Gil Amelio to the helm of Apple. Gil Amelio was perhaps one of the most technically savvy of Apple chairmen. He earned his PhD in Physics from the Georgia Institute of Technology. After graduation, he worked for Bell Labs (the home of UNIX), Fairchild Semiconductor and Rockwell International, but he is best known for his tenure as chairman at National Semiconductor, where he was recognized for saving the company.

By this time, Apple was bleeding red ink, and was experiencing its largest losses in its history. Michael Spindler, chairman at the time, was largely blamed for Apple’s troubles, which included poor product quality, shrinking sales, and the lack of a viable operating system to replace the aging Mac OS.

Amelio was appointed to the companies board of directors, and in 1995, he was appointed chairman of the company. Among the first actions of Amelio as the head of Apple was to reject the buyout offer made by Sun, which hoped to buy Apple at a significant profit for itself. Stockholders, customers and employees were all won over to Amelio by his decision. Employees at Apple even began calling their chairman Dr. Amelio.

The euphoria is short lived, as Apple announced layoffs of nearly 3,000 people and a $700 million loss, the largest ever experienced by a Silicon Valley company. Apple also had other problems. Sales were down, the quality of the hardware was dropping and Apple was still stuck on an operating system obsolete ten years before.

Amelio decided to go ahead with plans to license out the Macintosh ROMs and Mac OS and to give up the flagging Copland project. By the fourth quarter of 1996, Apple posted a $25 million profit. Months later, Apple announced that it would by Steve Job’s company, NeXT, for $430 million. NeXTSTEP would be the basis of the next Apple operating system, codenamed Rhapsody, marking the decline of Amelio’s reign..

Steve Jobs quickly suspected of lusting for the leadership at Apple, though he denied it. Slowly, top executives at Apple are replaced with those who served under Jobs at NeXT. Larry Ellison makes an unexpected effort to buy Apple, and Saudi Arabian billionaire, Prince Al Walid-Walid buys $115 million of Apple stock. Both actions bring down the stock price down. By July of 1997, Amelio is asked to resign after $1.6 billion in losses.

For Amelio, all is not lost. He receives a $50 million severance package. Hurt by his forced resignation, Amelio writes a book, On the Firing Line: My 500 Days at Apple, which includes a scathing review of Jobs and the changes he made in the company, especially the maneuverings to oust him as CEO and chairman. Amelio also complained about the lack of reserved parking at Apple, and how Jobs always parked in the handicapped spots.

After Amelio’s departure from Apple, there were many stories of mismanagement and incompetence during his leadership at both Apple and National Semiconductor. Though both companies survived his reign as chairman, both companies suffered huge losses that lasted well after his tenure.

Perhaps even more inflaming for Apple fans was his seemingly exorbitant severance package. During a time of unprecedented losses at Apple, Amelio was rewarded a $6 million package and over 135,000 shares of Apple stock. He used the money to buy a new Lexus, and fund several new venture capital groups.

Luckily, both companies survived and thrived. Under new management, both started producing profits and regained the clout they might have lost.

About the Author
Thomas Hormby is a high school student in Nashville, Tennessee. He maintains two Mac history websites, and

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