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Tim Cook Fires Key Execs: Business as Usual or Beginning of the End for Apple?

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Opinion is divided over whether the departure of high-level exec Scott Forstall is a good thing for Apple.

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MINYANVILLE ORIGINAL While a large part of North America was fretting about Hurricane Sandy on Monday afternoon, Apple (NASDAQ:AAPL) announced via a press release that it had fired two high-profile executives, head of iOS engineering Scott Forstall, and head of iOS John Browett.

Of course, the news still made a big impact despite the distraction of Hurricane Sandy, as the departure of Forstall and Browett, and CEO Tim Cook's rehiring of hardware chief Bob Mansfield out of retirement earlier in the year, marked the largest executive shake-up in the recent history of one of the most closely-watched companies in the world.

Cook's move to fire Forstall, a Steve Jobs protégé who was behind many critical Apple innovations and was once considered a likely successor to the legendary Apple CEO, came ostensibly after Forstall refused to add his name to an official Apple public letter apologizing for the highly-criticized flaws of Apple Maps.

Browett, who was hired by Cook, was let go in the wake of his failed plan to cut back on employee working hours.

The shake-up at Apple undoubtedly also heralded the official arriving of the Tim Cook era. But is that necessarily a good thing? A Wall Street Journal article noted that Forstall "never fit into the culture of Apple." But some point out that iconoclasm and innovation go hand in hand, as Steve Jobs demonstrated. Additionally, the slogan of Apple once was: 'Think Different.'

"The last thing you want in this highly competitive and innovative business is everyone 'fitting in' and become [sic] Yes Men. When this happens, the company begins to stagnate in terms of innovation, risk taking and being different," commented user 'Dyson Lu' at the Journal.

Others assert that like Forstall, Jobs would never have apologized for a product once it was released as Cook has done. Instead, Jobs would have insisted on a product being perfected before being released and would have stood behind it afterward no matter the circumstances. Cook's ousting of Forstall thus highlights that Apple is heading down a worrisome path that is divergent from the one Jobs would have taken, they say.

On the flip side, defenders of Cook say that cutting Forstall, who had apparently become unpopular among employees at Apple headquarters, signaled an ability to make difficult decisions and would restore staff morale.

"This was better than the Giants winning the World Series," a person in contact with Apple executives told the New York Times. "People are really excited."

At CNET, Charles Cooper agreed that Cook's move showed strength.

"[I]f Cook lacks the charisma and genius of his legendary predecessor, he also showed with the management shake-up that he has an iron fist in reshuffling Apple's executive ranks. For Apple, which faces myriad new challenges this fall, that's an encouraging harbinger," he writes.

Analysts covering the Cupertino, California-based company are also upbeat about the latest developments at Apple HQ.

"While we view Forstall as key to Apple's success having been head of the 'all-important' iOS platform and are very disappointed to see him go, there is no change to our current positive view on Apple," said ISI Group's Brian Marshall in a note. "We believe if the company can be successful without Steve Jobs, it can be successful without Scott Forstall."

Stern Agee's Shaw Wu wrote that his company doesn't "think [Forstall's departure] will be a big deal as the company has arguably not missed a beat despite senior departures in the past, showing the resilience of Apple's mission and culture."

Only Global Equities Research's Chip Chowdry was not as sanguine, saying that the executive change-up could be an indicator that Apple "lacks innovative executive leadership."

In the first day of trading since the shake-up, Apple shares fell as low as $587.70. As of 3:24 p.m. EDT, Apple was down 1.12% to $597.25.


Twitter: @sterlingwong
No positions in stocks mentioned.
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