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Hot off the Press - Industry News
May 19th, 2004

Apple Splits iPod and Macintosh into Div's, some Executives sell a load of stocks.

Apple Computer Inc. has startled the industry and most Mac owners today, by announcing that it has created a new separate division within the company for its popular iPod digital music player. Nothing was said regarding the music sales side of the business. That will leave the Macintosh in a division by itself.

Apple has sold more than 3 million iPods since its launch in October 2001 and now the iPod Mini has created such a frenzy that it’s hard to find too.

Jon Rubinstein, who has led the Cupertino, California-based company's hardware engineering efforts, will run the new division, an Apple spokesman said.

Timothy Cook, who was head of Apple's worldwide sales and operations, will lead a newly organized Macintosh division. Tim Bucher, now in charge of Macintosh system development, will head up the Mac's hardware engineering, according to the Apple announcement.

The new divisional breakup of products and the personnel moves were announced in a company-wide internal e-mail sent by Steve Jobs, co-founder of Apple and Apple's chairman - chief executive.

"This organizational refinement will focus our talent and resources even more precisely on our industry-leading Macintosh computers and the wildly successful iPod," the spokesman said.

Industry analysts have speculated that Apple might ultimately broaden the uses for an iPod beyond playing music, such as for watching movies.

This move comes as Apple increasingly focuses its business on the iPod and generally on it’s music sales via the iTunes Music Store. Last quarter, Apple said it sold more iPods than Macs--the first time that occurred. It’s no secret that the Macintosh continues to lose market share and perhaps the focus of the Apple’s founder, Steve Jobs.

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There are a lot of Mac owners wondering if this isn't very bad omen. A familiar trait of big corporations is to split off hot and slow products into separte divisions to either spin off the loser, sell it off or kill it. Lets hope not!

Ca-ching, ca-ching-
With the popular iPod music player driving their company's rising share price, six top Apple Computer executives cashed in stock options for multimillion-dollar gains last month.


The moves were the first insider stock sales in almost two years at the Cupertino computer maker.

Timothy Cook, Apple's executive vice president of worldwide sales and operations, collected the biggest payoff. He exercised options to buy 1.36 million Apple shares for prices ranging from $16.81 to $17.31 each April 19-23, according to Thomson Financial. Over the same days, Cook sold those shares for prices ranging from $27.46 to $28.53 each, for a gain of $14.75 million.

Senior Vice President of Hardware Engineering Jonathan Rubinstein exercised options to buy 700,000 company shares for prices ranging from $6.63 to $16.81 each April 19-29. He then sold those shares for prices ranging from $26.70 to $28.35 each, for a gain of $12.67 million.

Other Apple executives with gains from exercising options and selling shares in April were: Chief Financial Officer Fred Anderson, who retires June 1 ($10.11 million); Senior Vice President of Applications Sina Tamaddon ($7.49 million); Senior Vice President of Worldwide Product Market Philip Schiller ($2.78 million); and General Counsel Nancy Heinen ($2.67 million.)

"A major part of Apple's senior management compensation is based on stock appreciation," Apple said in a statement. "It's great to see some members of our management team get rewarded for their incredibly hard work by selling some of their stock."

The Apple executives who sold in April retain significant holdings in options to buy company shares.



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