'Obviously, Gil wasn't getting the job done'

Apple Computer Inc. investors are either breathing a sigh of relief or dreading yet another management change in the wake of Wednesday's resignation of Chief Executive Officer Gil Amelio.

Wall Street analysts wasted little time before expressing their feelings about how the shakeup will affect the stock's performance tomorrow and in the distant future.

The fact that Amelio's departure comes just days before Apple is expected to announce yet another dismal quarter -- some analysts expect it to be at least $70 million in the red -- doesn't bode well for investors who maintained the loyalty that has long been a hallmark of Apple customers.

"Anytime you see a CEO resign days before earnings are released, it's a pretty safe bet that revenue and earnings figures are going to be even worse than expected," said Bill Milton, an analyst at Brown Brothers Harriman in New York. "Obviously, Gil wasn't getting the job done and now they need somebody to step up and rekindle customer enthusiasm."

Richard Shaffer, editor of the influential Computer Letter and president of Technologic Partners, had this response: "I don't think this will do much damage. It's mostly a loss of momentum. And it will bring yet another new direction for Apple -- just what everybody needs. If Apple seems confused, more than ever, this makes Wintel seem the safe choice. How boring."

"[This will have] mostly an effect on morale and shareholders," Shaffer continued. "Users are hard core who refuse against all advice to give up the Mac. The users are still there. It's just a sign to me the board completely lost faith in the present administration," he said.

"There's clearly only one person there with the technology now," Shaffer said. "Steve [Jobs] effectively is in charge. The man with a vote is [Apple vice chairman] Markkula, the man with the sense of direction is Steve."

Brown Brothers' Milton said he expects the stock to climb a bit tomorrow, possibly as much as $2 per share, as traders will likely want to get in on the ground floor in anticipation of a new hierarchy that, hopefully, can return the personal computer maker to profitability.

But would Milton recommend the stock to his own clients?

"Well, I'm not really one who likes to roll the dice," he said.

Amelio's resignation came after Apple's stock closed virtually unchanged at $13.69 per share.

Vadim Zlotnikov, an analyst at Sanford C. Bernstein, said he was surprised by Amelio's resignation.

"Right now I'm at a loss," he said. "He did implement some cost-cutting measures to turn things around, but right now I really don't know the reasons for his leaving."

Zlotnikov predicted the stock would drop tomorrow as investors weary of Apple's recent legacy of volatility would bow out of the fray.

"I'm taking a wait-and-see approach to this," Zlotnikov said. "If the new management is found quickly and can clearly articulate the company's strategy it will mitigate the impact this announcement will have on the stock."

First Call Corp., a research firm based in Boston, predicted Apple would lose 54 cents per share in its third fiscal quarter.

Some analysts said Amelio may not have been a good choice in the first place, pointing out that the recovery he was credited for engineering at National Semiconductor Corp. may have been orchestrated more with smoke and mirrors than skilled leadership.

"[Amelio] came into National in 1991 at the bottom of the semiconductor cycle and left in 1995 when it was at its peak," Milton said. "National's earnings improved because of the cost-cutting methods he used, but they were losing market share and had declining revenues at a time when everyone else had higher revenues. He came to Apple when it was declining and wasn't able to turn it around."

Some analysts said the management change might overshadow Apple's poor third-quarter results, giving investors a chance to start anew.

"You are still talking about a company with $5 to $6 billion in annual sales and one of the most famous technology names in the world," said Rick Berry, an analyst at Murphey Marseilles Smith. "Sure, their revenues have been declining at 20 to 30 percent per year, but the stock is not an expensive buy here at $13 to $16 per share."